Transcript of Record — Southern R. Co. v. North Carolina

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SU PREME COURT OF THE UNITED ST. ATES

OCTOBER TERM, n

No. 74 72 7

. , 7

"SOUTHERN RAILWAY COMPANY, APPELLANT,

e us. |

NORTH CAROLINA, ET AL.

; No. 93 8

0 ; ee 2 sey 25

| UNITED STATES, ET AL., APPELLANTS,

155 oi 4 8 5 f

i e ET AL.

A 1 . & a = a af

APPEALS FROM THE UNITED STATES DISTRICT con FORTHE .

. MIDDLE DISTRICT OF NORTH CABOLIN A -

297

„ INDEX

. 222 a * are 8 3

.* VOLUME 2

Original Print

mission in Finance Docket No. 21563—Continued | 2

mission in Fiffance Docket No. 21563

Transcript of hearing July 11- 14, 1961—Con-

tinued 0 „

5 W of Hugh McVay— 15 f

direct hae Lat

CPOSS a, 351

redireet ran. 313

reeross . “ ae =F

318

5% . 3

5 Proceedings 8 the Interetats Commerce Com-

mission in Finance Docket No.-21563—Continued

Transcript ‘df hearing July 11-14, 1961—Con-

tinued ;

ener of A. B. Gleason—

eros

er A oon ay , examination by examiner’,

4 **

Ernest Rechel—

* oa

hte

4 ;

5 170

iit

— —

376 314

397 329

460 . 370

462 371

464 373

* fink

46 375

473 379

476 381

476 3881

482 385

486 388

489 390

495 394

503 400

519 410

530 417

533 420

546 428

587 4586

594 4461

602 467

603 468

604 468

605 469

610 478

616 477

617 477

Original Pritt

5 8 ;

0 . „ . . ° ®

~ ‘ 4 7 : i iy

& us ° * 5 “

2 Proceedings before the mee Commeres Com-

„ mission in Finance Docket Nb. 21563—-Colittinued

tinued.

| Testimogy of dee; Herbert

direet

Transeript of — July 11- 14, 1961—Con-

2. i 619

, direct 633

5 } es cross TT

George Herbert 5 oe

Fc & 9 further direct 8 —.—9— 5 : 641

„ Paul Greer — 3

„ direct 642

eros ä 648

Dr. Wilhelm 3 8

direeſet a 651

CTORS 655

i enn — „659

75 - Dr. Sherwood Githens— ?

Sie 3 @ 660

—.. 674

George. Parks—

- direct 682

* eross 669

® Riess Se R O Lackey— sae

ne mo, 1 697

5 78 — 2 * 700

er redireet 704

3 Hugh M. Cummings 6

direct 704

cross 710

Allan K. Manchester .

5 direct 712

0 cross — 720

Dr. Paul. H. —

‘direct . 722

Dr. Henry. Viiicent "Newson ey

_ direct RSI AR ARETE LER CR ea ae 726

cross ; 731

redireet 737

Proceedings before the Interstate Commerce Comz

INDEX

mission in Finance Docket No. 21563—Continued .

Transcript of bearing July 11-14, *

tinued

Testimony of Dr. Daryl Hart—

Exhibits:

Richard Arey—

direct .

eross

redirect.

direct

redirect

direct

Cross

F. M. Southerland—

direet

cross

pe —

H. 1. Present Schedule detween Oreensboro-

Goldsboro, N. C., Truck Raute

$1-3—Proposed Schedule between Oreensboro-

Goldsboro

H-3— Av

N. C., Truck Route

Monthly shipments handled at

> all offices between Greensboro and Golds-

‘boro, N. C., March 1960 2 ipa d

1961

H- Southern Railway eee 8

bandled on Trains Nos. 13 and 16 (Operat-

ing daily Goldsboro-Greensboro, N. C.) Jan-

uary thru, May 1961—151 trio .

＋ .

739 5660

742 562

750 5667

752 568

759 572

765 576

773582

77 35885

783 588

786. 590

787 51

791 593

793 595

794 595

796 596

806 : 603

806 603

807 604

808 605

809 606

3 wb N

Proceedings before the Interstate Commerce Com-

mission in Finance ‘Docket No. 21563—Continued

_ Exhibits :—Continued :

H-5—Southern Railway Company, Passenger

Traffic Statistics Trains Nos. 13 and 16

operating “between Greensboro-Goldsboro, |

N. C., January thru May 1961. Number of . .

trips, trip mileage, ete 811 608

H- 6— Southern Railway Company, 8 mes 5

Traffic Statistics Trains Nos. 13 and 16 5

operating between Oreensboro-Goldsboro, i

N. C., years 1948 ru 1901 (5 Months), 8

Number of trips, Number of passengers, et. 612 609.

H-7— Southern Railway Company, Operating Se :

Results of Passenger Trains Nos. 13 and 16, .

Greensboro, N. C. to Goldsboro, N. C., Jan a ae

_ > Uary thru May 19611 813 610

- H-8—Southern Railway System; Feeder Value : 7

of Trains Nos. 13 and 16, operating between .

“Greensboro, N. C. and: Goldsboro, N. C. ;

accruing to the Southern Railway System. 814 611.

„ H-9—Southern Railway Company, General

Balance Sheet as of April 30, 19111 815 612

H-10— Southern Railway Company, Income 5

Account for Four Months ended — 30, Bao, Be

1961 ‘ 816 618

H-11—Estimated benefits to be derived by re-

- moval of passenger service between Greens-

boro, N. C. and Goldsboro, N. C. e

_ H-12—Timetables of other Southern Railway rs io

Co. Passenger Trains, Seaboard Air Line

Railroad; Atlantic Coast. Line Railroad,

Carolina Trailways, National Trailways, and

‘Seashore Transportation Company, effective

April 30, 1961 and July, 1961 (These are

revised schedules of those shown in Exhibits .

8, 9, 10, 11, 12, 13, 14, 16, 17 and 18) 818 615

H-13—List of North Carolina Counties thait

do not have rail passenger service (50 out

of a total of 100 counties) ; 834 631

H-14—Sonthern Coach Company timetable 757

vi | _ INDEX

Order noting probable jurisdiction |

6 . 8

Record from the United States District Court for

the Middle Distriet of North Catolina

Notice of appeal by the Interstate Commerce

Commission to the Supreme Court of the

United States a shila

Clerk’s ‘certificate (omitted in printing)

. ee

—

preme Court of the United States

- J 2 2 A

Notice of appeal by Southern Railway Company Ae

Original Print

e 634

837 634

869 658

871 659

878 664

883a 667

884. 668

° : 5 : oe sf 2³⁰

liel 2 „Wednesday, a 1961

—_ MoVay was duty sworn and testified as s follows:

Direct examination. .

By Mr. Dixon: eee, Sear

0. Will you state your name, your r residence and occtipa-

tion, please? ae

A. My name is Hugh McVay; my: residence is Post · E nice

Box 2467, Greensboro, North Carolina; I am Division Super-

intendent for the Railway Express ‘Agency.

. Q. What is the background of “your Express experience?

ee Practically all of it has been in the Operating Depart-

ment, over a period of, 34 years.

Q. Do you have charge of the Express schedulus, the

matter of which express will be handled by REA o „ 3

line between Greensboro and Goldsboro?

A. Yes, sir. 8

Q. In the light of this prosesding, cubes. tes proposal

of the Southern, that these trains be discontinued, hav os

prepared any plans or new schedules which would.

[fol..341] the handling of express in the future if the trains

came off? |

A. Yes, sir. ; *

.-Q. Do you have exhibits for showing that? 8

A. Yes, sir.

Q. Could we get them distributed!

A. Thave two exhibits, Mr. Dixon, one of the present and

one of the propésed order and service, if you, would like

to distribute one of each.”

. If Mr. Eisenhart will do the honors. 5

- May we havethese ... Ft

Exam. Gibbons: The Present Schedule will be marked

for identification as H 1, and the document described as

Proposed Schedule, ‘will be marked for e as

ree Exhibits H 1 and H 2, witness ies sive marked *

identification 2 :

—

“By Mr. Dixon:

Q. Mr. McVay, referring to the Exhibit which has been

identified as H 1, showing the present schedulé of the Ex-

press company between Greensboro and Goldsboro— .

A. Yes, sir.

„

Q. Are all of th the schedules 0 shown on that exhibit truck *

schedules? :

A. Yes, sir, they are. 3

Q. I take it that in addition to those track schedules

presently effective, that you also handle some b express on

Trains 13 and 16

A. We do.

[kol. 342] Q. Can you tell us the 1 the sien sta-

that are worked by- Trains 13 and 167

A. Ves, sir, all stations between Greensboro, and Golds-

boro may be worked by 13 and 16, if needed. If we need to.

We operate, as you know, by alternate service, by truck

between Greensboro and Goldsboro: To identify stations

that are exclusively served by 13 and 16, I can do that for

you; leaving Greensboro first would be Gibsonville, and

beyond Burlington, would be Haw River, Mebane, Hills-

‘boro, Garner, Clayton, Pine Level, and Princeton, North

Carolina.

O. Now, those stations are served exclusively by the

trains

A. That is right. Those stations are not served by our

present trucks.

Q. The remaining stations 3 Greensboro and

Goldsboxo are served by true! .

A. Yes, sir.

Q. Will you state those stations, coming east krom i

Greensboro?

A, Burlington, Durham, Raleigh, and Goldsboro.

. Q. I think you haye an exhibit whichshows: -the number

of shipments at all of these stations in the period March

1960 to February 1961, provided as between the monthly

shipments and the number of shipments moving on Trains.

13 and 16, do vou not? ?

A. Ho.

Mr. Dixon: Mr. Examiner, can we identify that as H 3

fol. 343] Exam. Gibbons: It will be identified as n

H 3.

us (Petitioner's 8 Exhibit No. H 3. ‘Witness MeVay, was

marked for identification.)

are By Mr. Dixon:

Q: What does that exhibit show, Mr. ‘Mevayt 8

A. This represents the average monthly shipments

handled at all of the offices between Greensboro and Golds-

boro, North Carolina, during thé period of March, 1960,

through February 1961: It also indicates the shipments |

bags And what does that represent? 3

2 That represents four per cent of the total shiprfnts

moved over that line.

Q. In other words, today, on this line 8 Greensboro

and Goldsboro, the trains are handling four per cent of

the total of the average number of express e

A. That is righht.

2. And of course, the other 90% is already, on your truck

line! 2

A. Yes, sir. : | —

2. And if the trains are discontinued, you would extend.

your, truck route, or broaden it to include the whole works?”

A. Yes, sir. ;

= Exam.-Gibbons: ‘Did I understand you to say that the

Trains 13 and 16 do not serve Durham or Raleigh; would

you like to express the handling of express?

The Witness: Perhaps I didn’t make myself clear: Trains

[fol. 344] 13 and 16 and our trueks serve all of the offices

between the lines, is what I said. They do serve those

o towns, if need be. In other words, service is available if

wie want to use it.

Exam. Gibbons: I see.

Mr. Dixon: Im not sure 1 heard that, but. let me ask

; you. .

The Witness: To clarify it, Mr. Dixon, it I might, sir.

Nos. B and 16 * operate through Durham and Raleigh,

. - +

. bd *

handled exelusively ientifying the open ty Trains 13 and

“is aR where we're serving by truck.

—

5 4 : 5 — * *

* 2 5 5 * * 7 \

® 7 SNe i ‘ “4 . \

292 2 0 : 8

° ° * = \

and if the occasion.should demand it, we are privileged to

put traffic on the train or _— traffic to it, = we oC

By Mr. Dixon:

Q. Now, the larger points on this line are Greensbord,

Durham, Raleigh, Selma, and Goldsboro, and meng,

is that true?

A. With the exception of Sena, I would say yes, that is

true.

Q. After; as to these larger points, do you move cg

express by trucks or by rail?

A. Almost exclusively by truck. ~ :

Q. So that if the trains are — vou just .

broaden that: operation to include the smaller points? a

A. Yes; I might clarify that, maybe, for: you 15 little bit.

For instance’ Mr. Dixon, if a ‘shipper at Clayton wanted

to ship something to Durham, ‘and. J couldn't move it by

truck because 1 don’t presently serve ee with my #

[fol. 345] trucks; it would have to move tb Durham, that

partic piece would, by either of the trains. „

Q. Is Clayton east or west of Durham! 7 85 4

A. That would be east of Durham.

2. So you would move it by truck. to Durham and put it

on the train? $5

A. No; in that ease, we would move ‘it to Beben by

train; it it were moving between Clayton and Durham

only; sinée the truck would not serve Clayton, it could not

de put on the truck. It would have to be put on the train.

Q. Suppose it was going to Chicago?

A. Most certainly, it would move over by track, if from

Q. We are talking about Clayton. 8

ge Clayton; if it moved to Chicagé, we would take 3 i a

Greensboro. ° 5

Q. By truck? -

A. No, sir. 7

Q. By rail? . ae

A. Dyvell.

* It would go out of Greensboro? By rail?

that during the period March 1960 to February 1961, that

gine 946] these trains did not handle any express in and

out of stead is aoe 725 this exhibit shows!

A. Ves, sir. Ve]

Exam. Gibbons: Or Raleight

By Mr. Dixon: 4 ce —

Q. Or Selma or Goldsboro; is that right?

: A. That's ri ght.

Q. And Elon College and Burlington? |

by truck.

_-. Exam. Gibbons: Why didn’t you: show any shipments

to Greensboro?

The Witness: Well, Greensboro is an original point, and

any shipments moving from Greensboro to these offices

would automatically be included in these figures, and any.

a oving from these offices to Greensboro would automatically

de ineluded in the following figures.

x Exam. Gibbons: So that. business in and out of Greens-

boro then, is reflected? we

“The Witness: Yes; business i in and out would be reflected *

; in the figures: .

By Mr. Dixon:

Q. As an expert in the express business, would you say

f 5 that the serv ice proposed would be better or worse than

that presently if effect!

kol. 347] service préposed-is going to be; he hasn't said

_ how he is going to take care of the fine North Carolina toyn

of Clayton, we have been talking about. Or Graham, or any

of these other towns. Until he api ae his plan is, I

o don’t think he’ is qualified. _

Pian te ; ‘

- . . 5 3 * *

. 2 ;

. *

‘ *

Exam. Gibbons: an Exhibit H 3 does show, however, 3

| The Witness: nate REM, ee 5 28

A. Elon College and e are served 5

Mr. Burns: Objection. We don’t even 9 vi ‘what the

294. d j : 5

Gibbons: 1 vill sustain the 3 as to such

time as the details— a pe :

‘ByMr.Dixon: n ; :

Q. Mr. McVay, referring to H 2, do you have any ex- „

press stations that have been left out of that exhibit! |

A. Yes, sir.

Q. Can you tell us where they should be inserted ; and .

explain the express company’s proposal as to what it ist.

A. Yes, sir. The express station t Nary, North Carolina.

Q. Where?

A. Cary. It is not shown on this proposed schedule. It

is seven miles from Raleigh. The reason it is not shown on

this schedule is that it is also served by the Seaboard Rail-

way, and we have made an.arrangement with the Seaboard -

people that if and when it becomes necessary to-extend ou

truck service, we will serve that town exclusively by the

Seabaard Railroad, and not by an extension of truck ser-

vice, since rail service will still be available at Cary.

All other offices presently served by express between

Greensboro and Goldsboro are on this schedule:

2Q. Is Cary on the mu in line of the. Seaboard?"

[fol. 348] A. Yes. ;

Q. You proposé to handle your express business « at Cary

by the Seaboard?

A. That is right. : : eae

. And al! other stations by truck? Te ch:

A. That is right. tf.

Q. I get back now to the question I ahh you before; me

as an expert in express, do you say that the proposed ser-

vice will be better or worse than the present?

Mr. Burns: Objection on the grounds that the Railway

Express Company does not have authority at the pr¢sent.

time to serve any: other towns except the four ment oned

previously by the witness, to wit, Burlington, Durham,

Raleigh and Goldsboro. And that any other service wbuld

require application to an approval by the North Carolina

Utilities Commission, and this witness well knows that.

these things are fought out, and that the company does not.

always get what it asks for; and it’s an assumption to as- 1 1 55

“

enti ak eee

—

wer

‘

2 F

Hie aint cme te Rok aes

> 4 3 . 0

ieee eee RN MONS e

sume that. just because this 3 wants service, it's

goinp to get it. 0 : — —

Mr. Dixon: Sir, I think my friend, Kent Burns, i is push-

‘ing: this a little ar; my question is based on the assumption;

and in the absence of train service, the North Carolina

Utilities Commission would meet the public need by, gu-

thorizing truck service in this area. Now, to me, you kifow,

anything else just doesn’t make sense. We have had these

[ fol: 349 train eases all over the south; on 80 thousand

miles of railroad, and that’s how it, has always worked out,

and it’s just hound to work out that way; you. can't tell

these people they can’t have express service in the absence

of train service. Sa, getting back to- what I said in the

beginning; my question as to whether, the question as to

whether it is better or worse is premised on the: proposition

that the North Carolina Utilities Commission would au-

thorize such truck service kor the handling of express; and

‘- Iean’t imagine anybody objecting to it; the common car-

riers ordinarily don’t object to truck applications- for han-

dling express¢they are not in the express business.

Mr. Burns: Ask this witness what happened between.

Greensboro and Winston-Salem.—. And based on that state-

ment, if your Honor please, I would like to raise additional

: objection on the grounds that it calls for an opinion, a

hypothetical question not based upon the existing facts.

Exam. Gibbons: Has the Railway Express applied for

any additional authority to serve these additional towns?

5 The Witness: No, sir. f

Exam. Gibbons: It proposes to apply to the State Regu-

latory Commission for additional authority i in the trains

are discontinued? |

The Witness: Yes, sir.

By Mr. Dixon:

As well as the Interstate Commerce Seen be-

se vou handle interstate shipments as well as intrastate

[fol. 350] shipments. This is not mérely a matter for the.

North Carolina Utilities Commission, is it?

A. N o, sir, it is not.

— Pe

8 Gibbons: Im going: to permit the witness to ex-

press an opinion. Objection overruled.

The Witness: Itismy— 5 :

Mr. Burns: May I ask a question; Im. not sure what

rules gover this, but are we em make an exception

on each ruling? : 7

Exam. Gibbons: No, ain oe wah : 5

Mr. Burns: I didn't think gve © were; I wasn't alte sure;

- thank you.

The Witness: It is ni opinion that we would be in a

f position to give an improved service to the public through

the use of our on n *

By Mr. Dixon:

0 think that vou said, in your judgment, REA would

be in a position to give an improved service to the public .

through the use of your own ites facility; did I hear

vou correctly? .

A Fea cS eee . g wee

_ Exam. Gibbons: Do you know if that would require a att

chase of additional equipment?

The Witness: In this case, no. It would not. r

Exam. Gibbons: Proceed. 92 5 3 * :

; by Mr. Dixon: 8

Q. I had proposed to get sere to that, Mr. 83

now, I don’t think it is necessary. I was going to ask ‘the

[fol. 351] witness, whether his available’ trucking facilities

were adequate to take on this 4% of the total traffic thes

now moves by rail.

