The Montgomery advertiser., 1905-04-23
retters tc tbe cdfter
JUSTICE TREATMENT
Asked for Railroads and Peopi.

v
 fair and just return upon their value, appurtenances and equipments? If there is a man in Alabama who would answer this question affirmatively. then
 I do not expect that this article will even be read by or have any effect
 upon him. If answered negatively, then there are several matters to which would direct attention and be glad to have careful consideration by all those who feel an interest in the sub Ject. It would make this article too long or even attempt discussion of the intricacies which enter into the l subject of rate making primarily. Suf- | flee 1t to say that the rates have been many years of experience and the earn ings of the several railroads are de- rived from the rates upon the present basis. Now in this article l shall only down by law which must govern the Railroad Commission in determining the question at issue before that body, viz, the reasonableness of these rates. While the changing of these rates is a difficult and intricate question, after they are once fixed, 1t Is a very simple matter to determine whether or not such rates yield more than fair and just return upon the actual capital in vested. The law provides that in fixing and revising the rates, 1t must be so done as to allow the railroads to earn fair and just return upon the S'NS St~N' ANS and equipments"
 In the first place. then. Gt is the duty of the. Commission to ascertain, first, the value of the railroad, its appurten- ances, and equipments; second, to find out what it's gross earnings are; third, what its operating expenses are; fourth, the amount paid for taxes.
 In determining the first question the Supreme Court of the United States has laid down the following rule:
 while rates for. transportation of persons son and property within the limits termination, the question whether they are so unreasonably low as to deprive the carrier of its property without such cures ,and. therefore. without due pro- cess of law, cannot be conclusiveIy de- termined by the Legislature of the State or the regulations adopted under become the subject of Judicial inquiry.
 The reasonableness or the unreas- onableness of rates prescribed by state for the transportation of per limits must be determined without reference to the interstate business done by the carriers, or the profit de- rived from that business. The State cannot justify unreasonably low rates for domestic business, considered alone upon the ground that the carrier is earning large profits on its interstate
 
 are concerned, the State has no control; nor can the carrier justify unreasona- ply high rates on domestic business upon the ground that 1t will be able only In that way to meet losses on it's interstate business The basis of all calculation as to the reasonableness of rates to be charged by a corporation maintaining a highway under legisla- tive sanction must be fair value of the property being used by 1t for the convenience of the public; and in order to ascertain that value, the original cost ndsd or construction the amonnt es- the amount in market value of its bonds and stocks, the present as com pared with the original cost of con struction, the probable earning capa- rates as prescribed by statute, and the sum required to meet operating ex- penses, are all matters for considera- as may be just and right in each case. What the company is entitled to ask is a fair and just return upon the value of that which 1t employs for the public convenience; and on the other hand. what the public is entitled to demand Is that no more be exacted from 1t for the use of its public highways than the services rendered by it are reasonably
 Now would suggest that in Ala bama the Commission might adopt rule SLtlI more IdNOTdDle IO tH6 pcO- ple's side of the question, viz: find out (which can be easily done) what the real value of the road beds are. to this add the cost of equipments and willing that the railroads earn fair and just return upon this basis. Now. In view of the fact that the Supreme Court has held that State railroad commission cannot consider interstate rates nor the profits derived therefrom in fixing local rates, then lt would be fair that the basis of value for fixing local rates should be in the same pro roads as the proportionate share of the intrastate earnings bear to the whole earnings. It may be estimated for example. that the intrastate busi- ness. constitutes about one-third of the whole earnings. Now it may also be estimated that the cost of doing the local business is at least 10 per cent. 1through) business. Let the Gommis. sion then, after finding out the real value of the railroads, appurtenances and equipments, divide this by three to get at the basis of values upon which to fix local rates and, as the cost of operation for intrastate traffic is greater by at least 10 per cent, add tns yaae To Pfe Gsn say the to t6sa ei cost of railroad, its appur- tenances and equipments are found to be $45,000 per mile-a very low esti-
 
 the United States Is $64,000-now for the purpose of fixing State rates di- vide this by three, which would make $15.000 per mile, add 10 per cent and you would arrive at basis of $15,500 per mile for fixing local rates-this Is less than one-half. of the actual cost oe construction and equipments for the average railroad. Having arrived at this basis, let the Commission next as- certain the total amount of gross earnings derivel from intra-state busi- ness alone, which usually amounts to one third of the whole. This is easily done as each railroad can be required 10 furnish the data under oath, in fact the reports now on file with the Com- mission will probably show these fig be deducted, first, the cost of opera ton which is estimated at one-thIrd of the whole, and to which should be added 10 per cent as the excess cost of operation on domestic business is that much greater than upon inter- taxes paid. Leaving nothing for sinking fund or an accumulative sur plus which is hardly fair to the rail roads we will say that what !s let is net profit Divide the net profits per mile by the ascertained value of the road per mile and 1t can be easily de- termined whether or not the railroads are earning more than "a fair and just return" If this finding is adverse to the railroads, then the Commission traffic can bear. beginning, first, with the necessities of life. If upon the other hand the finding Is adverse to the people, then all fair minded men should accept the result and cease agitation. which threatens to bring about so much unnecessary strife between the people and the railroads, to the injury. | in the end, of both.