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The first day of the hearing of the milliiig-in-trausit question 

 before the Interstate Commerce Commission at Louisville on July 

 17 brought out the fact that general regulation of mill-ia-transit 

 privileges is fairly certain. It seems to be a pretty general opinion 

 that it will not be necessary to employ any actual separation of 

 lumber in question to utilize the milling-in-transit arrangement, 

 but that the alterations will come about through clerical operations. 



Elliott Lang of E. J. Darnell, Inc., of Memphis, was on the 

 stand the greater part of the morning of the first day. Mr. Lang 

 explained how the Illinois Central had discontinued refunding 

 according to milling-iu-transit arrangement with the issuance of 

 I. C. C. I\o. 1247. It later developed that the railroads used as a 

 basis for this action the fact that lumbermen had not effected any 

 separation of their stock in order to identify the various parts as 

 effected by transit arrangement and those not coming under such 

 arrangement. 



It was further develojied that Memphis, Paducah, Evansville and 

 Owensboro interests got together in an endeavor to get relief in 

 this particular, but were not successful in their efforts, and it was 

 demonstrated that no identification exists between rates on in- 

 bound logs and outbound lumber. 



In speaking of the probable result of attempted separation of 

 logs according to their origin, Mr. Lang compared such shipments 

 ■with shipments of grain, replying to the statement by the examiner 

 that the nature of the shipments is analogous. He made the inter- 

 esting assertion that one Memphis concern now requires 576 

 separate pile foundations for its various grades, lengths and thick- 

 nesses. He further maintained that it would take double this 

 amount to segregate lumber coming from two different lines, and 

 that this combined with the increased log yard space would neces- 

 sitate sawmills moving from Memphis. 



Mr. Lang further stated that Memphis sawmill men did not be- 

 lieve that they are granted a milling-in-transit privilege on logs. 

 He also maintained that a flat rate and the elimination of transit 

 privilege would successfully solve the problem, and that lumbermen 

 would therefore be relieved of the necessity of practically loaning 

 to the railroads large amounts of money as tied up in claims for 

 rebate. The examiner ruled that this had no bearing on the 

 question. 



A discussion of Louisville i: Xashville tariff' defining regula- 

 tions on milling-in-transit was then instituted. The witness stated 

 that as far as milling-in-trausit privileges are concerned the tariff 

 would be rendered void by the limit of the life of the expense bill, 

 which was six months. It had been claimed that two pounds of 

 log freightage would be offset by one pound of lumber, and the 

 witness showed that actual tests had proved this erroneous. He 

 stated further that the allowance is three to one with a transit 

 period of one year. The regulation contained in this tariff re- 

 quires a separation of logs and lumber showing origin in transit or 

 in non-transit territories. It was stated this would be impossible 

 and it required daily files with statements and receipts, shipments 

 and cancellations. 



The witness claimed that sawmills should be permitted to handle 

 logs in the same manner as they did before the issuance of the 

 order, and that log shipments should be oft'set by shipments of 

 lumber without reference to the particular type of wood involved 

 in the shipments. The inbound rate which was shown is always 

 the same, and the rate on lumber the same as that on logs. The 

 usual custom of mixed shipments of logs and lumber would render 

 segregation of species a physical impossibility. 



Mr. Lang argued forcibly for the Memphis sawmill people for 

 the privilege of a reasonable flat log rate in place of transit 

 privileges, thus enabling shipments to be made without various 

 obstacles in the way. 



As a concrete illustration of the need of some such arrangement, 

 he pointed out that the Illinois Central Railroad will not accept 



foreign cars unless they are loaded for Chicago, which condition 

 would enable the I. C. to get them over its lines and avoid the 

 per diem charges. This means that if a millman had au Illinois 

 Central car on his track he would not be able to use it no matter 

 how badly he might need it, because the road will refuse to issue 

 bill of lading. The consequence of this condition is expensive, 

 circuitous and delayed movements. The trade between Memphis 

 and Kansas City is a graphic illustration of this statement. Forty- 

 eight hours should be sufficient time for this shipment, but in order 

 to secure the legitimate refund on inbound logs on the Illinois 

 Central this railroad demands that the car be taken via Omaha 

 so that it will have the larger proportion of the haul and thus 

 the time consumed is from .ten days to two weeks. 



The examiner then suggested that there has been small possi- 

 bility of the adoption of flat rates, as this is a question of railroad 

 policy, although it has been recommended by the Interstate Com- 

 merce Commission. With reference to the transit privilege, how- 

 ever, he said it is recognized as necessary in commerce and that 

 the commission in its hearings was endeavoring to institute ade- 

 quate policing so as to make it within the limits of the law. In 

 reply to a question as to whether or not the rules could be brought 

 within reason, Mr. Lang said emphatically that they would not if 

 they were literal!}- interpreted, because every lumberman filing 

 request for refund under the present conditions would make him- 

 self liable to legal action on the grounds of perjury and by reason 

 of accepting the refund. The reason for this according to the 

 witness was because it was absolutely necessary to mix transit 

 and non-tiansit lumber in the same car, in order to comply with 

 the first essentials of lumber manufacture and marketing. 



The examiner then asked if it were true that the manufacturer 

 wished to be permitted to bring in logs from transit or non-transit 

 territory; to manufacture theto and reship them indiscriminately 

 without identifying any movements out against any particular 

 inbound shipments. Mr. Lang replied that they were opposed 

 to transit privilege, but that he had not tried to point out any 

 way under which they could operate according to the transit tariff. 

 To the examiner's argument that this point should be heard on a 

 specific complaint, the witness replied that such complaint had 

 been submitted months ago without result. 



D. M. Goodwyn, general freight agent of the Louisville & Nash- 

 ville Eailroad, said that his road has planned to make length of 

 transit period uniform in all cases, a limit of one year being the 

 period it was hoped it could adopt. In speaking of the proper 

 ratio of raw material to finished lumber he said that three to one 

 on dry stock and two to one for green products seems equitable. 

 The next witness was C. E. Cassell of the Weiss & Lesch Manu- 

 facturing Company, spoke manufacturer of Memphis. For this line 

 of manufacture mixed cars of oak and hickory are required, and 

 their separation would be impossible, according to the speaker. 

 Mr. Cassell also advocated a flat rate in place of milling-in-transit 

 privileges, and maintained that a one-year period would be too 

 short for his business on account of the necessary dryness of 

 material. A ratio of seven to one as between inbound and out- 

 bound freight would be preferable to spoke manufacturers as 

 against the present rate of four to one on billets and five to one 

 on bolts. 



It was suggested by Mr. Goodwyn that inasmuch as a change in 

 ratio would afl'ect a change in railroad earnings, a substitution of 

 a flat rate for the milling-in-transit rate would very likely result 

 in a higher rate than the present net. 



Again taking the stand, Mr. Lang averred that tests had 

 demonstrated that the actual production of logs in inch stock is in 

 the ratio of one pound to four-and-a-half pounds of log material. 

 In closing he stated that the percentages secured from tables kept 

 in the oflice on receipts of transit and non-transit stock would meet 

 the requirements of the tariff. 



T. E. Sledge, tariff manager of May Brothers of Memphis, was 



