to become effective without making any change in their own existing schedules. It would obviously defeat the purpose of requiring fifteen days' notice if the rule were to be rigidly applied when lines are merely meeting a situation created by the inauguration of new or changed service on the part of a competing carrier. "The above policy has been followed in dealing with schedule changes since the adoption of the interpretation relative thereto, and while perhaps the language of circulars issued in connection with this subject is not entirely clear in that regard, in fairness to all of the Western carriers the above indicated policy will be followed in dealing with such matters.

"This, of course, does not relieve any carrier from the necessity for advising all concerned of its intention to meet the new or changed schedules."

Exhibit G-7

LETTER, AUGUST 7, 1934, FROM H. G. TAYLOR, COMMISSIONER, TO SIGNATORY ROADS TO AGREEMENT FOR COMMISSIONER PLAN (1ST Paragraph) "Apparently a misunderstanding exists with respect to the obligation of roads signatory to the Agreement for Commissioner Plan as it relates to passenger and freight train schedules. Some roads have assumed that where there is an outstanding agreement between lines in a given territory as to specific schedules, proposed changes in such schedules should be handled through the Western Association of Railway Executives in the manner prescribed in the Commissioner Agreement, but where no such understanding is in effect the requirements of the agreement as to advance notice, etc., are not applicable. Other roads interpret the Commissioner Agreement as applying on all schedule changes, both passenger and freight, irrespective of previous understandings. It follows, therefore, that advance notice of proposed changes are given in some instances and not in others. Obviously, the best interest of signatory lines calls for a uniform application of the obligations of the Commissioner Agreement.”

"It will be noted that freight and passenger train schedules and services are set out specifically as matters falling within the 'plan' thereinafter outlined. "Paragraph 'C', of section 5, sets forth the conditions under which schedules, etc., are to be considered and the procedure to be followed. It is as follows:

"(c) If the proposed change in practice is with respect to matters set out in item numbered 4 of the recitals hereof, to wit, ""Service: A. Freight and passenger train schedules and service. B. Terminal and any unusual accessorial facilities or accommodations,' ," and such change, if made, might adversely affect the earnings of any other party or parties hereto, the proponent will present such proposed change to the Western Association of Railway Executives or an organization subordinate thereto and handle the same through such Association or subordinate organization in accordance with established practice.'

"In my opinion this language needs no interpretation or explanation. It is clear and unmistakable. Changes in freight and passenger train schedules and service which may adversely affect any other railroad, party to the agreement, are plainly within the purview of the agreement and as Commissioner I will feel constrained to render decisions in controverted cases under this plain mandate. "As a practical method of complying with the terms of the agreement, I offer the suggestion that when a signatory plans a change of schedule it serve notice of the change, in such detail as will make clear its intention, upon all roads which, in its opinion, might be affected, such notice to be given at least fifteen days in advance of the effective date of the change. Copy of such notice should be filed with me as chairman of the Western Association of Railway Executives.

"In order that the present misunderstanding be cleared up and a uniform policy with respect to this matter be established, I ask that, as one of the signatories to the agreement, you acknowledge this letter and indicate your approval of the position taken. A similar communication is being addressed to other signatory roads.""

Regular meeting of committee of directors, June 9, 1937, at 40 Wall Street, New York City, with Directors Stephen Baker, E. N. Brown, Walter W. Colpitts, Gen. James G. Harbord, W. A. Harriman, Will H. Hays, F. T. Heffelfinger, John

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H. W. Ingersoll, W. T. Kemper, Francis F. Randolph, and H. W. Rush, in attendance, Mr. W. A. Harriman presided as chairman:

"The absence of any formal protest under the Commissioner Plan to consider at this meeting was commented on by Chairman Harriman and other members of the Committee, the general opinion prevailing that this was an indication of the effectiveness of the agreement in preventing controversies between signatory roads."

Exhibit G-10

Letter, December 2, 1937, from H. G. Taylor, Commissioner, to the committee of directors:

For your information, I am outlining below activities upon which I have been engaged during the month of November 1937:

8. Use of the commissioner plant to prevent erosion of freight revenues in Western Territory. At meeting of the Member Roads of the Association of American Railroads, held in Chicago on November 19, 1937, there was considerable discussion of desirability of traffic organizations not only refraining from making any commitments as to rate reductions prior to receipt of the Commission's decision, with respect to the railroads' request for increases in freight and passenger revenues, but also to retain in the hands of executive officers authority for rate reductions which might be proposed subsequent to the Commission's decision in the case. As result of this discussion, I have been asked to outline operation of the commissioner agreement in Western Territory, as it might be applied to prevent the erosion of revenues in the event reductions were agreed upon in one or more of the several traffic associations, and made reply as follows:

"In the Commissioner Plan which has been subscribed to by thirty-four (34) railroads in Western Territory, including all of the Class I lines, the agreement is intended to advance their interests with relation to other forms of transportation; and for securing definite cooperation among them to the end that consideration may be given from the general standpoint of all railroads in the district, rather than from the standpoint of an individual railroad, to all questions affecting: "1. All matters of general railroad policy.