A. We could take on four times tliat iol traffic.

Q. Ves, sir, thank-you. Now, Mr. McVay, do * have’

any labor problem, if the trains are Gipcontinued?

A. L.eannot foresee any labor problem. “i

Q. Well, will any of your employees be released from

service or -down-graded? 3

Ar We operate on 13 and 16 “with one employee; and he

ns is classified as an express messenger. ‘The. need for that

‘man is that he can protect W and assist in the · loading ae

N *

N ms war tN

; 297

or unloading of trains at dasz offices. We 3 on a

seniority basis, the same as practically all of the-railroad. -

industry. That man who is governing the particular as-

signment in Greensboro and Goldsboro would not be af-

fected other than his employment would be—he would still

do the same type of work at the same salary—but, of course,

there would be no work for him to do on the particular line

„ in question. .

Mr. Dixon: That's all Ihave, Mr. Examiner.

= Exam. Gibbons: Cross examination, anyone?

ae: iin aon sett

e Cross éxamination. ö

; 1

[2 Fass By Mr. Burns: 5

: Q. Mr. McVay, as Division 8 of the’ REA

in Greensboro, I take it you are familiar with the applica-

tion of your company for authority to the North Carofina

: col. 352] Utilities Commisten for authority to serve Bur-

s . lington.as an off-route point, which was made recently; areo

. you not / i Jy.

3 5 A. I am, yes. 5 i —

_ Q. Now, that authority o was granted to vor company, was

4 it me oe 3

§ It was. 7

4 a And that authority was . on. Sis 24, 1961?

1 2 Wasn't it! 8 5

11 A. Ican’t say it was, . 1 At ber the date;

. but J do know it was granted; I don't recall the date. 0

- = _ Q. Do you know if it was this. year! ö

4 A. Yes, this year.

Q.. Do you know whether it was in Febeuaryt

eens 1 believe it was, but I am fade th as to the date.

Q. Will you; subject to check, ept that it was Feb-

ruary 24th? :

A. I certainly would.

Q. Your Exhibit H 3 purports to show shipments for the

year, March, 1960 to February, 1961, is that richt t *

A: Tes.

Q. Now, until the last four 9 2 of that one year 1

0 Coe

Klon College shipments are also if

208 2°

your company did not have authority to serve Burlington

as an off - route point

A. That would be right.

Q. Is the purport of this exhibit that you handle 8,552

shipments during that four day period

fol. 353] A. I don’t quite follow you there; I don’t handle

8,000 shipments in Burlington, I can answer it that way.

Q. In other words, this exhibit shows some shipments

that were actually made over the train, which you have

assigned to the trucks, i is that righ

A. This exhibit, Mr. Burns, was prepared to show what

we presently are doing; all of But, igton, and in recent

months, Elon College has become port of Burlington; the

this number of ship-

ments. In other words, under our present operating pro-

- cedure, these shipments move by truck, even though the

trains are still operating ee Burlington and Elon

College.

Q. Well, virtually all of the 8,552 shipments you show for

Elon Callege and Burlington were actually handled on

trains 13 and 16, were they not!

A. A great portion of them were handled. on 13 and 16

Prior to the time that Burlington was taken into our truck-

ing operation.

Q. Taat would be the last Jour days of this year that you eal

are talking about

A. Yes. ; |

2. Do you know that you 18 shippers that preter the

use of train to the use of truck?

A. No, I can’t say that I know; I would suppose that

there were people that would, of or for their own reasons.

I have not been told by anyone that they preferred train

to truck service. ö

[fol. 354] Q. Now, would you; one of your best shippers

on this entire route testified that he prefers train to truck.

Would that affect your conclusion as to future use of your

truck service; should it be granted!

A. No, I don't think if one did, 1 don't think it would

affect the final conclusion, no. .

“a if it happened to be one of your biggest aie

per L.

Sie SEL

A. Istill ould answer the same way. ii aba

Q. In other words, you don’t care about it!

A. Ves, I most certainly do. Mr. Burns, I would Like’

to take into consideration all of the factors that are in-

_ volved, rather than just this eee if I have to serve

„ them.

Q. The fact is that you did not: ship any express over 5

one-year period shown on your Exhibit H3, is that correct?

A. No, sir; I wouldn't say that is absolutely corrent.

Q. What is absolutely correct? —

A. .A% stated previously, Mr. Burns, it would not be pos-

sible for us to ship our truck as you quite well know, from

Haw River, Mebane, Hillsboro, Garner, Clayton, Pine Level.

or Princeton, because we have no authority to operate a

trains 13 or 16 either to Durham or Raleigh, during the. 3

truck in or out and serve those pa ere points; so if a 5

shipment were moving from Princet

say, and then, now that we only have train service, it would

have to move by train.

[fol. 3551 C. In other words, the purpose of your Exhibit

H 3 is not to show the actual situation as it existed during

to Durham, we will

the year, for which you have chosen somegfigures; but to

time.

Q. I take it ‘that you don't like trains express service?

A. I wouldn't say that, no, sir.

Q. Well; why don’t you use it?

A. We do. Bin,

Q. Well, your ‘exhibit doesn’t show any 8 use, . it?

A. We use train service extensively us you quite well

know, we use a lot of what we call feeder service, Mr. Burns;

when it is feasible or more economical. to do so, trains;

truck service, when it is possible to handle the business:

‘that. way; but, by and large, when we hit the main lines of

: the railroad, it is more or less exclusively train service.

2. in other words, the fact that this is a ‘branch line would

induce you to use truck

A ch agate

show what the situation would have been had you had used

pour truck service to the fullest. extent possible? 5

A. Well, let us answer it this way, Mr. Burns; it reflects

what we are doing now and we feel that we are utilizing the

truek situation about 2 as can be done at the present

A. To ans extent it would, if ahs to some extent it

would affect my conclusion, you are rrect.

. Now, the 4 per cent that you show being a proportion |

of eu total, is not the actual experience of your company

0 {fol. 356 J during any given year, is it?

A. The four per cent, Mr. Burns, As that traffic which

presently moves in 13 and 16.

Q. Which could not be moved under your present truck

authority?

A. That's right. And, as stated, Du moving every pound 5

that I possibly canon the trucks.

Q. Have you made any. aor’ not to use the train during

that year? 2. a

A. No. g

Q. Do you have the actual dares bor your company,

showing average shipments, or actual shipments, for the

period March 1960 to February, 1961, showing the exact

means of transportation actually used?

A. Those records would be available in our accounting

department in New York; they were sent there; I. would

say they ‘are available, individual. records, one for each

5 chipment, Mr. Burns. ey

Q. Where did you get the information here? 1

3 . our statistical repòrts, from our offices along

* They don't have the same type of information?

A. They have an account of the shipments, Mr. Burns. i

Q. Is that all?

SS ot |

2. So you really don’t 1 how 3 moved, éxcept—

[fol. 357% A. Yes; ‘I think that the exhibit is accurate;

I think it is an accurate reflection of just what I stated.

Q. Now, you know that you didn’t move some shipments

dy rail into Burlington and Elon College between March

1960 and February 1961, don’t you?

A. Yes, sir, we certainly did. ay 7

2. You moved a lot of it? a 5 i

A. That is exactly right.. - : 1

Q. Is there any way to find out just what, you did do?

A, Yes, there is, I Would say, there is a'very definite way

to find out. Just about what we would do. 5

1 7 | mie a oer amelie

Q. I didn’t ask iy what you would do; I said what, you *

did do?

a A. All right, let's turn around and ace what ‘we did do.

1 yeas * | Can you find that out!

9 A . Lean give you an estimate. can't ao it out without

some weeks of research possibly; but I would say this,

Mr. Burns; prior to the time that the Commissions, the-

ICC, and the Utilities Commission gave us our ‘authority 2

based on our application to serve Burlington and Elon Col- .

lege, which is now a part of Burlington, gave us authority — -

to use our. trucks instead of using train service; the 8,552

_shipments most certainly would have been moving by rail

because we had no operating Zuthprity by truck ‘into.

‘Burlington.

„ L. What do you mean vy average monthly . shipments

as shown on your Exhibit H:31

(fol. 358] A. That's the total divided by 12. The average

number of shipments that moved per month, if you want

to state it like that.

Q. In other words, to et out how many W you

E RN

. . ;

e bt 2 he

PO aka BG Ue Urea Gas STR Te

handled for the year, we epuld pretty well take the total

at the bottom and multiply by 121 55

A. I don't quite follow you, Mr. Burns.

Q. These are monthly shipments; now what we want to

know is yearly shipments?

A. I would say you would be reasonably accuzate to ee

3 that, yes. 7

i}. : Q. So ‘there would be 3 12, 000 shipments,

12 to 13 thousand shipments that you could not handle even,

Strike out even, that you could not handle if Trains 13 and

16 were removed?

A. Unless we were given authority to expand our truck. —

operation

Q. W What’ ’s the minimum charge on your shipments?

A. It varies some, Mr. Burns; depending. on the cqm-

mo dities, but generally speaking, I would give 7 a figure

of about $2.84. a

Q. And so your revenue; two dollars and what!

A: 82.8 4. 45 —

Q. And so your revenue Ee be.a minimum, of about

a .

$2.84 for eae 276 6,000 shipments a year over dis, Tine, is

that right? 4

A. Well, it would be a minimum of $2.84 Ber approxi-

toll 359] mately 12 times 23,000, I will say that.

Q. Better than three-quarters of a million dollars a year, |

is that right?

A. 1 wouldn’t say se, Mr. Burns, without calculating it.

If you have calculated it— ~*

Q. If you take 275; well, take 12 and multiply. it. by 23,

which is considerably short of what you actually did; it

would be nearer 24, wouldn't it; 24,000 shipments a month!

A. Yes.

Q. If you multiply 12 tides the 23, rounding out to the

‘lowest number, you would have about 276,000 ‘shipments |

a year; a minimum revenue, according to your own estimate,

of $2.84, is that correct?

A. That is about the average, yes, sir.

Q. If you round that down to be on. the safe side again,

$2.75, per shipment, and then it would. be approximately

,000 a year, would it not!

AJ I haven’t calculated it, Mr. Burns, I really couldn't say.

- Q.\That’s a pretty good estimate, isn’t it?

t might be at those figures.

t certainly couldn’t be any less than that, could it?

- *

A. I wouldn't say; now, if you want me to, Mr. Burns,

I will undertake to calculate it för you and give you some-

thing; but right off hand, I couldn’t give you a yee: or no

answer whether it is or not.

[fol. 360] Q. Well, we can have the eures j in the bord,

and I suppose anybody: that has a. — can make the

computations.

You. will accept, subject to ‘check, that vou i handle

3 approximately 12 times 23,983?

A. That is at approximately $2.84 per shipment, yes, sir.

That is about as near as I can get to being accurate.

Mr., Dixon: I don't like to interrupt, but I think the

record ought to be clear that those are not rail shipments kee

‘that are being discussed. ä N

Mr. Burns: We are going to to comt down: to the rail ship- 4

ments now. ; 4

— —— . 8

| —

* *

mind repeating it.

ue. Dixon: You will get a lot smaller: numbers. ;

Mr. Burns: Even if the figures on your H 3 were cor-

rect, and that you actually did not handle any shipments

at all during the 12 months period to Elon College and

Burlington, you would still! have about 12,000 shipments, a

by Trains 13 and 16, is that not correct! During that year

The Witness: If we 1 not baude anything ‘for Elon .

ner Burlington, did 7 say! ay

By Mr. Burns: i ; ies :

. By rail? aa = : *

A. In a year! f ee .

2. In a year. a

A. On an annual basis, we would handle about roughly’

12,000 shipments by 13 and 16, that is right.

Q. Now, that would be expréss revenue for the railroad,

express business handled by the railroad, somewhere in the

(fol. 361] nature of $34,000 a year, on that basis. ee,

A. Close to that, yes, sir. casera

Q: And that is assuming that the 9, 000, or nearly 50 per:

cent of, the total that was see ai handled by 8 13°

and 16, went by truck—

A. I don’t quite follow you. 6

Q. You. said a minute ago, that 5 all of the

8,552 chiprients that you shewed, Burlington and Elom .

College, actually went by trains ~~

_ A. Prior to the time that we got authority to move by

track, you are right.

Q. Prior-to the last four days of the year? ee

A. Les.

Q. Now, the figure 34,000, assume that; or ‘that: 8, 552

which actually moved on train, you would, assume that those

shipments were moved by truck, is that right?

A. I still don’t quite follow you, Mr.’ Burns. If you don’t

Q. Let me repeat it. If we get, we figure out, take the -

1,049-and multiplying it by 12 to get an annual figuré, then

multiply that by 2.84, we come up with * *.

#96,000; is that right?

ise 5 ig are on.

11 Ves.

Q. Now, the $34,000 figure that we come up with here,

does not include any of the 8,552 shipments that Burlington

or Elon College had? ot Be

[fol. 362] A. That's right.

Q: Which actually moved on the — 8 which under sour

exhibit, moved by truck, is that right?

A. It formerly moved by train; it will not move by train igs

hereafter ; it has been changed to truck service,

Q. You ‘still can use the train as long as the train is there; :

there is no law prohibiting you from using the railnied?

A. You are right about that.

Mr: Burns: I believe that’s all the ‘questions I have:

Exam. Gibbons: You mentioned an express messenger

on Trains 13 and 16, is there one in each ä

The Witness: No, sir, only one.

Exam. Gibbons: That express messenger Was not in-

a cluded i in Mr. Waters’ figures of yesterday?

The Witness: No, Mr. Waters doesn’t include ours:

By Mr. Bryant:

O. Mr. MeVay, I show you what 8 to be Docket

R 5, Sub 172 of the State Utilities Commission, in the

matter of the application of the Railway Express Agency

for authority to transport express shipments over highways

between Greensboro and Burlington, Greensboro and Ashe- -

. boro, High Point, and other terminals, and ask you if that

order of the Utilities Commission i is not dated the 24th day

of February, — 5

A. Yes, sir, it certainly is. 3

Q. And that shows that there were no Proteste hee

the application of the Railway Express Ageney, does it not!

[fol. 3631 A. Yes, sir, that’s what it says.

Q. If February 24, 1961 is the. correct date on which

the order was made, would you say that your Railway

Express Agency did not start shipping by truck to these

points until after this order was signed ~ |

A. That order, if I viewed it right, is an order from *

North Carolina Utilities Conimission; is that right? ~

Q. ae

| i’ Intrastate traffict

7 Q. Yes.

A. It would not have moved. to Burlington by any means

‘other than by rail, until the effective date of that order.

Q. So that you did not start shipping by Railway Express

. tracks until this order was signed!

A. Yes, sir. * :

Q. To these points here? 5

A. Yes, sir. iar : Face

Q. And you, I mean you were not operating; I'm not sure

I understand you; you were not operating in defiance of

the order,. but you waited until the order was signed in

order to operate. in compliance with it, is that correct?

A. You are correct’ in your assumption; we do not op-

erate unless we have an order; but I might say this to you,

we have to file applications with the Interstate Commerce.

Commission and with the NCUC, and on some occasions

one or the other, but in most instances, it is the ICC that

gfol. 364] will grant the authority for handling interstate

shipments. Before we have authority to handle intrastate —

shipments. In such cases where wé have duplicate services,

we sometimes start our interstate movement in advance of

starting the intrastate movement; or in other words, we

might begin the truck service on ‘shipments moving: from

one state to another, and confine it to that; and when the

order comes through from the. NCUC, we would start the

intrastate business.

rx. Bryant: I . say, your Exhibit H 3, 1 believe,

shows the volume of shipments from March 1960 through

February 1961, is that correct?

The Witness: Yes, | sir.

By Mr. Bryant: 55

Q. I assume that from the first day of Mord: 1960,

through the last day of February, the 28th of. February,

1960, 1961; is that correct? .

Ai. Yes, sir. at

Q. And you show average monthly shipments during that

period, from Elon College and Burlington with 8,552 ba

truck, and none-by train, i is that correct!

a. Se 15

A. That is the average number of shipments that was

handled, at the Burlington office.

Q. Is that what your exhibit show#here?.

A. My exhibit reflects what we have, what we are pres-

ently doing and what we will do hereafter, as far as Elon. —

(fol. 364] College and Burlington truſſie is concerned.

. Why do vou label it then Volume —Shipments, from

the Ist of March, 1960 through February, 19611 And show

no shipmenis by train during that period!

A. As I previously stated in my testimony, prior to the

Commission's giving the authority to use truck service on

the Burlington and Elon College, that entire volume moved

by train.

Q. You show on this same exhibit N 0. 3, that there was

average monthly shipments from March 1960 to February

1961, from Durham of 9,289, and you show that none of

those were by train on your exhibit, do you not?

A. That's right.

Q. Now, if during that period, finns March 1, 1960, to

24 February, 1961, yéu did ship by train because you had

no authority to chip by truck, then this exhibit does not

reflect the true facts, does it:

A. If what you have just stated was the facts, then your

assumption would be right. But, I would like to call your

attention to the fact that for a number of years, we have

had truck authority to serve Durham betweeneGreensboro

and Goldsboro; that dates back some several years, and }

5 possibly coincides with the removal of some other trains. *

And I believe it was based on that, between Greensboro and

Goldsboro. We have been serving for a number of years

Durham, Raleigh, and at one time, extensively at Selma,

[fol. 366] but now almost none at Selma, and Goldsboro.

Q. Are you telling me that’ prior. to 24th of February

1961, that you did all of your express shipping to and from

Durham by. truck? -

A. Virtually all of it, I would say, ves. 3

Q. How about Burlington and Elon College! eee

A. No, sir, I wouldn't sa} that because we didn’t have

the authority up until you have just shown, me.

N. If you got the authority for Burlington- Elon College

on. ay February, 1961, 8 E ;

—

ae . | os ate . = 307

„

Q. And for four days, on of that month there, 30 days

from March; I mean, four. days out of the month of Feb-

ruary, that means that approximately, one-seventh of your

shipments for that period were carried by train, does it not,

for the month of February, 1961, from Burlington ? a

A. Now, I wouldn't say that that would be right.

Q. Six-sevenths by train and one-seventh by truck, is that.

right! f a

A. I think that is getting close to right, yes.

Q. You show that during that period, to the end of

February, 1961, there were ‘no train shipments * *

did you not?

A. As you are looking at the exhibit, yes, sir.

. Then, your exhibit, in that respect, is just seed six-

[fol. 367] sevenths incorrect, isn’t it?

A. If you want to view it from that standpoint, yes, sir.

Q. I'm viewing it from what you said; vou gave the

volume.

A. I have already explained, if you please—thats bis-

torical data.

Q. Who prepared this exhibit?

A. I did.

Who, under whose direction! 3 .

. Under my own. . . 1

Lou mean no one asked you to get this exhibit 8

. Certainly did not.

You Weren’t * by . at all?

No, sir.

To prepare this exhibit? ‘

. I was not. :

. You just, on your own motion, vou prepared and

Eee

3 brought it here this morning?

