The Birmingham age-herald., 1903-07-05
ALABAMA RAILROAD COMMISSION
 MAKES REPORT ON RATE ISSUE
contInued from FIrst Paael


 
 missions power Is not arbitrary in the premises, and that no rate can be es- ablished and enforced, which does not field to the railroads "a fair and just re- urn on the value of the railroad, It's ap- mrtenances and equipments"
 The practical question then with which his commission is confronted is to deter nine what rates will yield to the several ailroads operating in the state of Ala anna that flair and Just return" which he law creating the commission declares hat they are entitled to earn.
 How then shall this reasonable com sensation be determined? Not by looking rates charged in another state, 'as he kind and amount and cost of busi- less vary in the several states"
 The Supreme court of the United States n an elaborate opinion rendered in 1898 n the case of smyth vs. Ames, above re- erred to. where this whole question was xhaustively considered, declared the pasS upon which the question of reason- lble freight rates should be determined, ind laid down the principles governing his commission, and all other bodies of ike Jurisdiction, in such cases.
 The court there said: That the reason- lbleness or unreasonableness of rates pre- cribed by state for the transporta- ion of persons and property wholly with it's limits must be determined without terrence to the interstate business done ,y the carrier, or to the profits de- ived from 1t. The state cannot justify inreasonably low rates for domestic transportation, considered alone, upon tho round that the carrier is earning large rohts on It's interstate business, over which, so far as rates are concerned, the tate has no control. NOT can the car fer justify unreasonabiy high rates on lomestic business upon the ground that t will be able only in that way to meet osses on its interstate business. So far IS rates of transportation are concerned, omestic business should not be made to pear the losses on interstate business, Tor the latter the losses on domestic busi- less It Is only the rates for the trans lortation of persons and property be- ween points within the state that the tate can prescribe; and when 1t under .akes to prescribe rates not to be ex- eeded by the carrier, it must do so with reference exclusively to what is just and reasonable, as between the carrier and Inc public, in respect of domestic busi- aess The argument that railroad line s an entirety; that it's income goes into, md it's expenses are provided out of, a common fund: and that It's capitaliza- ion is on It's entire line, within and with ,ut the state.-Jcan have no application where the state is without authority over 'ates on it's entire line, and can only deal with local rates and make such regula- lions as are necessary to give just com pensation on local business"
 Question Limited to lntrastate BusI-
 ness.
 It will thus be seen that in the consid- sration of this question, the commission controlled by the decision of the high sst court in the land. and Is limited to he consideration exclusively of intrastate business.
 It remains, therefore. to be determined rom the evidence in this case whether the ntra-state business of the several rail- 'oads in Alabama in relation to the capi- alization of the respective roads within his state yields more than "a fair and ust return on the value of the railroad. ts appurtenances and equipments" If his be the case, the commissions duty will be clear to reduce the rates to such a point as shall allow only the flair and ust return permitted and required by he statute.
 Basis of Earnings.
 But upon what valuation shall the earn ngs be counted. is pertinent and mate .ial inquiry? The doctrine declared in he leading case of Smyth vs Ames, above mentioned, also furnishes a standard for he determination of the value of the ,ailroad," which shall constitute the basis ,f its earnings. Upon that question the court said: Fin order to ascertain that value the original cost of construction, .he amount expended in permanent im- provements, the amount and market value of its bonds and stock, the present as compared with the original cost of con- Itruction, the probable earning capacity f the property under particular rates pre- icribed-and the sum required to meet op- rating expenses, are all matters for con- hderation and are to be given such weight IS may be just and right in each case" The following table compiled from the incontradicted evidence in the case shows he capitalization per mile within this tate of the various railroad companies herein mentioned their gross earnings per