"2. Rates, both passenger and freight, traffic rules and practices.

"3. Service. (a) Freight and passenger train schedules and service; (b) Terminal and any unusual accessorial facilities or accommodations.

"The agreement further provides for the establishment of a neutral Commissioner who, 'viewing all questions from the standpoint of what is best for the railroads of the district as a whole,' shall assist the railroads in reaching an amicable settlement of any differences which may arise.

"The agreement provides that before inaugurating any material change in current practice or any material innovation with respect to matters set out in items numbered 1, 2, and 3 above, a definite procedure shall be followed, which, with respect to item No. 2, 'Rates, both passenger and freight, traffic rules and practices,' the proponent will present such proposed change to the appropriate one of the following existing organizations and handle the same through such organization in accordance with established practice:

Western Trunk Line Committee,

Southwestern Freight Bureau,
Trans-Continental Freight Bureau,
Western Passenger Association,

Southwestern Passenger Association,

Trans-Continental Passenger Association,

Other associations subordinate to or collateral with the above organizations, Appeals where proper and desired shall be made to the Western Traffic Executive Committee in regular course.

"It is then provided in the agreement that when the procedure provided for by the organizations above referred to shall have been concluded and final action taken on any proposed change in practice, then the proponent of such change if unsuccessful, or if successful, any opponent or opponents thereto voting in the minotity for such change, may refer the matter or matters at issue to the Commissioner.

"Upon receipt of a controversy in accordance with this procedure, the Commissioner is required to develop all of the essential facts pertinent to both sides of

the controversy, and after a study of the facts so developed he shall, acting as a mediator, arrive at a fair and proper solution and settlement of the controversy, having in mind the greatest possible conservation of net revenue to the parties involved in or affected by the controversy as a whole. Should any of the parties involved in or affected by such controversy fail to approve the solution proffered by the Commissioner, written notice to the Commissioner and other parties involved or affected is required, together with announcement of intention to proceed independently if such action is contemplated.

"In the event the Commissioner is unable to compose a controversy, and a notice of independent action is served, the Commissioner is required to make a written report to the committee of dirctors summarizing the issues involved, the proceedings taken, and solution proffered by him to the parties involved or affected. Thereafter the Commissioner's relations with the controversy cease, except as he may be called upon for additional information by the committee of directors.

"The purpose intended to be served by the committee of directors is that such committee, as representatives of stockholding interests of the railroads in the Western District, may be specifically informed as to any questions adversely affecting net revenues arising among any of the railroads in the Western District upon which it has not been possible to secure unanimity of action by the interested roads.

"You will thus see that it is provided that any member road may protest to the Commissioner, but that in the case of 'Rates, traffic rules and practices,' the appeal must be made after regular procedure in the various traffic associations and following an appeal to the Western Traffic Executive Committee from such traffic associations.

"As you will have gained from the foregoing, a protest to the Commissioner can apply to any rate or traffic question either locally or interterritorially in Western Territory." Exhibit G-11

Letter, April 8, 1938, from H. G. Taylor, Commissioner, to the committee of directors:

For your information, I am outlining below activities upon which I have been engaged during the month of March 1938:

7. Use of the commissioner plan to prevent erosion of freight revenues in Western Territory. In my letter for the month of November 1937, I reported on the use of the commissioner plan to prevent erosion of freight revenues.

While a good many protests on rate matters have been referred to the Commissioner, it is recognized that there is some disposition on the part of traffic officers to avoid formal protests for the reason that such action is said to be sometimes used against them by their competitors who seek to gain an advantage with shippers through informing them of objections raised by competing lines to proposals for rate reductions. In view of the increasingly difficult railroad financial situation and the desirability of discouraging rate-reduction proposals, it seemed desirable that some arrangement be worked out whereby any possible traffic embarrassment might be avoided in perfecting appeals to the Commissioner. The following resolution was, therefore, adopted at meeting of the Western Association of Railway Executives on March 18, 1938, which will permit appeals from individual freight-rate-reduction proposals to be made to the Commissioner by the chairman of the traffic executive officers organization:

"Resolved, That appeals shall be made to the Western Traffic Executive Committee from the various freight traffic organizations in Western territory with respect to

"(a) Final action of the traffic representatives of the carriers.