A. I prepared it and 1 have it here with me this. morning,

Fes, sir.

Q. And nobody asked you to prepare: ‘it and N asked

you to bring it here this morning?

A. They absolutely did not.

Q. And now you have duplicating service, or duplicating

service between Greensboro and these points 3 N

~ * . 3 *

ton, Durham, Raleigh, ‘Selma, oud Goldsboro; available by

train, is.it not, the express shipments?

lol. 368] A. Ves, sir.

Q. And it is just a question of which 1 vou

decide to use, whether you ship it by truck or by train, is

that right? You have 9 — choice to a either way, do vou

not?

A. It could be: shipped either way; let 8 put it like that...

Q.. It could be shipped either way!

A. Itcouldbe,

Q. Who determines which way you want to ship it?

A. We do—-— !

0 That's the W Express Agency?

A. Yes, sir.

Q. And Southern Railway Company never cesta’ when

you asked permission to take all of this freight business

e away from then, or give the right to ship by truck, did 28

A. To my knowledge, they did not protest.

Q. You would have known it, wouldii't you! J.

A. I certainly think ¥ would have. A 5

2. Is it correct to say that Southern Railway Company

| did not protest the loss of this freight business?

. Err sir, I think you are absolutely correct.

Exam! Gibbons: You are referring to express, aren’t

you? . 8

Mx. Bryant: I use the term “freight”; T'was ‘ in error;

I had reference to expfess; thank you for the correction.

By Mr. Bryant:

Q. Now, Mr. McVay, if train No. 16, as it left the Durham

[fol. 369] station this morning, had on the back of the train

a a refrigerator car, would you know: what type of freight |

was being shipped; 1 beg. your pardon express being

shipped in that refrigerated car?

A. Yes, sir, I think I would. 55

Q. What would you say? 4

- A. That is a perishable. commodity moving to Raleigh.

Q. Would it be milk?

A. No, it’s not milk, it's fruit. oe fee

(2. Fruit t 5 55 (oe

1 f

| 7 $09

A You 5 Ws |

, Q. That would have to be shipped, that commodity would

have to be shipped in a special type of truck, would it not!

A. That commodity, if it were shipped the distance that

this particular one moved; I believe it was coming from out

Nin the western, from the west coast, would have to be i in a

refrigerated truck, yes, sir.

Q. Well, ‘does the Railway Express have refrigerated :

trucks in Greensboro? a

A. In Greensboro we do ee bev rigeratod .

„ L. So vou are not now equipped to perform that type of i

transportation, delivery of fruits and commodities of that

nature? .

A. ‘Lmight say ‘this, about the car that you referred to, it

did not move from Greensboro.’ —

Q. Didn't what 1

[fol. 370] A. Did not originate in n we do

not presently handle refrigerated trueks or refrigerated

trailers.

Q. So that if these trains were discontinued, that’s going

to, that means that the Railway Express would have to

obtain additional equipment in order to be able to. handle os

that type of merchandise?

A. If that particular car that you ae of, which aid .

arrive this morning, if it; if the Railway Express con- Ene?

tinued to handle that particular traffic, they would have to

make some special arrangements to get it to Raleigh, that’s

right.

Q. Does the Railway Express have a milk truck in

. Greensboro?

A. I don’t Know what you are referring to.

Q. A truck designed to transport milk. |

A. I would say no; we handle no milk, e so I know of no

reason to have a truck.

Mr. Bryant: I believe that i is all I want to ask the wit-

ness,

. N Gibbons: Further cross examination?

—

Wee Fees Oa

„55 Corres

By Mr. Graham: Sy eee

Q. Mr. MeVay, not to belabor the ae that Mr. Bryant

made in his cross examination with respect to your: Ex-

’ -hibit H3; am I correct in assuming that there were no ship-

ments of express by your agency, whch originated in

Durham during and entire year period, and went to any

of the other points which are indicated on your exhibits,

which are served only by the railroad: -

A. No, you would not be correct; and'if vou don't mind,

{fok 371] I will explain. 855 N

2. I will be happy for you to. .

A. Some of our statistical figures might shed some. light

on this.

Let’s take the shipment voluine: at Mebane, North caro

lina, of 440 shipments for a month. That includes all ship

ments coming into the’ town, and all shipments going out

of the town; they may or may not, I wouldn’t know the

details, whether or not any of those shipments move from

Durham to Mebane; I wouldn't know about that.

2. In othe. words, your exhibit as indicates on its face,

that no shipments of express originated or terminated by

rail in Durham, and it may very well be ee and i in-

correct?

A. It could be very well Aale ing ves, sir.

‘Mr. Graham: That's all. 3 os pawns

Mr. J ones: May I ask one question

5 By. Mr. Jones:

2. You said that nobody asked ed you to prepare Exhibit

H 3; in fact, vou prepared it yourself and brought it here.

How did you find out what to put on it, ag to the spl gape

Finance Docket 21563? 7

A. I did not-put that on there.

Q: You did not pat that_on there?

A. No.

Q. Didn't vou state to Mr. ‘Bryant that, you prepared. this 5

"exhibit and drought it down heref

[fol. 372] K. Yes, sir, I prepared the exhibit from the

statistical reports in my office. ae asked me to pre-

pare it, that exhibit.

Q. But you did prepare it vouruel? 1

A. I did.

Q. You brou ht it down here?

A. Yes, sir.

Q. Were you subpoenaed 5 be at this meeting, this

hearing!

A. Subpoenaed?

Q. Yes.

A. No, I wasn’t; I was requested to be here, but I wasn’t

subpoenaed. .

Q. You say you were asked to be here! 5

A. Les. f *

Q. By whom?

A. My Vice-Presiderft wrote me and told 1 me to attend

this hearing. ;

Q. So you weren’t asked, you were told?

A. You might put it like that, yes, sir, 1

Q. When you were told that, you thought you had better ee

get up a little something or another to bring down. here,

is that right? 7 .

- A. Tes. : 3

Q. He didn’t tell vou to ot anything?

A. No, sir, he didn’t tell me to do anything.’ oe

Q. He didn’t ask you to bring anything, you just ‘did

[fol. 373] that on your own hock, right? .

A. No one asked me to bring the exhibit that you refer.

to. Someone did ask me to bring exhibits as to present

and proposed schedules.

Q. Is that your boss?

A. No, sir.

Mr. Dixon: Mr. Hsaminer, I don’t like to laberrent: but

it seems to me that all of this is irrelevant, and it, has

nothing whatever to do with the merits of this ‘controversy.

Mr. MeVay is here, he has given the facts and of course, he

is subject. to cross examination on the facts, but how he got

here, or ‘who prepared the exhibits, that’s all irrelevant so

long as the exhibit is correct; and I think, in the interest -

é .

Sere

312

df time, we ought to cut aiid on this, otherwise, we will.

be here a long' time.

Mr. Jones: Well, of course, I don’t agree with Brother

Dixon; he has given the facts, he-has given some testimony

here, put anyway thät's a matter of argument; let me ask

you this; are you in favor of taking off these trains?

The Witness: From an operational standpoint of the

Railway Express Agency, I would be in favor of it, yes, 1

think 8g.

2 Mr. Jones:

4 Q. What other kind of.a e

A. That's the only standpoint that I would consider.

Q. So, from: ‘your standpoint, it would be better for you

te reduce your method, of transporting ef express from

{fol. 374] two methods to one method, is that what you

tell us?

A. I would prefer to do that, yes, sir. 5

. In other words, you would be better off, you think, to

: eliminate one of the methods which is available to you; to

your company, to transport the express

A. On this ‘particular line, ‘yes, sir. N

2 Did your boss = you testify: to that. * heret

A. No, sir.

Mr. Jones: That all. 4, i 4

By Mr. Burns

Q. Yow mean to sit there and tell us that you think that

you would be better o without / any rail service available

to carry youf- railway express shipments to these poiuts,

when you wanted to Wake them by rail!

Mr. Dixon: Sir, is this a recross; are we going through

the line again; are we going to do this with every witness? |

Mr. Burns: I withdraw it.

Mr. Dixon: Let's agree on some procedure and try to

get this thing behind us.

Mr. Burns: I withdraw it.

Exam. Gibbons: All right, is there anyone who n't

had the opportunity of eross examining?

(No response. ). Cae

Exain. Gibbons: The witness may be excused.

Mr. Dixon: I just have one or two questions on redirect; _

[rol. 375] rectly your Exhibit ee wy

Reaited examination,

By Mr. Dixon:

Q. As I understand it, during the nected March; 1960

through February, 1961, the average monthly shipments

of express to and from the stations indicated on that &.

hibit, are thosé hown in the first column, and they total

23,983, and that” represents the shipments’ * of

2 the method of ——

. A. That is right.

Q. Under the new plan, which apparently became effec-

tive in February, 1960, or 1961, on the same volume of

traffic, Trains 13. and 16 would have received only tl

‘shipments listed in the second column, which total 1,049,

and represent 4% of the total shown in column one?

A. That is right. 5

Mr. Dixon: That's all have.

Mr. Burns: I clave a question of the witness in reference ?

to that. ghee ?

-. Reeross examination.

SMe any oy

By Mr. Burns

2. Everyone of moge 23,983 average 23 that vou

show on your Exhibit 3 can be W r by Trains 13 and 16,

can they not? 5

A. Yes, they could all be 8 onT rains 13 and 16.

Mir. Burns: No further questions.

Mx. Dixon: No further questions.

(Oe

nee ries a7 1 te eee

ktol. 376] Exam. Gibbons: The witness is’excused.

(Witness excused.) —

Mtr. Dixon: Sir, may the witness be excused from the

hearing; as testimony shows, he is tationed in Greensboro,

and I’m sure he wants to get ‘yack to his job?

Mr. Burns: We have no objections, sir.

Exam. Gibbons: The witness may be excused. -

3 this point, We will take a brief recess. We wilt recess

125 until 11:00. 2 5

(Short recéss taken. )

Exam. Gibbons: On the record:

Mr. Dixon: Mr. Examiner, before we call the next wit⸗

: ness, I would like to say for the benefit of the Examiner

and the parties that the relations between the Express

Company and the Southern Railway, and other railroads.

throughout the ae have been apy ‘oved by the ICC in

Docket No. 33140 [which constitutes un approval of the

operating agree

Company, eXective October 1, 1959. I think that we have

t hetween the railroads and the Express

called Mr. Gleason.

A. B. GLEASOx, was duly sworn and testified as follows:

Direct examination. 9°

By Mr. Dixon: 1 5

Q. 1 ask you your name, address, and occupation. I

take it you Were sworn.

A. ‘Yes, sir. A. B. Gleason, A. reside in Washington,

fol. 377] D. C. I'm a Supervisor Statistician for Southern

Railway System.

JQ. What is your. railway 1

A. I have been with the Southern Railway for a period

of more than 30 years; all of this service has been in the

Aecounting Department; t last nine years, I have been

in the Statistical Section.

„ Loy

Q. Have you. or sees you 1 not testified in train ain discon:

tinuance cases! hom

ie 8 3

- ©

9 nada

—

= + + om . Se 2 ¢ SS a ei

hide WN 840 . l, aS EE eae RS

* 8 . — 8

A. 0 8 ;

.I think this is the fifst one. we 3 had before the

Ice. - -

A. That is correct. :

Q. There have been numerous cases a the various

State Commissions!

A. Yes, sir.

2. 1 think you have. testified in this when it’ was

before the North Carolina Utilities Commission; you testi-

fied in this case?

A. Ves, sir. ;

Q. Mr. Gleason, will you turn to our application, to the

ICC, and state the pages and exhibits for which you are

responsible, and which you support at this hearing? N

A. Starting at the bottom of page at ds and going on to,

the top— .

Q: Wait a minute; at the bottom of page four, is that the

last sentence on the page?

[fol. 378] A. Yes, beginning “Southern Reilway h has sus-

_ tained a wholly distributed—”

_ Q. That's where vou Start!

A. Ves, sir.

Q. All right, sir, Fal page four. Now you go over to.

page five, and how much on page five are you responsible

for

A. The first parag ph efiding with ‘thie words n

sively deelined.“ >

-Q. That ends with “patronage of the trains hae progres- |

sively declined’?

~ -

A. That is correct. .

Q. Now, where do you start up again? :

. On page 25, under Item 7, “The traffic transported.

Q. How far do yeu go, Mr. Gleason? 5

! Through the top of Page 31,-the first two lines.

Q. The first two lines, top of page 317

Av Yes, sir. 9

. That takes care of the text of the, application; how

about the exhibits?

A. My exhibits gre ‘Ne. 3, 24. 25, 26, 97, 28, 29. 30, and 31.

ee,

Q. Do vou have any corrections to make in thé tact of the

| application from which, for which you are responsible or

in the exhibits to which you have referred?

A. No, sir.

Q. Are all the statements and figures true and sonnet

to the best of your knowledge and ae 19

[fol. 379] A. They are, sir.

. Now, Mr. Gleason, I 2 that vou want o

bring some af these matters up today!

A. Yes, sir, my exhibits, in the Petition cover the two

calendar years, 1959 and 1960, as required dy the Inter-

state Commerce Commission, and I want to bring these ex-

*hibits up through May, 1961, with the exception of Exhibits

30, which is the Balance Sheet, and 31, the Income State-

ment. Then up through April, 1961, the last, the latest —

month available.

Q. Do you have a supplemental exhibit, that vou want

to introduce and bring these figures up to date: has it

been distributed

A. No, sir.

Mr. Dixon: Mr. Examiner, we weren’t just sure how

vou wanted these new exhibits to be numbered, so we just

left the Exhibit Number blank; should we just start in with

H 4, and go right on through?

Exam. Gibbons: And then consecutively thereafter, be-

gin with H4.

The Witness: Mr. Dixorg some of these, say H 4, in the

original ones, that's one exhibit consisting of two sheets,

do you want the H 4 sheet one, and sheet two! :

Mr. Dixon: Weil” H4 seems to be an exhibit of two

pages?

The Witness: Ves: sir: It is Passengers: Handled on

Train 13 (Operating Daily Goldsboro, N. C. to Greensboro.

.. [fol. 380] N. C.) January Through May 15 1151 N

And len · on the second page, it says the e thing, excep

as relates to Train 16. 1

The Witness: Les, sir. 5 ;

Mr. Dixon: Mr. Exmninef could we number that Ex-

hibit H4, page 1 and page 27 ; nec

* * .

1 N as

;

‘ * f

Exam. Gibbons: It may be so marked for identification;

and let's mark all the rest of them that He's got, testified to,

at this time. Let's mark them all at this time.

Mr. Dixon: Exhibit identified H4, Pages 1 and 2, firing’

up to date, ‘your Exhibit No. 24 ens to the application ; :

is that true? ; oes

The Witiess: Ves, sir.

Mr. Bryant: Mr. Dixon, you say up to date, 22 vou mean

through what?

Mr. Dixon: ‘Through - May, as indicated on 4, Mr.

Bryunt.

Mr. Bryant: Thank you. |

Mr. Dixon: Now, the next exhibit. would be Hö, 3

ney of one sheet entitled Passenger Traffic Statistics, and: J. ber

g / lieve that brings up to date your Exhibit No. 257 a 1. fi

The Witness : Les, sir.

By Mr. Dison:

Q. Up to date of May 1961.

Now, the next one is H 6, entitled Trains 13 and 16 ope r-

ating between Greensboro, N. C. ‘and2Goldsboro, N. C.,

Passenger Traffic Statistics, and that brings up to date;

but I don’t know: what day; Exhibit No. 26.

A. Yes, sir, same as the others, five months of. 1961.

fol. 381] Q. Oh, yes, it’s shown on- -the bottom on the left,

five montlis; that’s the addition, that last a

A. Just one additional line has

Mr. Eisenhart: In other words, you have copied 26 and

‘added the line?

The Witness: That. i is correct.

by Mr. Dixon:

0 > Q. 2 an exhibit identified as II 7 is entitled Operating

Results of Passenger Trains Nos. 13 and 16, Greensboro, -

N. C. to (Goldsboro, N. C., January through May 1961; and.’

that brings up through May 1961, the showing made on

Exhibit 27 attached te the eet

A. Yes, sir.

Q. „ 28 have anything to as N it!

—

it is quite a voluminous task.

tiit might be well for the witness to briefly describe: these

1948 through 1960. This information is taken right from

, 318

A. No, sir. |

. Exhibit H 8, entitled Feeder Value of ales 13 1

16, Operating Between Greensboro, N. C. and Goldsboro, f

N. C. accruing to the Southern Railway System; J anuary

through May, 1961, supplement Pe 29, attached to the

Application! a a of

Ai Zee, ste. 5

Q. Exhibit identified as H 9 is your 1 Sheet as 5 of .

April 30, 1961, and it supplements Exhibit 0 ‘attached

to the application? :

A. Yes, sir.

2. Exhibit. H 10 is your Wege Account esting April

30, 1961, and that supplements the Income Account shown

on Exhibit 31, attached to the application! a

fol. 382] A. Yes, sir. a a

Q. Mr. Eisenhart called attention to the fact that one of

the. supplemental exhibits adds tooth Exhibits * and 28,

and that— © 1

A. Ves, sir, if I may plain Exhibit 27 is a one is

exhibit showing the Operating Result of these two- trains

for the year 1959. Exhibit 28-shows the Operating Results

for the year 1960; that consists of ten schedules. that is

prepared in the so-called NAEUC Formula. We didn’t

think it necessary to prepare both years in this formula ;

Mr. Dixon: Mr. Examiner, these exhibits are described,

we think, in ou „Petition, but Mr. Eisenhart and I feel that

exhibits as a matter of clarification and to provide a ready

basis fo me cross examination, without these gentlemen hav-

ing to wade through all of these papers. :

So, Mr. Gleason, will you take up your exhibits 3, and

then 24 through 31, and: expla n briefly what they show!

The. Witness: Exhibit No. "3 is a Passenger Service

Operations of the Southern Railway Cothpany for the years

Table 300 Income Table, in a formal report to the Inter-

state Commerce Commission. Column (2) is the Passenger

Service Operating Revenues; (3), Expenses; (4) Taxes;

(5) Equipment and Joint Facility Rents; (6) Total Oper-

— 383] ating Expenses, Taxes and Rents ; Column (7)

—

319

is your Net Railway Operating Income, that is the figure

on whieh your rate of return is predicated as to your gross

‘investment and net investment. The next figure is column

(8), Passenger Train Miles, passenger train miles for the

Southern Railway Company during these years. I might

say for the year 1960, the Net Railway Operating Income

was à deficit, $14,669,798. Column (9), the Average Rev-

enue Per Train Mile, $4.26, that’s relating yout column 2

and 8. Column (10) is the Average Cost Per Train Mile,

ire $6.63, relating columns 6.and column 8; Column (11) is the

Average Cost Per $1.00: of. Revenue, $1. 56; it costs $1.56 to

earn a revenue passenger $1.00; that is relating Column

6 to Column 2. : 0 a 4

By Mr. Dison: Petes 3 „

Q Mr. Gleason, now, (7), Railway Operating

Income, as you pointed out, shows a passenger deficit: of

$14,700,000 for 1960; what are those- ‘figures based on; is

thut the uniform sy stem?

