Omaha daily bee., 1906-09-23

by Attorney General Hadley of Mis-
souri, to combat the contentious of the
railway attorneys in what is known al
the Missouri maximum rate case. has
developed a puzzle which on its face Is
more mysterious than the old 13-14-1t
combination. The general auditor oi
the Burlington road, under oath for q
deposition, had the audacity to assert
that his road is carrying local trafnC
in Missouri at a loss in excess OF
100000 a year, which would be SO
increased in case the maximum freight
rate law enacted in 1905. reducing
rates on a large number of commodi-
ties from 20 to 40 per cent we're put
into force that it would reach $1,000
900 a year.. The witness under exam
ination was compelled to admit that
the Burlington's net profits on state
and interstate business taken together
in Missouri in 1904 and 1905, amount
to about $5,00O,000 annually, but
stuck to 1t that the more local busi-
ness the road handled the more It
would lose
The key to the puzzle with which
Attorney General Hadiey seems to
have grappled in vain may be found
by coming to Nebraska and digging
out of the legislative archives the let
ter over the signature of General
Manager Holdrege, representing that
road in this state. dated March 6,
1905, endeavorlng to uphold the rates
in force in Nebraska, which are much
higher than the rates exacted in Mis-
souri,. In a labored argument the
Holdrege letter undertook to make
several points, among them:
5. That the supreme court of the United
States in its decision upon the Nebraska
maximum rate cases requires that in con-
sidering the measure of the reasonableness
traffic must be eliminated and that rates
within state boundaries cannot be reduced
by law below a compensatory basis.
1t can safely be asserted that no rail-
road in the state of Nebraska can be sus-
tanned at its present condition of efficiency
and give the local service now rendered OF
expected and depend exclusively on local
state traffic at the present rates. and that,
therefore, existing state rates cannot law
fully be reduced by this legislature.
And further the letter attempts to
clinch the position by this convincing
argument:
The fact is that by reason OF competition
and the effort to make suitable rates to in
crease the volume of traffic the present
tariffs in many of the agricultural states
Of the west are clearly insufficient to pay
in any return upon the investment with
out the assistance of interstate traffic,
which, in accordance with the United
States court decision, is not an element
for consideration in the problems before
the state legislature.
Transformed into cold figures, the
lawyer who wrote the Holdrege letter
asserts that the traffic local to Ne
braska is only 20 per cent of the traf-
fic handled in and through this state
by his company, making the net earn
ings upon this strictly local traffic
for the preceding fiscal year only $459
per mile, amounting to 1.76 per cent
upon the valuation upon which we
are willing to pay taxes" and "these
figures clearly cannot be considered a
fair rate of interest upon the actual
investment"
The puzzle whose key Attorney
General Hadley is looking for, there
fore, is unlocked by the statistical
jugglery by which the Burlington
charges as expenses of operation In
Missouri the total outlay in that state
and offsets this against its receipts
from local traffic while crediting all
receipts from through business as
pure velvet to the profit account. In
other words, the Burlington financiers
persist in making the local traffic in
each state bear all the items of ex-
pense for both local and through traf-
fic, and then set UP the claim that it
Is losing money on local business and
that a reduction of local rates will be
equivalent to confscation of their
property.
On this theory every railroad in the
country would have to be regarded as
charitable institution, carrying
freight and passengers out of pure
benevolence to the people and trust
ing to divine Providence to furnish a
suitable reward at some. future date.
The Bee is sure it voices the senti-
ment of the people of Nebraska in ex-
pressing the hope that Attorney Gen
eral Hadley will go to the bottom of
the Burlington rate extortions and
blaze a way for our legislature and
railway commission to follow