“(b) The announcement by one or more carriers of intended independent action with respect to freight rates, rules, and practices."

Exhibit G-12

Regular meeting of the committee of directors, January 10, 1940, held at 40 Wall Street, New York City, with Directors Stephen Baker, E. N. Brown, Fairman R. Dick, C. Jared Ingersoll, Wm. DeForest Manice, Francis F. Randolph, Finley J. Shepard, F. C. Nicodemus, Jr., C. E. Johnston, Commissioner, and O. E. Sobota, secretary to Commissioner, in attendance, and with E. N. Brown presiding at the meeting in the absence of the chairman, and O. E. Sobota acting as secretary in the absence of F. M. Wilson.

10. Applications to become members of Western Association of Railway Executives and parties to agreement for commissioner plan, Western District.

Western Lines redrafted and reissued their pass rules for 1940 in an effort to reduce the number of passes issued. One of the new requirements under the 1940 pass agreement is that only member lines of the Western Association of Railway Executives will be members of the pass agreement, and only member lines of the pass agreement are permitted to exchange complimentary annual transportation.

This action had the effect of bringing forth applications from some 8 or 10 Western Lines for membership in the Western Association of Railway Executives, and at the December meeting the following lines' applications were accepted

Chicago & Illinois Midland.

Duluth, Missabe & Iron Range.
Elgin, Joliet & Eastern.

Lake Superior & Ishpeming.

Spokane, Portland & Seattle.

Spokane International.

Toledo, Peoria & Western.

Two additional applications are to be voted on at the next meeting.

Exhibit G-13

Regular meeting of the committee of directors, April 9, 1940, held at 40 Wall Street, New York City, with Directors Stephen Birch, E. N. Brown, F. W. Doolittle, James G. Harbord, Will H. Hays, C. Jared Ingersoll, B. F. Kauffman, Wm. DeForest Manice, Finley J. Shepard, D. W. Stetson, C. E. Johnston, Commissioner, and O. E. Sobota, secretary to Commissioner, in attendance, and with E. N. Brown presiding at the meeting in the absence of the chairman and O. E. Sobota acting as secretary in the absence of F. M. Wilson.

10. Applications to become members of Western Association of Railway Executives and parties to agreement for commissioner plan, Western District.

Since my report at our last meeting, three additional Western lines made application and have been accepted for membership in the Western Association of Railway Executives, namely:

Texas-Mexican Railway.

Nevada Northern Railway.

Green Bay & Western Railway.

(Regular reports made by the Commissioner to the committee of directors pursuant to the Western Commissioner Agreement are offered in evidence as Government Exhibits 14 to 68. Minutes of meetings of the committee of directors held pursuant to the Western Commissioner Agreement are offered in evidence as Government Exhibits 69 to 110. Excerpts from these exhibits will be reproduced in this brief under the topical headings to which they relate.)

The membership of the Committee of Directors and their affiliations under the Western Commissioner Plan are attached hereto. They are:

Stephen Baker: Honorary chairman of board and director, Bank of The Manhattan Co., 40 Wall Street, New York City; trustee, Bowery Savings Bank, New York City; Great Northern Railway, director.

Donald C. Bromfield: President and director, Garrett-Bromfield & Co.; Denver & Salt Lake Railway, secretary and director; Arizona Marble Co., president and director; Denver Pressed Brick Co., vice president and director.

E. N. Brown: St. Louis-San Francisco Railway Co., chairman of board, chairman executive committee, and director; Chicago, Rock Island & Pacific Railway Co., chairman of board and president.

A. L. Burford: Texarkana National Bank, director; secretary and director, Magnolia Ice & Coco-Cola Bottling Co., Texarkana, Ark.; Louisiana & Arkansas Railway, general counsel; Texarkana & Fort Smith_Railway, director; Port Arthur Canal & Dry Dock Co., director; 4 States Grocery Co., Texarkana, Ark., director.

C. W. Cahoon, Jr.: President, treasurer, general manager, and director, Olney Oil & Refining Co., City National Bank Building, Wichita Falls, Tex.; United Oil Corp., Wichita Falls, Tex., president and director.

William F. Carey: President and director, Carey, Baxter & Kennedy, Inc., New York City; International Utilities Corp., chairman of board and director; Curtiss-Wright Corp., director; Dominion Gas & Electric Co. of Canada, director; Southern Phosphate Corp., chairman of board; Siems-Carey Railway & Canal Co., president and director; Chicago Great Western Railroad, director; The China Corp., vice president; Lehigh Coal & Navigation Co., director.