-A. That's based on the uniform system of 3 1

f might explain that all are expenses in the orders of the 100;

all freight expenses are charged direct when possible; all

passenger expenses are charged direct when’ possible.

There are a number“of expenses, a great deal of expenses

money-wise, that are coming to both services; and at the

end of the year, on a formula prescribed by the. Interstate ü

Commerce Commission, these common expenses are pro-

rated back to your. freight and your passenger operations.

fol. 384] That is why I could not bring this particular

exhibit No. 3 through. any. later date then the calendar year,

because the common expenses are only broken down and

pro-rated back to the two services on the ICC Formula, at

the end of the calendar year. | a

. The figures in Column it are ustally described as

fully distributed figures? | -

A. Yes, sir. a 7 .

. Are there any other solely’ rate oat figures in

this Petition or in any of your exhibits?

A. No, sir, the exhibits that follow, I have eel my

direct passenger costs. ‘

320 .

Q. So-called out of pocket?

A. So-called out of pocket. ae — 2 f

Q. Are they based on any particular Pricer for so-

called out of .

A. The uniform system of accounts all are expenses

charged to these accounts as prescribed by the Interstate

Commerce Commission. 85

Q. By the Southeastern | ‘Association of Utilities; don’t.

they have some formula?

A. Yes, sir, Exhibit No. that's the NARUC, I'm told.

That's Exhibit 28, it was prepared i in the ‘approved formula

of.the National Association of Railroad ant Utilities Com-

mission.

Q. All right, sir, would you take up, heginning with

Exhibit 24.

[fol. 385] A. Exhibit 24 3 of four sheets. Sheet

No. 1 shows ange Handled on Train 13 (Operating

Daily Goldsboro, N. C. to Greensboré, N., C.) Year 1959.

On the left hand side shows where thé people got on the

train, the daily average; got off, and the daily average;

and across the top shows the various stations where they

de-trained. This shows for the year 1959, for Train 13

there were 6,462 passengers for a daily average of ATT.

The next sheet, Sheet 2, is the same information for. Train

_ 16, for the same year.

Q. Mr. Gleason, just a second; getting back to Sheet 1

of Exhibit: 24, you've got a total there of 6,462, during the

year 1959, and the exhibit shows that one of those passen-

gers went to Rosey North Conn, which is the first sta-

tion ?

A. Tes, sir.

Q. Then jumping all the way over, 3,910 of them’ went

to Greensboro, is that the way you read it; all the way over.

A. 456; oh, from ali the stations; yes, sir. I was thinking Mb

of Goldsboro, on the first line; but. for all of 1 3,910

to Greensboro, that is correct, sir.

Q. All right, now, take up the second sheet.

A. Sheet 2 shows the same information of Train 16

during the year 1959; it shows that there was a total of

7,789 * for a pally’ average ‘of 21. 3. This is pre-

; „„

pared in the same form; it 3 where the in- trained on

the left and across the ‘top, are the stations that, where

they de-trained. 5

[fol. 386] Q. That shows where one of those passengers

went to McLeansville, North Carolina, and 1,534 went to

Goldsboro? / 7

A. Yes, sir.

Sheet 3 is the same . Train 13 for the year

1960. That shows 7,076 passengers for a daily average of

19.3. It is prepared in the same form; shown on the left

where they got an; across the top, where they got off.

Q. Of the 19.3, relatedto Train 137

A. Yes, sir.

2. And the next page ities ;

A. Train 16; the same information, for tlie year 1960;

7,700 passengers for a daily average of 21. us this is

prepared i in the same way.

Q. Now, Mr. Gleason, wouldn't it be most S to

turn to Exhibit I 4, which 5 No. 245 and e

it up to date?

A. Exhibit H 4, Sheet 1, shows the number of Papsengere i

_ Handled on Train 13, from a period of January through

May 1961. This period will show 4,384 passengers for an

8 erage of 29.0 that use this Train 13. Exhibit H 4, Sheet

„shows similar information for Train 16 for the same

sad, 4 sh passengers for a daily average of 30.1; that’s :

Train 16. :

Exam. Gibbons: Are these Seures ‘Need pon 1

amounts, actual count, or estimates? y

‘The Witness: Actual counts. ogee

pe Exam. Gibbons: Who took the counts? 8

fol. 387] The Witness: Our Auditor of Passenger Ac. |

counts madé the compilation of these figures.

Exam. Gibbons: They weren’t based on Conductor’s—

The Witness: They’ were taken from the . 8

lifts. '

Exam. . Proeged.

220 d ⁵ðͤ d ee (ee og II

2 * *

= - 3 * 2 2 2 2 — ———

. es Tee A ETE nT at Se pth grips I

3 8 DNN * 7

By Mr. Dixon:

— Q: Now, Mr. Gleason, I guess the mS oné is 25.

aa A. Exhibit 25 consists of two sheets, Sheet 1 is Passen- . :

ger Traffic Statistics for Trains 13 and 16 Operating Be-

tween Greensboro, N. C. and Goldsboro, North Carolina,

for the Year 1959, It Chows the number of trips operated,

trip mileage, total train miles operated, total number of. .

8 passengers carried, total passenger miles, total passenger

vr revenue; and starting with the next line, it gives your

average number of passengers: per trip, 19.5 for both trains;

that is, your total number of passengers carried, divided

by the “number of trips operated. And that gives you a

result of 19.5 people using the trains. The next one is

average miles per passenger; that is taking your total.

passenger miles, 643,398, and dividing that by the total

number of passengers carried of 14,251, and it gives you an

average number of miles per passenger of 45.1; that is the

average haul, as you might say. Next item is the average

F revenue per passenger, expressed in cents, 139.211 ; that’s

8 $1.39; that is your total passenger revenue of $19,839,

dividgl by the total number of passengers carried, 14,251.

[fol. 388] el Next/tem, average passenger revenue per train

mile, also expressed in cents, 21.067; that is 21 cents; that

is your total: passenger revenue of 4$19,839 divided by the

8 total train miles operated of 94,170; and gives you 21.067.

- The last item, average passenger miles per train mile

„of 6.83; that is total. passenger miles of 643,398,

, divided by your total t

you 6.83, or “approximately seven passengers, yenking the

entire trip.

=< - . Now, Mr. Gleason, H 5, Exhibit H 5 brings the show “a

* “ing made i in 25 up through May of 1961, and it is prepared

in the very same way, isn't it!

A. So is the Sheet 2 of 2 of the Exhibit No. 25, showing

2 ‘ the same information for the year. 1960.

: Q. Supposing we go to 26..

A. 26 is a historical record, so to speak, of the operations

of Trains 13 and 16 between Greensborp and Goldsboro,

- North Carolina, for the year 1948 through 1960. It shows

rain miles operated, 94,170, to give

. for Train 13, No. of-Trips, No. of Passengers, Passenger

> °

3 a

223

Revenue, Av erage No. of Passengers per trip; Average

Passenger Revenue Per trip. Train No. 16, it shows the

' same information, and over on the far end, the totals; the

same columns, the same headings, for the total of Trains

13 and 16. It shows— -

Q. Let me ask you just a couple questions. And I think |

maybe we can save a little time. What does the exhibit show -

as to both trains in 1948, with respect to the average num-

[fol. 389] ber of passengers per trip, and the average pas- ,

| : senger revenue per trip!

A. For the year 1948, both trains, the average number

of passengers per trip was 77. 51.

Q. What was that in 19807

A. In 1960, the average number of . per trip b

1 is 20.19, or decrease of 74 per cent.

Q. Give us. the comparable figures on the revenue. .

A. The average passenger. revenue per trip, 1948, $82.70;

and tue year, 1960, 828.87, for a decrease of 65 per cent.

Exam. Gibbons: The last figure, 828.87, that's the aver-

_ ,age revenue per round trip, or one way

-The Witness: It's the average revenue’ per one way; we

are using both trains here; if you look\over on Train 13,

\the average revenue is 828.40 and Train \6, is * 35.

Exam. Gibbons: . Thank you.

By Mr. Dixon: ,

‘Q. Mri Gleason, H 6 brings through May af 1961 the

showing made on Exhibit 2, does it mot?

A. That is correct. 7 1

2. Prepared in the same manner?

A. Yes, sir. 4

Q. Now, would you go to 27 1 N

A. ExhiBit 27 shows the Operating Results of 8 a

Trains Nos. 13 and 16, Greensboro, North Carolina to

ree North Carolina, for the year 1959. At the. top

1.390] of the page, it shows Revenues: Passenger Rev-

enue, $19,839; Express, $31,875; Miscellaneous, $356, for a

total revenue of $52,070. Below that, the out of pocket

costs, detail shows Wages, Train and Engine Crews, Pay-

roll Tax, R. R. Retirement & Unemployment. Insurance,

. hes

324

5 *

Train Fuel, Net Loss, Engine. House Expenses, Passenger

Locomotive Lubricants, Other Supplies, Repairs, Passen-

ger Train Cars,—Cleaning, heating, lighting and water and

leing; Lubricants, Other Expenses, Repairs, Air Condi-

tioning, Goldsboro Union Station, Rental of Equipment;

giving a Total Direct Expenses of $174,907. Diret J

penses in Excess of Revenues of $122,937, for a ratio of

+ $36, or $3.36, was.expended to earn a revenue dollar.

I call your attention to the bottom of the Exhibit; Items

of Expense Not Included} no maintenance of Way-Tracks

and Structures; the only maintenance of. equipment we

have is repairs; no Maintenance of Way-Supervi ision-De-

preecidtion-Retirements; dee oe of Equipment-Super-

vision-Depreciation- Retirements;

transportation expenses for Supervision-Train Dispatching

and numerous overhead Accounts; no General Expenses ;

i No Taxesg except Payroll and no Fixed Charges, that is,

Bond Interest, and payments on equipment.

Q. Now, these expenses are What we call the ont of ;

pocket expenses?

A. Yes, sir, related directly to the. operation of the.

trains, .

— Q. Are these. ‘figures prepared in accordance with ‘the 5.

fol. 391] NAKUC Formula?

. A. Yes, sir. a

é Q. I think' we explained i in our Petition the basis for

these figures, have we not?

A. Yes, sir. ‘On page, starting with Page 28.

o Traffte Expense; No

Q. Do you wish to elaborate? On what you have shown on vA

pages 28 ‘and 29 of—let’s see, are there any more—and 307

A. I think the explanation is required by the Interstate

‘Commerce Commission. It is . unless 50 gar

ta add to it. "hy

2. Ido want to ask you one question. Fh#figures .

for wages and payfoll taxes are actual, are they not? 4

A. Yes, sir.

Q. Why do you not 3 depreciation. on. equipment t N

A. Wel, the principal reason is that-it would be very

difficult to assign a proportion of the depreciation expenses

to the operation of a particular segment of the line; that

can be said gf your other expenses like > Abaintenance of

: . ä . 0 5 5 * . ,, N

nt me

n ee Fer athe

ys A 1 325

wax; it is, there is a ae but it’s very difficult to say now

just what part of that cost should be assigned to a particular

segment of a line. Now, we all know that there is cost

there, but of course, there. i is a difficulty in- noes it and

we have never used it.

. Will you turn to Exhibit 28, and tell us briefty what

28 shows, and relate it to 27.

[fol. 392] A. Exhibit No. 28 consisting of 1 of Sched-.

ules, shows the Operating Results of Passenger Trains 13

and 16 Between Goldsboro and Greensboro, North Carolina,

in the year 1960; it shows by months, the calender year,

Passenger, Express, and Miscellaneous Revenues of 853,101.

The Direct Expenses of the items I have just enumerated,

the same thing, for the vear, also shown by. months,

$170,742; Direct Expenses in Excess of Revenues of $117,- _

641, and the next lirfé shows that the Car miles Operated

on this line for the calendar year 1950, and Train Miles

Operated, and then there are some computations below that,

Revenue Per Train Mile in Cents; Direct Expenses Per

Train Miles in Cents; and Direct Expenses in Excess of

Revenue Per Train Miles in Cents. Now, the first Sheet,

Sheet 1 of this Schedule, shows the Operations a

trains.

Q. Now, you are talking —— Schedule 1 of Eihibit 287

A. Ves, rr. a

Q. Is that right? «= WA

A. Les, sir. if; ay ff

Q. Go ahead..

A. Sheet 2 is the same l in 1 the same törm for

‘ ay

for Train 16: Sche ald 2 is Passenger Revenue I. C. C.

Train 13 Sheet 3 is the m information in the same form

Account 102, shows the miles operated, the Passenger Reve-

nue for Train 13, and shows the revehue per train -mile

„ expressed inf cents; and the Passenger Revenue for Train

fol. 393] 16 and the revenue per train mile expressed in

cents. It shows Passenger Revenue for the year 1960 of

$10,394, and 22 cents train mile, for Train 13; and $10, 741

for Train 16, and 22.7 cents per train mile. -

Q. Mr. Gleason, let me-see if I can shorten it up a little.

On Schedule 1, of Exhibit 28, where/you show these various

out of pocket expensess you~ indicate to the right of the

7 We

: 7

; by month for the yar 1960.

tion of, those figures?

* e : Pe 1 . > —

. ¢

7 a * 3 1

0 : we 2 *

deseribed expenses a Schedule number in this exhibit. Add

as J understand it, that Schedule number provides the basis

for your figures?

A. Ves, sir. starting lh Schedule 2 ‘of this exhibit 28,

is the supporting information. to the summary an shown ced eee

Schedule 1.

— For example, taking Schedule 1 of Exhibit: 28, up at

the top there you have got Account 102, Passenger (Sched-

ule 2); and then you show the passenger revenues month —

A. That is correct, sir. , LO =.

And Schedule 2 provides tbe basis .

A. By months. : | 1 5

L. So on down the exhibit? 8

r 5 e

Q. I don’t believe it is necessary, Mr*Exaniiner, for the

witness to take up each of 25 e schedules 8 ih

testify about: them.

Exam. Gibbons: 1 don't think so unless there. are and

{fol: 394] questions. ; Seis Wa

Mr. Dixon: Yes, sir. . i ae

Mr. Burns: We will take them up d one by one on cross

a examination ; we don't object to his not taking them. up. 5

By Mr. Dixon: 3 ; 7

ee Mr. Gleason, supplemental Exhibit H 7 . up

through May, 1961, the e on exhibit 27, does it not?

A. Yes, sig ;

2. 27, 28, in fact!

A. Ves, because we have 28, that i is just the same as 27,

only in the detailed form, as required by the NARUC °

Formula. ‘Chis: Exhibit H 7 shows Total Revenues of 815,

490 for the period of January through May 1961.. Direct.

- Expenses of $70,321; Direct Expenses in Excess of Reve-

nues $54,831, for a Ratio of 454; of course, $4.54 to earn a

revenue dollar in the. operation of these Trains“ for the

period January through May 196111. POE

Q. Now, Mr. Gleason, Exhibit No. 291 is supplemented by

. Exhibit No. H8? 7

o 96,

N : Lf os. ok 327

A. Exhibit No..29 shows the Year of 1959 and 1960, the

two calendar years; System OFF Line Revenue generated

by the operation of these two trains; for the year 1989,

_ $73,960; for the year 1960, it was $83,034. From that we

have deducted 50% Operating Costs, in lieu of actual

operating costs; 50% is a per cent agreed upon by the Inter-

state Commerce Commiissien in abandonment cages.

Mr. Burns: Mr. Wieaininer, I object to that; I don’t think

(fol. 395 the Connnission has ever agreed on it. The Com-

mission has simply lét that in and held the Railroads ac-

countable for that portion of it, as a minimum, while mak-

ing #ery clear in its opinions that it expectetl the ‘met

revenue for these passengers to be in excess of 50%.

Mr. Dixon: Mr. Examiner, I think we can let the cases

speak for themselves. I think Mr. Gleason was mistaken

‘when he said “agreed”; he must have meant accepted, or.

something like that; but we all know what wel are talking

about, -so what difference does it make. |

Exam. Gibbons: The ‘Commission has used the 50%

formula i in the abandonment cases, and also. train discon-

tinuance cases.

Mr. Burns: Yes, but that. has dee over a railroad *

tion, that they should not be charged with any part of it;

the point I am making is that the 50% as recognized in

the Commission’s opinions, has been a minimum figure and

not a maximum figure, as Mr. Gleason, I think, inferred.

Mr. Dixon: In connection with Exhibit 29, and supple-

mental Exhibit H 8, the Southern Railwaßg System i is com-

posed of a number of eames corporate —- rail-

road properties, is it not?

The Witness: bea sir.

By Mr. Dixon: N .

Q. And when Bu refer on A580 Exhibits \to Southern

Railway System, you are including the Feeder Value as

to all of the separate railroads that are in our system!

[fol. 396] A. Every railroad involved in our system, that

receives revenue from the operations of these trains is in-

eludedi in here. —

2. 1 if you will take out the balance sheet on Exhibit

30, as, supplemented by Exhibit H 9.

A. The Balance Sheet is shown on Exhibit 30, for the year

1960; it is merely taken right from our annual reports of

the Interstate Commerce Commission. Sheet 2 shows the

same; I’m sorry, Exhibit 3 is just one shéet, the Balance

Sheet.

Q. And that’s 5 By H 9, isn’t it?

A. H9; and that is the same Balance Sheet, taken through -

April. 30, 1961.

-Q. And now; why don’t you bring that through May, Mr.

Gleason? ü

A. That was the latest period available.

L. 1 think 1 the last of your Exhibits, the exhibits for which

you are responsible, is Exhibit 31; that's. the Ineome Ac-

court statement; that’s supplemented by H 10. Were they

just taken from Books of the company f a

. A. Exhibit No. 31, Sheet 1 of 2, was taken right “ERK the

Income Table in or Form A. Annual Report, to the Inter-

state Comnierce Commission. That’s for the year 1959.

Sheet 2 is the same i formation for the year 1960.

that shows a break down of your expenses between Freight

and Passengers, taken. down to Net Income. Now on Ex-

hibit H' 10. across the top is shown that this is Income Ace-

count for Four Months ended April 30, 1961. Of course, the

fol. 397] common expeffses are not broken down and pro-

rated between the two services, Freight and Passenger; it

is not possible to do that; so they are just shown in total.

It's the Income table for the four months, April 80, 1961,

but it does not make a separation between Freight and Pas-

senger.

— Dixon: That's all on eit Mr. Examiner.

m. Gibbons: Cross examination?

8 Mr. Burns: If you will give me a moment to get organ-.

ized: | *°

Exam. Gibbons: Do you want a short recess?

Mr. Burns: I don’t think it is necessary, sir. ‘ 5

Exam. Gibbons: Of the record. We will recess dunes five

minutes. 8 A ae hs

(Short recess taken.) os

Exam. Gibbons : Back on ‘the record.

— —

Cross examindtionn =. a OR

By Mr. Burn: 7 .

Q. Mr. Gleason, I believe the first exhibit for which you

accept responsibility i is ‘Exhibit No. 3, is that correct!

