# Transcript of Record — Southern R. Co. v. North Carolina > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0005%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1964 - **Citation:** 376 U.S. 93 ## Text 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 ** it Ernest Rechel— * oa hte 7 ee 4 ; if 1 AP f 5 170 iit 2 — — = fy af il e' 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 i 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 iv oe 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— n Exhibits: Richard Arey— direct . eross redirect. ee direct redirect direct Cross F. M. Southerland— direet 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 752 568 759 572 765 576 765 576 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 0 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 K ree Exhibits H 1 and H 2, witness ies sive marked * identification 2 : — 20 “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 | 0 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. O é — 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! te 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 5 294. 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 a > 4 3 . 0 ieee eee RN MONS e 2 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 20 2 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 0 8 ; 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. 2 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 Pa 0 Coe Klon College shipments are also if id 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 n 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 G 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 he 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— 2 [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 9 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 Ad 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 . 4 2 $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? 2 - * 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 8 The Witness: If we 1 not baude anything ‘for Elon . ner Burlington, did 7 say! ay 4 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: * c 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 ee 0 22 a | 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! 8 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 4 2 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? — 27 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: V. 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 82 [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 2 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. 5 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; _ © I want to be certain, Mr. McVay, that I understand co [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. * . 4 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. 7 „ Loy Q. Have you. or sees you 1 not testified in train ain discon: tinuance cases! hom / ie 8 3 - © 9 nada ' — n A = + + 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. 25 5 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, Be 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 7 ; ‘ * 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. 7 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! — = NN 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. ‘ 1 P 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- fe ; „„ 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 * 8 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. = ° 3 a 223 ww 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 . B 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 0 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 i 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 43 4 o 96, * ra 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. 0 — — 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 © that not right f. 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 a A * 2 1 45 — 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 G 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. . os > f U . — 35 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. og . 9 * 0 8 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. 89 | - 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 0 1 8 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 83 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 — „ ’ . 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 * N 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 A wad \ en 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. 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 4 pt 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.) 56 ‘ 0 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? 05 — (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 · K 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 — U 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 ; 00 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 ra 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 * 2 N *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 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 9 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 iv 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 5 0 2 - . 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. di 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° cy % *. „„ . @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? : [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386411_0005%3A2. Public record. Not legal advice.