F. W. Doolittle: North American Co., director; Potomac Electric Power Co., director; Illinois Terminal Railroad, director; Capital Transit Co., director; Washington Railway and Electric Co., director.

William M. Duncan: President and director, Duncan Foundry & Machine Works Inc., Alton, Ill.; Illinois Stoker Co., president and director; Litchfield & Madison Railway, vice president and director.

Allen P. Green: President and director, A. P. Green Fire Brick Co., Mexico, Mo.; Mercantile Commerce Bank & Trust Co., St. Louis, director; S. A. Materiales Refractarios A. P. Green, Buenos Aires, Argentina, South America, president; Liptak Furnance Arches, Ltd., London, England, chairman and director; Bigelow-Liptak Corp., vice president and director; Ann Arbor Railroad, director; Wabash Railway Co., director; New Jersey, Indiana & Illinois Railroad, director. Tom K. Smith (alternate to Allen P. Green): President and director, Boatmen's National Bank of St. Louis; American Telephone & Telegraph Co., director; Curtis Manufacturing Co., director; General American Life Insurance Co., director; Ann Arbor Boat Co., director; Ann Arbor Railroad, director; Detroit & Western Railway, director; Frankfort Realty Co., director; Lake Erie & Fort Wayne Railroad, director; Manistique & Lake Superior Railroad, director; Menominee & St. Paul Railway, director; New Jersey, Indiana & Illinois Railroad, director; Toledo Central Station Railway, director; Wabash Motor Transit Co., director.

James G. Harbord: Bankers Trust Co., New York, director; chairman of board and director, Radio Corp. of America; National Broadcasting Co., director; R. C. A. Communications, Inc., chairman of board and director; R. C. A. Manufacturing Co., Inc., Camden, N. J., director; R. C. A. Institutes, Inc., chairman of board of directors; New York Life Insurance Co., member executive committee and director; Marconi Telegraph-Cable Co., Inc. (New Jersey, New York), director; Employers Liability Assurance Corp., Ltd., of London, England, member of executive committee; Atchison, Topeka & Santa Fe Railway, member executive committee and director.

Thomas W. Lamont (alternate to General Harbord): Chairman executive committee and vice chairman of board, J. P. Morgan & Co., Inc.; Lamont, Corliss & Co., chairman of board and director; United States Steel Corp., director; Southwestern Construction Co., director; International Minerals & Chemical Corp., director; Atchison, Topeka & Santa Fe Railway, Director; Santa Fe Pacific Rail Road, director.

R. E. Harding: Fort Worth National Bank, president and director; State Reserve Life Insurance Co., director; International-Great Northern Rail Road, director; Acme Brick Co., treasurer and director; Texas Pacific_Coal & Oil Co., director; Texas Electric Service Co., director; Missouri Pacific_Rail Road, director; New Orleans, Texas & Mexico Rail Road, director; Texas & Pacific Railway, director; Fort Worth Belt Railway, director; Agricultural Livestock Finance Corp., director; Citizens Hotel Co., director; Ellison Furniture & Carpet Co., director; Fort Worth Lloyds, director.

W. A. Harriman: Partner, banking firm of Brown Brothers Harriman & Co., 59 Wall St., New York City; Union Pacific Railroad, chairman of board; Illinois Central Rail Road, chairman executive committee and director; Los Angeles & Salt Lake Rail Road, chairman of board; Oregon Short Line Rail Road, chairman of board; Oregon-Washington Rail Road & Navigation Co., chairman of board; Yazoo & Mississippi Valley Rail Road, director. E. W. Stetson (alternate to W. A. Harriman): President and director, Guaranty trust Co., of New York; French American Banking Corp., member of executive committee and director; Textile Banking Co., Inc., director; Coca-Cola Co., member of executive committee and director; Bibb Manufacturing Co., member of executive committee and director; McLellan Stores Co., member of executive committee and director; Selected Industries, Inc., member of executive committee and director; United Stores Co. member of executive committee and director; U. S. Industrial Alcohol Co., member executive committee and director; Air Reduction Co., Inc., director; General Shareholdings Corp., director; Tri-Continental Corp., director; McCrory Stores Corp., director; Illinois Central Railroad Co., chairman of executive committee and director; Southeastern Compress & Warehouse Co., member of executive committee and director; Yazoo & Mississippi Valley Rail Road, director.

Will H. Hays: President and director, Motion Picture Producers & Distributors of America, Inc.; Chicago & Eastern Illinois Railway Co., director; Continental Baking Co., director; Hays & Hays, partner.