A. Les, sir. :

Q. I believe you said the break down for expenses, for

example, was on this exhibit, was made according to the

ICC Formula, is that correct?’ ©

A. The breakdown of the common expenses ; all expenses

were charged directly. ‘ *

Q. Now, how did you arrive at the Passenger Service .

Operating Revenues, which are shown in Column (2) of-

Exhibit No. 3?

A. That is taken right trom. our Schedule 310 of the An- 5

[fol. 398] nual Report Form A; it shows Transportation

Revenues—gre you speaking of Expenses now?

Q. Im speaking of Column (2), — — Service —

ating Revenues.

A. That’s taken from our 310, page. 303 of Form A of

the Annual Report to the Interstate Commerce Commission.

Q. In other words, on this exhibit, you show all revenue

and notsimply passenger revenue?

A. In Column 27 A pve :

2. Ves. 0 f „

nue, Parlor an

Senger trains!

A. Yes, sir, we don't conſine thie to Aso 1020.

Q. Ves, that’s what I wanted to make sure. Now, what do

you mean by Passenger Operating Déficit? © |

A. Your Passenger Operating Deficit is your deficit tak-

ing the figures, passenger figures, expenses, I mean “reve-

nues, less expenses, less taxés, and taking into consideration

the Equipment and Joint Facility Rents, and bring that

down to Net Railway Operating Income Passenger.

Q. The Passenger Deficit in 1960 was lower than it had

been any time since 1955, was it not!

A. That is about right, yes, sir. ~

hair Cars,’ Mail and Express, other pas-

A. No, sir, j Passenger Service Revenue.

Q. You sho enger Service Revenue, Baggage Reve-

330.

- [fol. 399] ern Railway Company, do you not?

Q. You also — — in the South. 5

— —

A. We have some; they are quite extensive.

Q. As a matter of fact, those are sufficien}, are they not,

sir, to pay off the passenger deficit which you referred to,

and. still leave your company net railway operating income ..

with some $36,000,000 i in 1960, is that not right

A. That is correct. ; :

2. Now, the reason for that, of course, is the Interstate.

- Commerce Commission considers the passenger deficit whén’

it makes its freight rates, is that not correet?

A. I thin lit was stipulated at a previous hearing that

some of the ex parte proceedings, that the passenger defieit

of the carriers was considered in the Commission’s deci-

sion on the increase.

Since the last hearing, there has been anotlter ex parte

increase, has. there not? Something like Ex Parte 223. Is

A. Off the record,; vou should know. 3 5 beste

2. Off the record, Mr. Gleason and I had this same case

993 before.

: considered i in Ex parte 2231

A. Ex. Parte: 223 was ; effective, the effective date was

October 24; 1960, for the ICC increases, and of course, we

have had the hearings before the ves, that’s correct.

2 In each of those proceedings of the Federal And State,

where the passenger deficit, were the passenger deficits a

matter of consideration? ©

» [fol..400] A., As I said, it was so stipulated by our at-

_torneys; I'm sure that is correct...

2. I'm talking about this particular one, 223, now.

A. Well, of egurse, I must state this; that 1 do not par-

n in the ICC cases; my participation was restricted

solely to the intrastate proceeding before the State Com-

mission.

. Do you have any reason to believe ‘that it was not

A. Ves, sir. -

Q. When was the last time your rréliroad. showed a ud

from its passenger operation, if it ever did

A. 1946. 5

And showed one for the. years 1942 through 19461

2 1

— 7 — ees

1. That's 8 ‘correct ; 42 throngh 46, four years.

a profit. on the mee operations

A. 1941. i

„nn other words, 41 through 46

A. That is correct, yes, sir, N

2. Are there any other years, that" you 3 a profit?

A. My records that I am looking at, only go back to the

ae year, 1931.

J. Is there-any time in 1931 to 1961, except for. the war

years, 1941 through 19467

A. They were the only. years that ay showedrevente i in

2 [fol. 401] excess of expenses. 85

Q. Now, in spite of this deficit on your passenger opera,

3 has there been a year since 1931 when you have not

shown an overall profit in your railroad business?

A. Now, you are taking this down to Net Income

Q. Yes. Net Operating Income.

A. In Net Income, 1931, we had a defielt of five millien;

32, eleven million; in- 33, "810 thousand; 34, two million,

— Are there any other years that your empany showed 7

eight; 35, one million, eight; and W skipping “down to

1938, 570 thousand.

2. I take it from your naming of ‘ai I take it the re-

maining years, you have had net income!

A. Yes, sir, and this goes back to the year of 25. a

Q. That goes batk to 19257 f

A. Les. os 0

. Would you give tlie figures on your net income. for the

years 1958 and 59 and 607

A. Southern Railway Company!

O. Southern Railway Company.

A. Net Income, Year 1958, is that your first year?

Q. Yes, sir.

A. Thirty million, two; 5 59, 38 millon, ene; 1960, thirty

million even, seven.

Q. Now in order ‘that the Heat may be clear N et Income

here as we are using it could be equated’ to Profit from

[fol. 402] operation of the railroad /

A. Yes, sir, we don’t use profit, but that - is Lhe réwalts of

your operations, taking into consideration every thing except

Jour pay ment ce ee

. 332 5

Q. Does your compainy fle a 1 Federal Income. Tax Re- Se

turn, based on the operations of its freight business, sepa-

rately from the operations of its passenger business?

A. No, sir.

Q. In other words, any loss on the passenger operations

offset income f rom freight operations, for Federal Income

Tax purposes ?

A. Your passenger losses are taken into consideration i in

payment of taxes, yes, sir.

Q. By being ahle to off-set your r passenger deficit, against

your freight income, the real effect of such à transaction is

to let the Federal Government pay for 52% of your pas-

_ senger deficit, i is it not!

A. Well, in effect, ves, sir; you are getting the tax credit

for your losses on your passenger business; as I stated be-

- fore, we don't want to lose money ta preclude us from pay-

ing Federal Income ‘Faxes, ‘but they a are taken into con-

sideration when. the taxes are paid. .

Q: But when you consider the amount tof the loss in doi-

lars, the real loss would not be '$14,670,000, but would really,

be some 52% less?

A. That is correct, taking into consideration your taxes.

kol. 403] U. And carrying it on down through your com-

pany operations to the particular train, any loss that you

had is borne, 52%, the Federal Government, and 48% by

your freight operations? :

A. In effect, the United States Government, the IRS,

loses out on a certain amount of taxes due to our e on

passenger service operation, that is true.

Q. Calling your attention now to Exhibits No. 24. do you

have that with you? Before yout | 3

A. Ves, sir. 8 f :

Tze figure of, at the Weldon of 8 1 of Exhibit 4:

Excuse me, I meant to say Page 1 of Exhibit 24; 17.7 reflects

the average number. of people that were on Train 13 on

every trip that it made? 7

A.-That is correct; régardless of how far they went.

Q: Now, the figure for Train 13, in 1960, is shown at the

1 bottom of Sheet 3-ef Exhibit 24, as — 19.3, is it agtt |

A. That? s correct. .

> f

—

0 And the figure for Train 13 for the first five 8 of :

1961 is shown on the bottom of page 1 of Exhibit H 4 as

being 29.0, is that correct?

A. That's correct.

2. Does this mean that the average amber o passengers

on your train 13 has increased from 17.7 in 1959 to 19.3 in

1960, and then to 29 in the first five months of 1961?

A. Number-wise that is correct, Mr. Burns. I haven't

[fol. 404] broken it down by train, by this particular train,

but while your number of passengers have gone up, your

average revenue per passenger, for both. passengers, in.

1959, was 139.211; 60, 143.36; and in a five months period,

119.241; which shows that we are ‘getting more passengers,

but we are carrying a tremendous number of children in

these group movements; where the greater preponderance

of them, the greater, number of them are all travelling on

half rates; we are carrying more passengers, hut the reve-

nue per passenger is dropping down. .

The fact is that your increase is from 17. 7 to 19.3, and.

now the 29; in numbers.

“© Yes, sir, in numbers.

Q. Would you figure out the percentage of increase of the

D over the] 193%

A. What's that again?

Q. Would you figure what percentage inerease that ist |

A. You want to take the 17.7—

Q. Either way; 17.7 or the 19.3.

A. That would be a nine per seal increase.

Q. That’s the 19.3 over the 17. * N

A. That's correct.

Q. Would you figure thie 29 passengers over the 19. 37 Tt

would be roughly 50 per cent, would it not? ae

A. Let me have that again. )

Q. Figure the increase, 29 over * 3; you are ã little less

than fifty per cent, but right at it.

[fol. 405 A. Number of passengers, 29 from 19.3.

Q. The first five months of this 15 over. the full year

of 1960.

a Roughly, yes.

Q. So the increase, of 1960 0 over 39, the aes on,

on the train every. day, was s nine per cent, and approxi-.

=e 50%, 61 over 19607

* mie

—

[ee F

A. n yes, sir. a r ee

. Adl through here, when we are talking bent wamber of .

people on the trains, we are not including: pene riders, are

wet :

A. No, sir, we are ‘it giving any consideration to. non.

revenue passengers. e 0

: Q. I believe in the last case there was some testimony

to the effect that approximately seven per cent of your

total passengers rode on passes; is that not correct?

A. That could be true; but, as I recall that case, there was

no breakdown between: personal passes oy pines passes.

It was just a total number of people rode the train

for a certain period of time, and your figure df seven per

cent could be correet, but we give no consideration to non-

revenue passengers. i 2

Q. Do you have any reason to Naeve that . — f

. centage there was in the last case is any * today,

as far as pass riders? 5

A. Could be the same. 2

If )l. 406 Q. Would you have any reason n to believe that it

would not be? males Ms

A. No, sir. g 8

2. Now, that is not et in the figures that we on

- here, though?

A. No, sir, because the company gets no revenue from the

transportation of pass riders.

Q. How did you get to Raleigh for this hearing?

A. Came down on 29 and 16. :

2. Your use. of that train would not be 45000 i in any

figures that we had at the time you came? 8 f

A. No, sir. If I eame in on Seaboard, I would have a bass s

too, and it wouldn't cost the company anything.

Q. Did the company get webs eevee = having you at-

1 tend this hearing? 75 g ;

A. That problematical. ©

Q. At any rate, the company assumes that it is going to

get benefit by sending you down here, does it not? .

A. I think definitely. they will.

2. If the company is to get benefit, they have to have

Fou here in Raleigh instead. of Washington. |

A. For this Kumars case, yes, ir.

* 0

0. And a same would va true of any of the other

a einployees that the, any other „employee of the company

that use the train, this train, with a pass, would it not i

A. On business, yes. Of course, now, you must take into

fol. 407] consideration other railroad people of other for-

eigi lines could: be part of that seven per cent, getting passes

through our pass bureau, as we get passes on other roads. °

Q. You would have been, you would have come down on

the Seaboard? °* |

A Yes, sir.

. The Southern Railway would baut if won came on

‘the Seaboard just as much as if you ¢ came on Train 16, would

it a

: hat’s: correct. Wie yy

2. You also might have flown, mightn’t Ascii

A. Ves.

Q. You could have if you had wanted to, 2 had the

railroad; I don't know whether they do or not; ot. at dee

rate, you could have gotten here by air?

A. That's true, yes, sir. b

J. If. you had come by air, somebody would have had

to pay for your ticket down here, would they not? a

A. Ves, sir. 3

Q. Who would hats jomebody be?

A. Ultimately, the company; I would purchase the ticket,

and put it on my expense account.

2. Be reimbursed: the; Price of fhe ticket?

41 :

Q. And there again, the company would be berfefited to

some extent by your e here!

A. That's richt. a

[fol. 408] Q. And sheds the use of the facilities to Bet you

here? 8 8

. N

Q. Suppose the railroad veddeaty d decided that ** were

no longer going to permit people to ride on passes; do vou

think the employees of the railroad would be particularly

happy about such a d¢éision? 7 8

A. You mean all passes?

2. Ves.

| -

A. Im sure that those travelling on personal trips would

be unhappy; for us, it wouldn’t matter too much; because

we would be reimbursed for whatever money we paid for

our transportation; but.a person taking a vacation, as an.

example, if they could not ride on a pass, they-would have

to pay for that transportation, and I'm sure that **

wouldn't be, too elated abo: it.

L. So one of. the benefits of 8 for a mailrüed is

being able to use a pass, is it not . .

A. It is, for the employees who take trips, yes, sir

that the employees would seek: some other- en *

that riot right?

A. I don’t know; that’s very problematical, a L doubt

seriously if many people are attracted to railread employ-

ment on the basis. of free transportation ; that's my own

* personal opinion.

— — —

Q. At least the railroad employees do have the benefit of

that for personal business?)

fol. 409} A. Yes, after they have fulfilled the required

months, the required number of months and years in ser-

vice, they are entitled to free transportation; on their own

lune and also foreign lines.: K

Q. On your, Exhibit No. 24, again, looking. at the figures

Q. And if they did not have that advantage, it might be

this time for Train 16, do we not find an increase from

21.3 on Train 16 in 1959, tn decrease to 21.0 in 1960, :

is that right? ae

A. That’s right.

Q. And an ultimate figure of 30.1 paissengess, daily av- ;

erage; i is that right? 3

A. The five months of 61. yes. sin : |

Q. Now, the increase of 196] over 39 is again very close

to 50 per cent, is it not?

A. Roughly it is; I might add that I made a study of the

ve months, January through May of 1961, and we had two

thousand ‘and twenty-four (2,024) people, children with

their adult ch e stan in groups of 44.5 per cent“

of your 4,550 utilizing the service of train. 16 in that period;

these, group riders; I’ reful about using that tert ;

group riders, child of kindergarten, church schools, Boy

Scouts, and what. not; I think that. better expressed. it than

eraup riders. ‘

Q. Did vou, by any chance, talk to the management of

Southern Railway and determine if that could, if they ob-

jected to carrying these children? f

A. No, sir, my purpose in looking it up was; I personally

{fol. 410 don't think that this comes under the concept of

ee convenience and Pfoeasity; ; that’s why I made a study

Lea

Q. In order. to determine that, we want to know whether

or not these; we would want to know where these children

went, would we not; how many of them came to Raleigh,

‘as part of their education, say the Capitol?

A. In March, there were 23 Scouts from Durham to

Raleigh; and in May, various schools, the number of schools, 2

424 children from Durham to Raleigh, for a total of: 447 of

the 2 ‘ae or roughly 22 per cent. „

Q. All right, they came to. Raleigh; now why did *

come to Raleigh, to see the Legislature in Session here

at the State Capitol? f a

A. That may well have been. eae

Exam. Gibbons: I don't think it's necessary to find“ “out

why. they came ;.the fact that they were on the train, I think

that's all we are concerned with.

Mr. Burns: : The only reason’ Im going int Cth is; I think

you are quite right, sir; the only thing important is that |

they were on the train, but just becausé they were riding Be

the train, didn’t indicate that there was a public need for it.

So, I was going into it a little further, to establish perhaps

the reason for their coming here, and I think certainly that

it's the policy of this state that the education of our. children

is a very important part of our state activity. *

Iol. 411) Exam. Gibbons: I don’t think the reason for the

travel is too significant, so long as we have the number of

riders on the train; whethereit’s little children or adults,

‘doesn’t make too much n as, except as affects the

revenue. f ‘

Mr. Burns: I was going to — Mr. Gleason, Sor. the —

recsrd, that, the fact that this would have the effect of

diminishing the av erage revenue per passenger; that i is true, ree

is it not?

- The Witness: That is true, yes, sir.

ES Lf „ 1 AR Ve : 5

1 3 : ‘ 2 8 0 * * . 7

By Mr. Burns: ny 2 ö

Q. Now, calling. your ‘attention to Exhibit No. 25 the

figures which you show there indicate that the average pas-

senger miles per train mile for the two trains combined

have increased from 6.83 to, 6.83 in 1959, to 7.33 in 1960;

and then to 9.97 in 1961; is that correet!? 2

A. Yes, sir, the average did increase; but, as I point out

here, average revenues per passenger decrease and your

revenue per passenger mile decreased.

Q.. Now, the average passenger revenue per train milee.,

) for Trains 13 and set in 1959 was 21.067 cents ; is that

oF correct? .

4 A. Ves, sir. d :

2. In 1960, the corresponding figure was 22. 382 ‘oun:

was it not? : 0

A. Yes, sir. 1 5 : ; pee :

C. In 1961, it was 27.3451 eee 5

A. Yes, sir. ey ees

L. So there has been a steady i increase in the average

fol. 412] passenger revenue per train mile? :

A. That is true, but your-average. revenue per passenger

has decreased, and so has your er revenue per pas-

senger mile-decreased.

Q: Now, you are. talking about the average passenger rev.

: enue per passenger mile; is that right? 5

A. N o, Im speaking about the average revenue per pas-

senger; what we receive from the carrying of each pas-

senger.

. Have you made a 3 based or the average

passenger revenue per passenger mile, similar to that ‘that

vou make in your annual reports to the ICC?

A. For these periods?

0. For these trains and these periods.

A. Yes, sir. 5

Vou have? Would you give me your figure for 1960

for these trains, the average renn, revenue per pas-

senger mile? 0

ö N A. The revenue per passenger mile for Trains 13 and 16,

0305, with a company average of .0296. = :

Q. And your average in N erth Carolina, as shown on page

9⁰³ of your annual Report to the North Carolina —

E es Oe Ne ARP aN ea Mo * * * , * r

4 „ * g

' . * 4 t 0

0 > 8 : 6 * ; 78

5 i 5 2 5

* ‘ $4

— „ ’ .

f Commission was 0301. was it not? Page 905. These are

all in 1960 A Revenue per passenger mile for North Care- ae

lina is. 0301; is that the figure you gave met?

Q. Ves. ‘And so, Trains 13 and 16 have greater. 3 F

passenger revenue per passenger |! mile in 1960 than did your

Ifol. 413 company as a whole. and also greater than your

operations i in North Carolina as a Whale; is that not right? -

A. In 1960, that is correct. And in the five months of

1961, the revenue per passenger mile for Trains 13 and 16

was .0274, and the company average.is .0300. There again,

Tm calling your attention to the impact of the school and

kindergarten groups with the number of children travelling

at half rate: So, it’s bélow this period, the company average.

Q. What do you: mean by the term “average passenger

1 per train mile“ strike that out. Is the term “average

passenger miles per train mile” a term used in filing your

report to the Interstate Commerce Commission?

. No, it's not included in our Schedule 531, or 931, +

5" State. 1 RSS

Q. What does that meant

_ A. It means that you divide. your total passenger miles: 3 :

passenger miles might be explained as à passenger moving

one mile; divjde that figure by the total number of train

miles operated, and that gives · you a figure of people who

have been on the train the entire distance. Now, this 19.5

includes pe -ople ayaa at one e place and went five, ten,

Illes 3

or fifteen or twent

7 On this tri‘n?

A. On this train; but the 683 are dices ‘thee wonld loins

heen on the- entire distance, based on your train miles and

passenger miles. —

fol. 414] Q. Now, of course, the important die there is

the distange that each pene travels, i is it not! oa

A. Yes, sir. a

Q. If vou had, for example, a train with a yeahs 100 miles

long, and it took 100 people just ten miles each day, and

didn't carry anybody the rest of the way, that would have

the effect of reducing the average — 28 mile. per ‘train

mile substantially, would it not?

A. Les, sir. >

sel 8 — * nd —

6 .

2 -

bo NG ees Feb aad

0. But it wouldnt show any lack of need on 1 thee part of

people who use the train to go ten miles, would it!?

A. There again, you have to develop the need of these

a people ping ing ten miles. You get into; it could well mean

that people actually needed the service; or it could

megn that they were just travelling—

L. This figure in itself doesn’t indicate anything at all

about the need of the people that are e using the

train : :

A. No, not the need, but it shows-the use. 1

. On your exhibit No. 26, the only difference that I can

see between your Exhibit No. 26 and Exhibit H 6, is the

last, or bottom line, all the way across the page.

A. The reason I.did that was because through our ma-

chines we are able to reproduce the statements, so rather

than just have a statement showing five months, I merely

incorporated at the bottom of my =e Exhibit 26, show- -

ing the full picture Exhibit H 6.

fol. 415] Q. Well, Hooking at Exhibit H 6, since it has

all the information on it, including the information on Ex-

. hibit 26, the average number of passengers per trip for.

the Trains 13 and 16; fer the first five months of 1961, is

+ higher than at any fime since 1953, is that correct?

A. That is correct. ;

2. And calling your attention to Exhibit 27, the 3

which you show on that Exhibit for the year 1959, are sum-

maries of figures i in Exhibit 287

A. No, sir, that’s a different year g we didn’t think it

‘necessary to make two calendar years in the NARUC For-

mula, with thdse ten schedules, so we made: 1959 as a one-

sheet exhibit in sort of a summary form.

Were these arrived at by using ‘the NARUC Formula’

A. Yes.

D. What is the NARUC Formula? |

II strike that question.

A. It’s a special committee ; — of the special com-

mittee in cooperation with the ICC in the study of the rail-

road passenger: deficit problem, adopted by tile. National

Assoeœiation of Railroads and Utilities Commissions at New

Vork City, September 23, 1953, published by the NARUC,. .

the National Association of Railroads; this is the formula

that is embodiedi in this report.

wy. 23 i g * 5 : os

: ies ; ee - ne ae! a 8 * 341

Q. Is that report binding on- the Interstate Commerce

Commission? :

[fol.416} A. There again, I don't know.

Mr. Dixon: We will concede it’s not.

By Mr. Burns:

„. The purpose of that 8 was to ‘proviiie a sheet cut

for the railroad. in presenting expenses relating to a par-

ticular passenger train, is that not correct! 5 5

A. I would rather say provide a uniform 8 as we

had- these cases prior to this September 23, 1953; this

NARUC Formula is much more elaborate, as the previous.

showings made before this was adopted; it gave us a uni-

form approach in the presentation of train cases before

the regulatory bodies.

Qi. One of the regulatory bodies not approving that was ,

the North Carolina Utilities Commission, was it not?

A. I believe that was so stated at the previous hearing;

this is adopted by the Association in convention. How many

individual Commissions 1 adopted, I’m not in a position

to say. i

Q. Let's go on over io your Exhibit 28. "Sheet. 1 is a.

summary of the succeeding achedules, 3 is it not? 8

. .A. Yes, sir.

. Q. And the Rassenger Revenue you show at the top for

the Year 1960, for the two trains i is $21, 135; and was arrived é

at in what manner? :

A. As explained on Page 28 of the’ Petition, Account 102

Passenger; “Tickets lifted by conductor are punched into

IBM ards showing station to station, class of passage and.

other information. These cards are processed. through the

mputer which is programmed to compute the passenger

fol. 417] revenue based on authorized rate for class of a

passage.” th

Q. Boiling all that down, what you did is essentially this;

you-took the total revenue paid by the passenger and ap-

plied a mileage pro- rate, isn’t that what you did!

A. A block to block mileage. 8

2. What size blocks are those mileage blocks that you

2 3 |

J . 1 2 5 , 3 5 . | *

A. 1. of course, didn’t 4 this iat This was done ae

the Auditor of Passenger Accounts’ office. This information,

was furnished me.

Q. Do you know whether a. are very big or. very: small ; |

ten miles, a hundred miles, a thousand miles? *

A. I think they are station to station; that's the way the

“ mileage blocks are. They would have to be because of these

people travelling sniall distances to apply to their. short run

tickets. :

J. In order to apply a pro-rate, you had. to know what

the total revenue generated by all passengers originating or

_ terminating on this line, did you not?

As No, I wouldn't say so. I think it is ‘computed right

from the tickets lifted’ right from the conductor; the in-

formation is punched on the IBM cards; right from these.

tickets that the conductor lifts.

e „ the ticket shows where the passenger originated

and te ted and how much he, paid for the ticket,

doesn't it!? 9

. 8

[fol. 418] Q. So you would. bios what the 5 is to

apply your mileage pro- rate! 2

A. From station to station.

Q. You would have to. know the total to know what the -

pro- rate is, is that right! a |

A. Yes.

Q. Is the total of all passenger revenue ies shown on

Exhibits 29 and H 8; is that the total figure?

A. That's the total of your Off Line Revenue; it doesn't

inelude this On Line Revenue. f

. The figures that you show on 29, plus the figure. that

you show on Schedule 1 of Exhibit 28, I believe it is, would

be the total revenue that your passengers pay for riding

‘a part of which was using this line? J

A. Generated by people either in-training or e

Q. Is that the way, on Exhibit 29, the figure on Exhibit 29

was arriveſ at? .

A. Now, this figure on 4 Exhibit 29 is a figure taken; I got

to explain how this happens; in order to do this, you've got

to set up a prgcess a head of time and trap these tickets

as. they come in. 1825 1588 are Gace: able, when they get

(HOt art. s N

wad

sf nied

—

A nati

ae e ‘ 4 ise 5 a

2 . : - g

CaaS eee ea a” eee

‘the tickets, the traffic on this Greensboro to Goldsboro seg-

ment, and then to compute the revenue for those going

beyond the Greensboro—going» north or going south. <

Q. When did you set up the program for these two trains“

I[fol. 419] A. I think it was in July of 1959. : 5

Q.. And it’s been running ever since, pulling every ticket

that goes qn and off these trains? \ .

A. Ves, sir. 8

2. As I understand “it, you alien a mileage pro- rate .

to determine the Off Line and a mileage pro- rate to deter-

mine the On Line portion of the revenue, is that correct?

A. IT don't know. whether I am making myself clear; but

on this programming, this program is set up; it is already

in the machine, and they have these bloek to block, Station

to station, items in there, and also it is a class of- traffic

coach, first class, 30 day, or round trip, family plan; and

when the ticket is punched, the 705 automatically computes

the revenue for the segment on this line, and of course, 75

ultimate lines, too. .

O. In other words, the same process is used to divide

the On Line and Off Line Revenues!

A.. I would say so, yes.

8 Do you have any figure that would show the amount

_ of revenue that would be lost by other railroads if these

two trains were discontinued, and all the passengers went

td some other modes of transportation?

A. Your supposition is that if these trains go off, the

company will get no off line revenue, and then all those

passengers, say, going beyond Washington to New. York,

Pennsylvania, no.

. You could determine that also from the seedling rin

[fot420} your 705 computer, could you not? .

4 It could be determined, but I certainly wouldn’t want

to have the job. 5

Q. Lou could determine the total that would pe lost by ;

other railroads, simply by taking the total that you get

and subtracting it from ‘the total that was paid, couldn't =

: yout” ‘

A. I don’t think it 3 quite be tbat simpls; U think it

would be sort of a voluminous job; f course, I’m not a

passenger accounting man; I’m not familiar with all tlre

_- = . .

: that the predominance of the traffic goi

“1s. Pullman or first class traffic. ~

= acta rl

93 of the passenger problem, as some of our passenger

folks.

Pullman Company might use a little bit, wouldn't they!

A. On the premise that it goes on this traffic, I would say

off this .

Q. So there would be a loss i

8 1

A. If your — 3 is correct.

2. To the extent that you lose any, the Yulee cn

pany would lose, too, wouldn't they? 5 :

A. Yes.

. In your express revenue, as shown on your Schedule ,

2, or Schedule 3, of Exhibit—what i is it 287

A. That's right. .

Q. What you have dongtis taken Car Foot Miles for the

Southern Railway Company, and divided into the Southern .

[fol. 421]. Company's revenue and come up with Average

Revenue per Car Foot Mile, i is that not right?

A. That’s right.

Q. How do you determine a Car Foot Mile !

A. A. Car Foot Mile is a linear foot, the length of the

car, and. the number of miles a car travels is a Car Foot

Mile: we know, each month we get the express revenue from

the REA, and the company knows through our statistics

REA on our line, the Southern Railway Company; and it's

a simple calculation to divide one by the other to get the

| ‘trains; how much express is handled on individual trains®. —

and reports, the number of Car Foot Miles we serve the

average car foot mile; and that is applied to the car foot

miles on these particular trains; we also know that, and that

gives us the express revenue. That's the only way you can

compute it because we don’t have records to show individual

Q. In other words, vou don’t know how much is handled,

or how much the Railway Express earned on the handling

of that traffie !

A. No, because they take all the revenues. r deduet 3

from that their. expenses, plus a return on investment and.

the revenue is distributed to all the member lines on the

basis of à user basis, the car foot. miles that they furnish

—

Q. Of course, though; in addition to, other railroads, eae

some indeterminable |

. RT TEN OY TL TERE RLY TES eS

the REA during. the partealar month or period; that's gen-

- erally. —.

Q. Now, the revenue that is distributed, the Portion that’s

earned by this particular train has been credited back into

[fol. 422] the revenue figures that you show here? 3

A. As shown in my exhibit, yes.

. You don’t know whether or not the 3 train

that we * in. question is one that's doing a whale of a lot

of express business, or none at all, do you?

A. Ite could be determined by ascertaining the require-

ments; you see, the REA issue requirements or requests on

the company to furnish space in their cars; and as I under-

stand it, tliat is constantly being changed; they drop it down

and raise it up, depending on the volume of their business.

; Q. You mean volume in size, do you not“

A. Yes. Say, they got 20 foot; and find that 20 foot is

not adequate; sixty foot and that’s not adequate; well, then

they make another request and maybe they raise it to 0 ,

4 or some other figure.

ie Q. As far as the railroad is concerned, > Sees it malte any .

difference whether * aré carrying diam

in that car? ‘

A. We don’t care if they order 4 foot car, whether

they fill it or not.

Q. Well, one figure that is used on the Schedule fesei-.

gates me; it’s the figures of: Miles Operated for December

of 1960; would you tell me. how you arrived at the figure of

3979; that’ s Schedule 3.

A. I haven't heen associated with you all these many.

[fol. 423 months without determining that. you find “out

these things; now, December 14, 1960, we had a terrific snow

storm on the eastern coast, and the Pennsylvania connection

coming to Washington was many, many hours behind. So,

when the 29 got to Greensboro, it was So late that the 16

took it ever, and by the.time that it got to Selma, it Was .

time to come back; so the December 14th, 1960 only oper- -.

ated Greensboro to Selma, and the passengers. were ‘taken

care of by private cars. Only yo notice that.

Q. That does affect the fotal rev enue,” does it not?

Aa’ a does. 5

ds or feathers *

7 N 12 A . =

„ — i 25

0. Well, wait a ne now; since you operated twenty

miles less, you've got 20 miles of ear feet that would not

be used if you were multiplying. by the 3 revenue

of thewar foot mile.

„ es. 5 ~

5 0. New, the other; vou chow no one revenues from

baggage or handling pets or anything for these two trains,

s that correct? a4

— (ih. Maat passenger is allowed 150 poulds of checkable

pbaggage.

; . So, I-assume that you had no other kind of revenue

except ex ess and passenger.

A. And miscellaneous. A certain amount of newspapers.

* did not carry any mail on this, did you i

o, sir, the mail went September 14, 1957.

Aer many express cars do you have on this train!

i a 424] A. Speaking now!

: Q. Now.- 3 .

- A. Right now, we have a combine N the ‘Express

Campans has space there.

Q. What do you mean by a combine?

te A. Combination baggage and passenger; half of 4. car

bas seats for passengers, and the other half has open space

for baggage and express.

Q. Was that reduced since February 24th, 1961? —

A. I understand. the entire run, Greensboro-Goldsboro

car, went off in January, and we had a Burlington, Greens-

boro- Burlington car, went off in, sometime in Febfuary.

Q. And so the railroad ne longer provides facilities for i

Burlington, is that right, for express oo

A. Well, I can’t say the car goes to Burlin ton; and thex f

have 20 foot of space in the car} and *

they so desired. ; 3

Lo — Q. The thing that has caused the 5 fion in revenue 5

‘ of: this train over the years has been the/oss of the mail ~~

contract with the Government, and nowthe loss of all your

express. business to trucks operated by the REAT

A. Plus the loss of passenger rate, too.

Exam. Gibbons: ‘Off: the record:

„ (Discussion off the record.)

‘

Exam. Gibbons: : Back on the sacord.

[fol. 425] Mr. Burns: My opinion is because re the eating

facilities here, it would require an hour and a half for most. e

of the. gentlemen’ to get their lunch and get back. ae

Exam. Gibbons: Let: 8 . and get back, return

I .

We will recess until 1 45 p.m. x?

—

(Whereupon, a noon recess was taken until 1:45 p-m.) „

8 .

3 220 pk Afternoon Session (45pm)

a -

Exam. Gibbons: On the record.

The hearing will come to order.

Mr. Burns: Beforé going back to where we left off, Mr.

Gleason, there seems to be some misunderstanding about

one of the figures that you gave me this morning; that being

the Net Income Figures for the entire Southern Railway

Company, arhich you gave me for certain years this morn-

ing! :

A. The Witness; Yes, sir.

5 * * 8 8 1 \

5S ·

Buy Mr. Burns:

Q. When you used the term Net Income, you mean after

all taxes, do you not? D

A. Ev erything.

2. And that figure is after ev 1 except what divi-

. dends the company gjects to allow shareholders? |

i A. Les, sir. ‘| Meera

Q. Thank you. ‘

Now, going back; I think we are on Schedule dof Ex.

hibit 28 Do vou hav e that before yau, sir?

. ü 8

. That schedule consists of two pages, does it not!

ee A. Schedule 4 is four pages.

Q. Four pages, yes. The Sheet 3 shows the Crew Wage

: : Expenses. Per Trip for 8 13, Goes. it not?

A. Yes. » se

—

8 . * e

. * 7 .

: 3 ¥

. : 5 is ’ 5 0 *

2. On that sheet, I notice the miles per trip vary from

180 in the case of the Engineer and the Firemen, to 150 in

[fol. 427] the ease of Conductor, Flagman, and Baggage

master. What’s the reason for that variance? :

A. The Engineer and Firemen are paid for the trip up

to the yard; 8 the station; and of course, the Conduc-

tor, Flagman and Baggagemaster are _ on a 150 mile

guarantee. \

Q. Is that a daily guarantee?

A. There is, they are guaranteed 150 miles a day.

O. Are they also guaranteed 90 cents in addition to the

120 miles?

‘+ A. Les, sir, if I may explain that. “Taking your first

man, the Conductor; of gets 13.76 cents per mile or 620.64

per day. Now, his ‘daily guarantee is $21.54; so he gets

90 on top of that $20.64; in addition to that, he gets an

- hopr’s overtime.

Q. And the hour overtinge, I believe you said a minute

ago, is for the purpose of taking it and turning it around?

A. Yes, sir. :

. So the effect of the existing wage contracts are to

5 payment for 150 miles and since that does not come

up to a minimum dollar guarantee per * they get an

additional 9061 ;

A. Yes. =

Q. And the hour overtime is for the purpose of turning 5

the train around?

A. Les :

And then, I might say that effective March, 61, the basic

salary has gone up; the current rate per mile i is going to

14.034.

[fol. 428] Q. And the hour overtime is the thin t

makes the difference in the wage expenses of T 13

and 16?

A4. That is correct; 16 gets the 90¢ along with 13, but

they don’t get the hour overtime.

Q. That’s the reason why the wage expense of one train 185

is some $4,000 a year less?

A. That’s correct. 5

8 on your Schedules 5, 6, 7, 8. 9: 9. Lshonld stop there;

are the figures on those schedules all * . the use

of the Formula f ;

A. Ves, „ | yt 5

Q. The effect of the formula, Mr. . is to take

System or Company figures on a mileage basis, and apply

them to the local trains, is that not correct?

A. You arrive at a unit mileage cost; and to that unit

mileage cost, you apply the miles made by the trains in

question. . N

‘Q. In all of. these cases, vou took your Southern Railyay.

Company figures, did younot?

A. Ves. I might say we have to be very en most

people speak of a system as the whole company; and we

have a system and a company; so we have to differentiate,

80 we have to be sure that we know what we 1 talking

about. The Southern Company N

Q. To repeat the question, I think we are in agreement;

the Southern Railway Company, you used Southern Rail-

[fol. 429 J way Company figures? _ 2

Yes. 3 \ 3

2. And reduced those to a mileage basis? et eo We

A. To a cost per mile. N

Q. Then multiplied the cost per mile by the number of

miles operated or covered by these trains?

A. Locomot a and passenger car.

Q. The effec

on this partie

train are no greater or no less than costs

on any other train a aco by the Southern Railway Com-

pany?

A. Yes, sir, that’s the assumption you have to mike.

because there is no way for us to confine cost to one par-

ticular segment of our operation; so you have to use, make

that assumption, use the contpany average. i

2. I take it that this same assumption could be made as

far as freight is concerned; that one mile of track has the

same amount of revenue and expense «Associated with it

as apy other mile of track on the-South Railway System?

A. I believe that’s fair. You are speaking of cost now,

, o not.revenue.

Q. On your Schedule 5, as an illustration, you assume

that the cost of fuel for the trains operating between

Greensboro and Goldsboro, is the same as the cost of fuel

of this procedure is to assume that costs *

*to New Orleans or in 1 or any other point on the

Southern Railway Company?

A. That's the assumption I made by using the company

[fol. 430] cost per gallon, each month ‘it changes; but in

addition to that, 1 made a study of the cost of fuel as used

by these locomotives, and I got the i invoices, and using the

twelve month, or individual month cost, in plate of what

I did use here, instead of $5,622 the cost would have been

8 $5,644, using these individual invoices, So, the assumption

there is, the level is practically the same. I used the invoices

for the -Diesel fuel used on these locomotives that’s pur-

chased and delivered for consumption by these trains, — .

of course, other trains in this area.

Q. How did you get those figures for that?

A. I went through, to our Purchasing Department ; Gulf.

Oil Corporation furnishes us fuel; the Division Storekeeper

at Greensboro, 00 had the price of the fuel per gallon

right on the invoice? and using those. prices instead of the

company average, the difference would have been just 5822;

for instance, January, the average fuel bst per gallon,

$8.80; this was 88.95; and as yéu go down, they are up and

down and level themselves off as you go along, so the differ-

ence kor each train woud have been $22; $5,644 as against

85,622.

Q. In- this particular ease, then, the assumption that the

system averages would reflect cost of one train. 5 a

A. In this particular instance, ves. 5

Q. Turning to your Exhibit 6, I take it ‘that the same

basic2= Schedule 6, excuse me; the same basic procedure

‘[fol. 431] was followed; that is, reducing everything toa

per mile cost, and then applying it to-

A. The different items of expenses.

.Q. What tests did you make of this item, t chor, that

it would be reasonable for application? 2

; A. I made no test. E was very simple for me to get the

invoices to determine whether the cost of fuel used by these

8 locomotiv es would be comparable, - or- x

Q. Enginehonse expenses inéludé some things that would

vary with locality, would they not?

A. Iwouldn't say SO, no, sir.

dies 8

0. on your Schedule 7, wend you 1 tell me here

vou got the figures, Total Passen ger Train Car Miles,

60,882,395, from?

A. That's the total passenger train. miles for the South-

ern Railway in the year 1960.

Q. Does that appear in the annual report that you filed

with the ICC? Maybe I can simplify it; would you turn to

Line 24, on Schedule 531 of the Annual ‘Report to the ICC, oe

for 1960?

A. This shows to be 60,762,546; but that, if that seve.

is slightly different from Schedule 531, that is merely to

determine the average cost per year; so it shows 2.131¢,

and as you start down with January, you get 2.317, 2.364;

this is to show that your yearly average is in line with- ‘your:

monthly averages, average expense per passenger train

mile.

[fol. 432] Q. In other words, you didn’t use that figured

A. No, sir, each individual month is worked on the indi-

vidual miles and charges to the varipus operating expense

of each month. N 5

Q. And that figure was not used? „„

A. No, slr, that’s just to show that the averages are in

* . line. f 5

Q. Would you turn to Schedule 8. for a moment ; 3

your attention again to the figure at the bottom of. the

page, Total Passenger Train Car Repair Miles, and tell

me the source of that figure; maybe I eould replirase the

questions; why would that figure. be different from the“

figure that we have just talked abput on the preceding |

schedule !

A. Well, in Schedule 7, we are ineluding all équipment i in

. Pullman and foreign lines. And you get over here in Sched-

ule 8, we do not include any cost for foreign lines and pull-

man cars for these repairs. See, we are not obligated to

repair foreign line cars, pullman cars; if we do repair them,

we bill the owners and are reimbursed ; 80° that wouldn't be

a proper cost.

Q. And so you excluded all of those miles from- your”

- computation which have the effect of increasing the per

mile cost; whether it’s right or wrong, that’s the effect of

it, isn’t itt i, 2 1

1 7

A. Ves, that's richt. f

Q. Again, on Schedule 7 and 8, did you 1090 any “hea

of the particular line as far as cost are concérned, to deter-

(fol. 433] mine the. reasonableness of the application of the

: NARUC Formula!

A. No, sir; in fact, it would be impossible for us to make

any such test. .

Q. So, really, what. we have i isa mileage pro-rate on these i

various items? -

A. Yes, conformative with the formula of the NARUC,

‘yes, air.

. Insofar as your e ee of certain savings Sree

discontinuance of Passenger Trains 13 and 16 at Goldsboro,

isn't it a fact that the Goldsboro Union Station i is owned

- one-third . by Southern Railway and one-third by Seaboard

und one-third by ACL? I don’t mean by Seaboard, I mean

one-third, by ‘Southern; ACL, nd one-third by\ someone

else f

A. That's my ; understanding, | yes, sir. hee. oy |

. So your ownership would be retained; whether or not

you had, you operated any cars or not ? 9

A. Yes, IL made inquiries about that, and I, of our joint

facility folks, that when we pull-out, if we do pull out, and

discontinue thts train, we would have no more cost there

except the ‘only cost would be incurred if there was some

major repairs to the property, and Southern, Railway

agreed to participate; other than that, we would have no

further cost there, and there was to be nothing done until—

if everything left Goldsboro, and the place was liquidated.

Q. Of course, you are going: to continue vour freicht

operation to Goldsboro? .

[Fol. 484] A. Lassume so, yes. .

Q. Any office space or anything like that you use at the:

station for your freight operation will be maintained!

A. This is strictly the passenger cost at Goldsboro; this

is taken from the Operating Statement furnished to the

Goldsboro Union Station; to the owners and tenants each ;

month, showing all the expenses, from those expenses,

whatever concessionaires occupy space in the building, the

costs are thereby reduced, and to.those costs, the lines

using the. facilities are charged on a Per car basis.

Q. Ona per car basist

A. Les.

*Q. Well, one other particalar 4 item of expense I. want to |

ask you about; i is your pullman company, net loss. Now, as

I understand it, setting some sort of loss from tlie operation

of these cars against thesg particular trains, is that right?

A. Then let me explain it this way; each month, the

Pulhnan Company furnishes us with a statement showing

revenues; first it shows, these lines are operated by line

numbers, so the one we have here under question is line

6854, New| York to Raleigh; it operates Trains. 29 to

Greensboro, 16 to Raleigh, and then 13 and. 38 in the reverse

direction. The Pullman Company shows the révenues they

f received from the revenue. passengers and the expenses; ahd.

it. shows the net; then as this line extends from Washington

to Raleigh on Southern Railway, I have used a mileage ꝓro-

[fol. 435] rate from Raleigh to Greensboro to assess against

deficit, to show what this $4,226, now, our first class revenue

we received from these passengers is in 102. 8

Q. Your portion of that revenue, not the Pullman?

A. No, the Pullman Company is in the first two figures;

they furnish us; they furnish revenue, expenses, and fhat.

Q. It’s a fact that Southern Railway is a large stock-

holder or a stockholder in the Pullman Company, is it .

A. A stockholder, yes, sir.

Q. As a matter of fact, according to your Annual 1

in 1960, you receiv $89,532 in dividends from the Pull-

man Company for 1960; did you not; I refer particularly to

Line 37 of Schedule 205,. on page 211 of: your 1960 Annual

bss ep page 211, Line 37.

A. $89,532. Now, if I can find that; 1 don't have the

Pullman yearly figures for 1960; I took. the year 1959 figures

and that $67,149; took the total car miles and then I took

the New York and Raleigh Car miles and related one to the

other, and the New York-Raleigh operation was 2.15 per.

cent of this car miles, and I applied that 2.15%’ to the divi-

dend of $67,149 and it gave me. $1444. and 22% of the

Greensboro-Raleigh segment from the car mile standpoint,

$321 net dividend would be applicable to this line on a car

mile basis. i

353°

*. „„

. @Q. Instead of using car miles, you- . miles of paseen- -

ger road, 4.5% of tle $89,532 in 1960 would be applicable |

to this segment of the. road, would it not: ! oS

(fol. 436] A. Using what?

Q. The actual passenger miles of road that you had for

‘your company.

A. Miles, passenger miles, you Foul arrive at—

aS 4.46%. Total miles of passenger road. 5

A. I don’t think that would be a proper thing to use;

uf “think the proper thing to use would be the total pullman car

miles of the Southgrn“Railway. Company, and take the per-

centage of the New York-Raleigh Pullman car miles on this

run, to arrive at a 2.15%, and apply that to your dividend“

of tig ,000, and it would result in say, $1444, and you ap

the 22% & the Greensboro-Raleigh segment, it would give.

\ Pon $321. I think that. would be the better approach.

Re Q. The fact is though that your 1 do; not reflect any

N of that saving og

3 A. No, sir- i i ,

. And you are getting about a ten percent return on

your investment from the Pullman Company?

A. It amounts to— wey

= In 1960, you received $89,532 i in dividends on an inv est.

ment of $828,171, did vou not rar

A. That’s probably about right: they seem to be qui.

dating their surplus account, ‘and that’s not- the Pullman

var ear each year; that’s not out of earnings, because

Fur earnings only aniount to $325, 000.

ol. 47] Q. 1 think vou did agree with me at: the last

| 2 and I can find the place in the record if you like,

but W vou did pay the Pullman Company for- ‘what you

call a 2 loss in your exhibit, that was, in effect, making a

down payment on your dividend?

: A. We were receiving some return, I would say about ‘

- $300; it was on à car mile ves, sir.

Falling your atterition“once again, to Exhibit 28. nö,

No. 29: did xou make any study to determine that operating

costs Off Line would be anywhere near 50% of your Off

Line Revenue? th . 5

5 A. No. sir, that’s why we used the 50% „ because we have

nothing to go on, as far as en costs were, eoncerned.

b 0. In other words, it could be’ more; 3 be less?

A. I would think, I would say it would be more in this os

respect; because the 50% used in the abandonment cases is

freight abandonment, while I would say, in passenger cases,

| well, your freight ratio is 61.67% and your passenger ratio

is 143.72; so using 50% for freight ratio in abandonment

Cases, it seemed that the passenger ratio should be .

. Q. You are talking about operating. “ratio there?

A. Yes; sir. ;

: Of course, the additional expense ‘ereated by these

passengers on the main line would relate only to the addi-

tional expense of pulling one or maybe two cars from

. Greensboro to wherever they are going, is that right?

[fol.438] A. That's true, of course, but in your passen-

ger cost, you have your tremendous terminal cost, which .

really boosts your costs up.

Q. You mean the terminals that were built in; these are

the-great terminals which are no longer needed for. that

type of traffic?

A. If I may digress, the 3 tax property in the City. ,

of Washington is. the- Union Station, 1960, 9.2-million dol-

lars, and we have to pay taxes on that. 3

2. Maybe; we offered it to the Government for 8 for

nominal lease, and they wouldn't take it.

Exam. Gibbons: I thought the Union Station was “second.

Mr. Burns s- I’m sorry.

The Witness: I'm talking abaut the Union Station prop- .

erty in 1960, was numb@r one; but in 1961, the Towers

Apartments have passed it tax-wise, assessments. 5

Mr. Burns: There ought to be a moral there somewhere ö

Im grasping for it, but I can’t find it right now.

I believe that’s all the oT I have Mr. Gleason.

By Mr. Bryant:

N. Mr. Gleason, I believe you characterized your position -

as Supervisory Statistician?

A. Yes, sir. \

Q. Then you have occupied that position for a number of

: yee a

Statisticians means?

the preparation of all the reports that go to the Interstate

356 5 : : : ö N

A. The last dasa years, I have been 8 of Stat- |

isticians; prior to that, ahout six or e, I was a Statisti-

cian:

fol. 489] Q. Would vou ‘be kind enough to explain for °

the record and for me tao, what the term’ Supervisor of

A. I have an office-foree of four statisticians, several

assistant statisticians, and several clerks, that. report to

me and I in turn report to the Director of Statisties and

Reports. My job is to prepare statistical information for

management as they need it, costing out varjous elements

that appear before the Interstate Commeree Commission,

and all the-yarjous-state regulatory bodies which are of

interest to the company. This falls within that—our rate

cases, abandonment eases, and routings. _ .

Q. As I understand it, statistics pertaining to the entire

operation of the Southern Railway Company,. come under

vour supervision, and

A. No, sir, that’s not ‘correct; they would be more under

the direction ‘of the Director of Statistics, Who is my im-

mediate superior, or supervisor; he is the one that makes

Commerce Commission; the Assbeiation of American Rail-

roads, and varidus state reports, and of course all theses

reports are available to me and my office people for use.

Q. You do either collect yourself, or have available to

you, the statistics pertaining *

A. Ves, sir, available to me. 5 vied

Q. May I ask you please, to vate to yotr Exhibit H 4;

(fol. 440 page i. It is the exhipit ‘supplementing . your |

Exhibit 24. I believe that that shows that during the first

five months“ operation of this year, January through May of

1961, 1,515 people boarded Train 13 in Durham, and 394

‘departed from Train 13i in Durham? *

A. That's right, sir. 5 *

Q. That would make a tétal, I believe, of 1,909?

A. That is about right, sir.

Q.. And on your page 2 of vour H 4, 3 that at the

same station, 657 boarded the train and 1,148, during that

same period of me e months, left the train?

—

3 3S 8 2 8 „ —

1 ae NS „„

=A. That is cor „sir. A ,

Q. And that would make a total, according t to my caleula:

-tions, 1,8051 gaa. Se :

A. Les, sir. ete

Q. And that added to Train 13, would give you: a total

of 3,714, would it not?

A. I got some computations 1 m trying to find here; what

was that given figure again!

2. 3,714.

A. What are those two figures again! .

Q. 1,909 on Train 13, is that correct?

A. Lou have the computations for 1959 and 60; 'I didn't

make any computations for the five months period.

Q. I’m directing your attention to cis Exhibit H 4 for

fol. 441] the five months.

A. I follow you now.

Q. Is the figure of 3, 714 correct for “as total passengers

on and off the train at Durham, for Trains 13 and 16, for a

five months period?

A. Ves, sir.

Q. Now, Mr. Gleason; if you nil that as a monthly aver-

age for a twelve month period, that would give. yan a total

of 8,916, would it not?

ey Thatis correct, sir.

Q. Now, if you turn to your Exhibit 4, as attached to your

Petition, in which you give the population of the entire

county of Durham, not the city. alone now, but the county

of Durham, 111,995— _ . “

A. Mr. Bryant, I’ve got to tell you cit now, I didn't

prepare these figures; so I am not familiar with them.

Q. I understand that vou did not; butIsay—_.

A. What is this exhibit, No: et: 8

2. Exhibit e The 1960 population of Durham f

n your Exhibit listed as 111 995

A. Yes, sir.

Q. If you assume that figure is correct, that would mehn,

would it not, that. approximately a figure equivalent to 5%

of the entire popylation of Durham County, either boarded

or got off of these two trains im Durham during the course

of.the year, would it not? 7

fol. 4421 A. Mr. Bryant, assuming that this level of

traffic for, five months would continue for twelve n

your ur figurd of 8, 1 is correct.

* A i U

* 4 5

0 8916 I Saige. 5 ***

A. Now, I don’t think that is a fair . because

as I stated, on Train 16 for these five months, we had 2,024

school groups, and this was in this particular five months;

and I’m sure that these school groups and kindergarten

“>

groups and church groups would not continue for the rest

of the year; so 1 think that 8,916 would be overstated. ag

Q. Now, Mr. Gleason, that would be a matter of argu-

ment; there might be athletic groups, 0 letic contests,

and other groups in the fall of the yea d Jam asking

vou if you assume this as an average ,

A. If your assumption is correct. a

' Q. It would be a figure equivalent | to 8% of the entire

population of Durham County. 2 . 5 N

8 A. Yes, sir.

Q. Now, sir, I want to ask you if you will look on your

Exhibit No. 26, and there I believe you show that for the

combined operation of Trains 13 and 16, you had an average

number of passengers for the e 1959 of 19.52?

A. Yea, sir. N

Q. And for the year 1960, an average for the two trains

of 20.191

1 N

fol. 443] Q. Now, your Schedule H 6, I believe, iowa tee

first five months of’ 1961, and has an yoga of 2088, does

it not!

have testified | was the average for 1960— 1

A. Ves, sir. a

2. I understand of course, that you do not aan that

the average would continue, but if you would assume that

the five months of 1961 average did. continue, that would

give you an increase in 1961, over 1960, of approximately

46.5%, would it nat? Take. your figure of 20.19, which vou

A. Ves, sir. “pd

Q. Then take the figure of 29.58. the average for 1961;

the first five months; and what iner base, what percentage

increase does that represent?

A. About a 45% increase. |

Q. Isn’t it, to be exact, about 46.5% ũ ũ 1

A. That is assuming that fhe level of traffic for the five

months would persist for the. next seven months.

i Bek

g 0

eens , ,

Q. But ‘iia your own ‘figures ; I mean, you ian that

percentage as a result of vour own figures shown on your

schedule, made by you, does it eae?

A. That’s correct, yes, sir: 25 ieee

Q. Now, Mr, Gleason, do you know it to he a fact, or do

vou not know it to be a fact, that at one dme there were

three passenger trains each way, east and west, going be-

tween, operating in and out of Den that is, six 2 725 a

senger trains?

[fol, 444] A. That's true. :

Q. And by petition to the Utilities 3 of North

Carolina, that has been reduced now to the current, to the

point where there are Only two trains going through Dur-.

ham a day, one eastbound and one westbound; dong 3

16 and one being 13, is that correct!

A. Yes, sir,

Q. And do you know it to be.a fact, sir, that 8

with a population in excess of 78,000 people, if these two

trains were removed, would be entirely without any rail

passenger service of any kindin any direction?

A. If these trains were taken off, yes, Bir, there would

being no. passenger service to Durham.

Q. Now, Mr. Gleason, are you aware of the decision of

the Supreme Court of North Carolina in this case in which ,

the question of the continuance of these two trains went. to °

the Supreme Court of North Carolina:

A. Well, I have seen it; not being a lawyer, I’m not too

well versed on it, but I did testify in the proceedings be-.

fore the ſtilities Commission.

. Can ou tell me one thing, Mr. Gleason, that the

Southérn Railway Company has done to popularize its

passenger service in orSoyt of Durham since the ‘tendition

of that decision? 7

A. Sir, I have to tell you as an accounting man, I would

know nothing about the activities, except in a general way

[fol. 445] about the activities ; all that solicitation comes

out of supervision. .

Q. While I thoroughly appreciate the fact that there ere

other departments, and your duties give- you somewhat

different Beis, Tm asking you as head of the! statistics

a a

4 ge 3

“i

épartment, having supervision of the expenditures, -and

ne statistics relating to expenditures, if you know of one

enny that has been spent or one thing that has been done

) ‘popularize. or improve the train service that goes out 3

f Durham since that decision! 5

A. No, sir, I wouldn't know, 3 I wouldn't go into?

ouldn’t Know wliat goes into charges; say, the traffic ad-

ertising and the particular facets, they take care of. You

ecqythat’s entirely different.

Q. Now, Mr. Gleason, going to 1065 subject W

ou stated chat certain passenger trains to q our knowledge

ave been discontinued in and out of Durham, so that leaves

nly two left; can you tell us on how many different oc-

asions the Utilities Commissiop for the State of North

‘arolina, have permitted increases in fri@;sht ratés in order

» compensate or make an effort to compensate for losses

n passenger service, on this . route, from Greens-

oro to Goldsboro? -

A. Well, I don't think in aliose ex parte proceedings this

articular route was given any special consideration ; when

he railroads applied to*the ICC for permission to increase

heir interstate rates and they were granted certain con-

fol..446] siderations; and then we went. to the various

tate regulatory hodies to get the intrastate. Do you want

he number of times that we—

Q. No, sir, I'm asking you if you ¢puld tell us the number

f times—yes, that’s what I want, the number of times;

ur —_ if you ean tell me the number of times that the.

111

reusc in freight rates in order to take care ‘of the 3 J

t passenger traffic? ?! B.

A. I don’t think it was primarily to take care of losses

n passenger traffic; we submitted data to show the in-

reased cost, wages, supplies, materials, and other costs

ike that; while also; they were the primary information

urnished the Commission; as to the number of times, I

ust recently finished with Mr. Burns in Ex Parte 223, 2

on’t know how suecess{nl we are going to be on that one;

he one previous to that was 212, 206, 206A, 196· and 175,

° «+

4 if

„

chy

to my knowledge: now there are some more than that mat

bs participated in, though.

Q. Do I understand. that that totalé four or six, as 1

dened: them? .

A. 175, 196, 206, 206A, 212, 223—8ix.

0 Six. So, on at leagt six ‘different oecasions; whet

= coal of years, dees that cover, approxiniately, if you

can give it to us? \

A. 175, that was a series of i increases, starting in Mare th

of 51. extending to August of OR; November of 55, rather. a

[fol. 447] 196 was in 1956.

Q. Excuse me, do I, understand that the first one was

in 19557

A. 1955 was ‘the last effective. date, of Ex Parte 175,

. That is; then, is it correct to teed that over the period

of the last six yéars—

A. I would say ten years; 115 goes back to 1951. oe

8 Q. That's about the figure of ten years. During the past

ten years; there have been six occasions on which the Util-

ities. Commission of North Carolina has approved freight

rate increases for the Southern Railway” Company 9

A. To some extent, yes, sir.

. And in each of those six instances, the loss in

passenger revenues was assigned as one of the reasons

why the increase in the freight rates should be granted.

is that correct? 5

A. Im not sure about the State 1 but I know:

the ICC considered the passenger loses; as to the state

cases, statistical data I furnished was always based on

increased costs—labor, material, and whatnot.

Q. And in each of the six cases, to which you have re-

ferred, the loss in ‘passenger revenues was one of the rea-

sons assigned for the increase in freight rates!

A. In ICC proceedings, yes, sir. 5

Q. Are you familiar with the. Luckett Formula, and ff

so, I want to ask vou if that dées not have special provi-

sions for taking care of the decrease in passenger revenues?

[fol. 448] A. I'm familiar. with it, but the fact, as your

colleague on your right knows, I presented at the last

1 would say yes, it’s considered in that.

362 ~

Q May I go to 8 subjeet lease. What was the

‘Southern Railway Conan 8 . in 1960, in number

of miles / f

A. 6,266. ;

2. 6,266. Now, Mr. Gene what is the trackage in

mileage on this route from Greensboro to Goldsboro?

A. 129, using ation to station; and’ 130 when you go

around the yard—I’d. say 129. gs

Q. All right; I apologize for asking a question which

I-could figure out myself if given time; but do you know

What the pertentage of the total trackage that is repre-

sented by this route from Greensboro to Goldsboro? —

A. Round figures, ten-per cent. |

Q. I'm afraid J can’t en you said total: trackage was

6,000— ~ 5

A. 1 thought you were referring to the total North eas re

lina trackage; end the total trackage of this segment.

. No I didn’t make my question clear; what I intended

to ask you was the percentage of this trackage of the route

from Greensboro to Goldsboro to the total trackage of

Four company?

A. Tou will have to pardon me > while I go throtgh. all

of this record.

th. Take your time; I'm interested i in getting it accurate,’

oy 110 449) A. 6,266.

: Q. Yes, that’s what you testified. . f ay

A. And the North Carolina mileage i is 1,000—oh, on ‘this.

line —129.

Q. On this line, that is what I was widen Fou about.

A. You want the percentage now? Roughly, around 225

Q. Thank you, sir.

Now, you have offered the information; * percent

of your total mileage is in North Carolina; 5. not con-

fining it now to this particular: route. |

_ A. 1,294. 8

2. That would be Area be- 1 5 you.

to say it was approximately. ten per ” o your trackage

in North Carolina! ah

A. Ten per cent of the North . trackage’ is the

: Greensboro-Goldsboro n 4

o N.

>. em

0. Now, Mr. dises vou gave us a figure this morn-

ing, as to the total operating profit, I believe you call it,

if I’m not mistaken, net operating profit of the Southern

Railway Company for 1959, tor the entire company. What

was that for the year 1959; and on what Schedule does

that appear? 0 d

A. For 1959, net income, I think that’s what vou are re-

ferring to? gers Cages —

5 2. Yes, sir. 5 55 .

A. It is $33,126,748. 32333

fol. 450! Q. What was the figure for 19587 a

A. $30,254,231. ° ae

. And now I will ask you for th e of *

A. $30,702,542. ° :

. And on what Schedule was that! 0 8

A. I don’t think that’s on any of my schedules; nt. ap-

pears in the annual report in Schedule 300. nee

2. Now, your figure for 19600 — f

A, Oh, I'm sorry; this Income Account, it's the first

time we have used this in proceedings, and. I forgot about

Ger it, Mr. Bryant; it also appears om Schedule 31, sets on Jo

3 eral 1.

A. We, in) the Railroad industry do Hot use profit. We

have a term

Q. Net operating income? 3

A. No, sir; not this figure. We do hiave—that’s the figure

which we predicate, our, rate’ of return ee to our in-

— : vestment figures.

resent in your terminology? |

A. That represents after all our revenues, deducting all

our expenses, taxes, then taking into consideration the joint“

facilities, equipment rents, adding other income, and de-

[fol. 451} ducting deductions from income; and deducting

your fixed. charges; you get down to net income; that’s the

figure I gaye you; and there js one more item of expenses

to come out of that; which would be dividends.

Q. In order that 1 might understand your terminology,

what * you identify that! 5 . a3

A. ‘Net income, or ** . a

Q. And, of course, as you have just explained, that. is

ö after the payment of all income taxes.

A. Yes, sir.

. Do you have the 1960 figure for yout ae losses,

for the entire company? 7

A. Yes, sir, $14,669,798. ,

Q. Is that after dednetisn income taxes, or before the pe

‘deduction of income taxes?

\A. There is no taxes on our passenger operations, as

they are operated as a deficit; you pay, no income taxes, ;

but the taxes in there are three million seven, ad valorem

use, llaneous, ‘unemployment and so forth. ; ie

Q. But not income tax? \ ‘

A. No, sir, you pay no, income tax on that, because they

operate as & deficit. 5

2e. All right, sir, now, by using any loss in your. pas- ·

senger ineome, vou are able to reduce your Federal Income

Taxes on that rticular item by 52%, are you ma

six * cent, are you not? · 8

5 = the tax’ department, so; I am not

familiar with the rates.

Q. If the maximum N. th Carolina corporate i income

tax is six per cent, then you would be entitled to an addi-

tional six per ¢ent; would yoy not?

A. Six per cent there, yes, sir. Of course, that ‘might

not apply on the whole system." Various states have vari-

ous levels of taxes.

2. I understand, but that weed ‘apply to any losses i in-

_ Side of the State of North Carolina? \ 3

A. Yes. 3

Q. So as to any | * inside the State of North Carolina,

you would have total deductions for income taxes of 58%,

if the North Carolina rate is six per cent? * a

A. Yes, sir.

Q. So, therefore, that means that the net. 10 8, with the

glimination of the income taxes, would ‘reduce the' amount

an if you paid 58% in taxes. x c

A. That's corrett. But we don't. want to lose money to

keep from paying North Carolina Federal Income. Taxes.

The Governnient wouldn't like that. #

Q. I understand; now, of course, if Southern Railway |

fol. 453] Company has to pev taxes too, just like anybody

else we might just as well ‘be realistic about that; ‘because,

we have to pay them? :

A. Yes, sir, we have to pay hind.

Q. Will you turn, please, to your Exhibit Schedule No.

28, please, and I refer to Sheet. No. 1. And I see there that.

by Direct Expenses in Excess of Revenues for 1960, for

Operating Results of Passenger Trains 13 and 16 between

Greensboro and Goldsboro, North Carolina; and I see for ‘

the total year 1960, . the figure $117, 641.8

A. Yes, sir.

Q. Will you please tell me what that figure represents?

A. That. represents the out of. ot Joss, on the —

Be of: these trains for the year

. ls that before the deduction of any taxes?

A. No. That figure would r be diminished, if we 3

didn't have that.

Q.. Now, would you diminish that. dines: by 58% please

and let me know. what the results would be; I think you

would get the same thing, by 8 2% of the’ figure,

would you not?

A. Vou certainly would; and N f

. nde what would that amount tot

A. $49,400, in round figures. |

Q. $49,400 in round figures, you say. Now, ‘can you tell

me ‘what Perea: of $30,702, 542, the sum of ne 400 rep-

resents? 8 '

A. Not much 8 1

fol. 454] 2. Let’ s get.” it approximately, please, if you

don't mind.

A. I don't main Mr. Bryant, making these n

but it is difficult to sit up here and answer questions; I

prefer to make most of these computations off the stand,

if you wouldn't mind. 50

Q. I'm not hurrying you, Mr. Gleason.

366 0 8

A. You realize that it's difficult to sit up here and answer

questions and make these computations; it’s quite difficult;

“if you insist I do it, III do it.

Q. This may be an important figure, sir; I certainly 5

wouldn't want to insist in taking up time if I didn't think

so, but I did want to ask you what percentage of $30,702,542

the figure $49,400 re sp

A. .0016.

Q. Thank you very much, sir.

Now, going to another subject; what is the surplus, or

+ what was the surplus of the Southern Railway Company

at re end of the year 19601

The ICC has changed the terminology of our Balance

aie We nd longer have a — account; we retain—

it’s $343,594,070.

Q. What dividends did the Golithern Railway Company

pay during the year 1960 to its shareholders?

A. $21,043,207. That is your preferred and common both. :

Q. The figure which.you have given us for 1960 of 830,

fol. 455 702,542 represents net income from the 6,266

miles of trackage of Southern!

A. $30,702,000 is the operation of Southern Railway Com-

; pany ; I’m pretty sure that’s the mileage I gave you.

Q. That’s the mileage, 6,266. Mr. Gleason, do you have

‘any figures to show the net income, or net profit, from this

—for 1960—from this route of 129 miles. from Greensboro :

to Goldsboro?

A. No, sir.

Q. May I ask you this question. Are you not tamiliar

with the fact that this 129 miles from Greensboro to Golds-

boro runs through an extremely heavy industrial area?

A. It may. well be; I’m not familias with - industrial

, aspect of this section. 0

. Do you have someone who will be in a position to

testify as to the possible revenue from freight i in this, on

this particular route?

A. No, sir, because we don’t keep our records in such a

manner that we can segregate a certain segment of opera-

tion and show the revenue.

Q. Without segregating it, statistically, don't you have

someone in 8 company who knows whether gr not this

7 0

— * .

PO ETO ²˙: ̃ ̃ n OT IE PELE IT F —

; . -

. ~ * e

367

particular ‘joa poor run through a blake industrialized

area, which would be calculated to generate a great deal

of shipments by way of f reighyr

A. No, sir, the only figure that I could give you; just

[fol. 456] bear in mind now this is a branch line operation;

and the only figures. we would have to show the action on

this particular segingent | is your density figures; your ton

miles per mile of road; ‘and ton miles per mile of road on

‘this Greensboro-Goldsboro segment is about 61% of the

company oF ge. Now, the company average is decreased

not only this particular operation, but we have some

“more small ‘operations where the traffic is not very dense.

Now, relating this particular operation to your traffic |

coming down from Alexandria through Danville, Salisbury,

and going on to Charlotte, and tliose places; that traffic

there is terrifically dense compared to this. And it could

be easily understood because. it is not mainline traffic; this

is feeder traffic.

Q. Wouldn’t you say, thal that; strike that question,

planes:

Would you e what you meant by the 61% figure

a few moments ago?

A. Taking your net ton miles per mile of road,» that’s

your traffic density ; the traffic density moving on tlif dine

is approximately 61% of the company average.

- Q. When you say this line, what line?

A. Greensboro to Goldsboro. *’

. Greensboro to Goldsboro. — -

A. I think that’s easify understood because it’s not on

the main line operation.

2. Then, Mr. Gleagon, according to that, as 1 1

ffel. 457] it, you would say that the freight’ traffic moving

on this Goldsboro:Greensboro: route is shove the average

for the company’ s entire operation? -F

A.. No, sir, 61% of the company average.

Q. Do you have any figures to show the freight opera-

tion on this particular route?

A. No, sir, only ton miles and miles of road, that’s the

only figures we have. You see, we can’t confine our opera-

* a A

tions to any given saint: like that without special study.

Which would be quite involved; I've never heard of any

special stugies. Ok ieee

ee Do you feel thet you want to recess! :

A. Pm getting tired; if a recess would be in order.

. Exam. Gibbons : Let’s progeed a short time.

By Mr. 3

0. Mr. Gleason, I refer to

a our suggestion that vou don't

like to work out percentages,

but I would like to ask you

if you lost $14,669,798 in passenger service on = 6,266

miles, how much that averages a mile?

A. That figure was 6,2677.

5 Q. You gave me the figure 6,266 miles ot trackage of tjhe

Southern Railway; I'm assuming that is the sagan

A. I gave it to you, but I forgot it. he

Q. I will be through in z moment, your Honor.

Exam. Gibbons: That question assumes that passenger 55

operations are conducted over the entire track, isn't it!

fol. 458 Mr-Bryant;. doe m just trying to get an average,

sir. 5

The Witness: 4234.

x By Mr. Bryant: 80

Q. What does that figure represent? g me

A. That's your $14, 700,000 divided by your miles oper-.

ated, 6,266.

Q. That would bd the average passenger tees per mile

of track, wouldn't it?

A . Just like the E miner said, we are assuming that

° the 6,266 miles of r operated are both passenger and

freight; we do have some exclusively freight operations//

but, where there is no passenger service.

Q. Can you tell me the amount of passenger trackage?

A. No sir, *

Q. That figure wag what please

A. $2,344, Now g to Schedule 531, niles operated is

2,913 for passengers, rather 1 e 6, 266.

2 ks

5 4 .

5 . 7

* * * -

2 *

5 5 o's

. °

369

Q. Now, how much is the. loss per mile, the 129 miles

from Gréensboro to Goldsboro, if the loss was 117,641

A. $912, but now let me explain one thing first. You are

taking this fourteen millien; you are taking the full cost

which includes everything; but when you are taking 117

thousand, that is cost, out of pocket cost, which is restricted |

to the sole operation of this train, so we are not ia ating b

light with ght.

Q. You have given the figure of 117 thousand as 3

fol. 459] expenses in excess. of revenue, haven't you?

A. Ves, sir.

But when vo get around to the fourteen million, vou

have everything in there; that's the full cost, as I explained

when I was making explanation of Exhibit No. 3. Thats

the report we make to the Interstate Commerce Commis-

sion on our income table and report. That has full” cost;

$117,641 is out of pocket costs related only to the operation

of tliese trains, as I have shown on Exhibit. 27; items of

expense not 1 ‘fpeludeg, There is a terrific amount of ex-

penses.

Q. Let me get at it another way, „Ar. Gleason; as to ‘the

point raised by the Commissioner a few moments ago, you.

have given us 6,266 miles as the total mileage of the South-

ern Railway Company; now, is any of that, not l

miles?

A. A good bit of it, yes, W

. Can you tell us what. p

part of it is passenger miles? .

A. Schedule 531 shows 2,913.

Q. 2,913; so that if you were going to compare passenger

miles with Passenger miles, you would have to compare

2,913 for your entire company’s operation with 129 for this

Greensboro- Goldsboro operation, youldn’t you!

A. Comparing it with what, Mr: Bryant; the first com-

putation you had me make was 6,266 miles.

. That's for the entire company, ae and benoten

[fol. 460 A. Yes, that’s right.

Q. You tell me now that for the entire company’ 8 opera-

tions, that the passenger miles of trackage st cea is

2,913, is that correct? 7 : 7

A. Tes, sir. :

of it is exclusive; what

370 : ae :

Q. I think that's all I want to ask you, sir.

Exam. Gibbons: Any further exoss

I have a couple of questions here.

Examination.

By Exam. Gibbons: 3

‘Q. This Exhibit No. 29, ‘that 1 $41, 517 ‘for 1960 ;

that, in effect, peas the Feeder Value of these trains, |

doesn't it?

A. Ves, sir, that. the total of actual Feeder Value to the

9 lines, from this particular . of dae re-

duced by the 50%.

2. I understand you to say that the revenues, there the

System Off Line Revenue is computed in the same manner

3 08 with the passengers revenue between the runs, between

Greensboro and Goldsboro! . PP

A. Yes, sir.

Q. Your out of pocket * there is shown on Exhibit 28,

and in the amount of. 8117, 641; is that the amount which:

you claim will be 1 if these two trains are removed?

A. Yes, sir.

Q. Wouldn't that, in turn, be reduced by the loss of the

fol. 461] feeder v the revénue, or do you expect to

lose all of the revenue that's shown on Exhibit 21 =

A. No, sir, I’m not the man to answer the question; our

Traffic Department estimates that we will save or retain

part of this feeder value.

Q. A part of it?

A. From Greensboro to > Mebane, I think ; I think they

will save. 8

Q: In other words, your claimed savings is $117, 641. is |

that right? : *

A. Nei...

Q. On Exhibit 1 6, you show all of these, you show the

number of passengers! vs Res

A. Yes, sir.

Q. Does that include the Pullman passengers that might

— + Hiding between Raleigh and Greensboro?

a N. N „„ ae ae

Ge Ves, sir, it inchides the first dass revenue. Mr. Ex- g

aminer, if you will notice, in my expenses, I show the

Pullman Company's net loss. In that, Vss, whatever first

class revenue that the- Southern Railway got foi these

people moving from Greensboro to Raleigh and return,

those figures are included in he revenue of 102 at, the top.

Q. Do Exhibit 29 there, the System Off Line Revenue,

insofar as it relates to passengers, would only include first ;

class and coach bassengers !?!: 2, 8

A. Principally firgt class. : *

[fol. 462] Q: One question abdut the savings; I’ believe

that you said that you saved all“ of the Union Station

expenses at Goldsboro / 0

( *

Q. $6,940 a year; is it true that even if vou * save thei’

amount, those expenses. would necessarily be .diverted to

other carriers that are using that station?

A. The carriers that remain thege; they would have to

bear the burden, unless: they. could reduce some of the ex-

penses to the elimination of the Southern Railway's use of

the terminal, yes, sir?

2. Is-that expense at Union Station, is that: depending

on the number of units; that operate in and out?

A. Yes, the cars in and out; these terminhls make an

rating stdtement and they show the cost of the opera-

tion of the terminal. Now, if there are any concessionaires,

amy revenue received, that in turn, is deducted from the

expenses, and the net amount is pro-rated to the user lines

onsthe basis of the cars they have.

Exam. Gibbons: Any further questions?

Mr. Dixon: L have one or. two, Mr. Examiner.

— 7 \ *

Redireet examination,

3 Mr Dixon:

Q. Mr. Gleason, you stated the amount of dividends paid

by Southern Railway Company in 1960.

„ oe:

Q. Were they based on 82.80 a share on common, and

* 463 et 00 on ce ee

eet

372

A. Yes, that's correct.

Q. Can you tell us the earnings of Southern during the ; :

latest available period: in 1961, compared with the com-

parkble period in 1960+

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