New-York tribune., 1907-10-12
EARNINGS FALL OFF.
RESULT OF TWO-CENT LAW
pice-President Daly of Central Says
Ohio Report Is Misleading.

i1"Ae ohore road have increased in Ohio under
the operation of the two-cent fare law.
To say the least" said Mr. DaIy Yesterday 10
reporter for The Tribune, "the figures given
out by the commission are decidedly misleading.
instead OF an increase in gross earnings OF the
Lake shores passenger traffic under Ohio's two
cent law there has been a pronounced decrease
/ IN the period considered in the report as COM
pared with the previous fiscal year. when the
/ increased traffic is taken into consideration"
/ MI. DAILY proceeded to make an analytical
| comparison of the roads earnings and then
discussed railroad conditions as a whole from,
/ the point of view Of a man Of long experiences
with passenger traffic. He insisted that the best
/ interests Of the public demanded that the reg
ulation of passenger rates be left TO the rail-
roads. declaring that the law Of competition
would bring the lowest possible rates for all
i lines He also pointed out that one certain re-
suit of compulsory two-cent fares would be the
abandonment by the railroads of the cheap ex-
cursions which In the past have been big boon
| to the people at large
! In the report OF the Ohio commission Mr.
! DAILY was told. the gross earnings OF the Lake
Shore Michigan Southern read in Ohio for the
| year ended June 80 1907. are given as 81, III
4;i3 as compared with S2.471395 for the previ-
Gus year and an average Of S2.376.O7O for five
years. If the two-cent fare law is detriment
| TO the earning capacity of railroad. how do
you explain this seeming increase2"
The commissions statement is positively
misleading and decidedly unreliable" Mr. Daily
! replied. The method pursued by the commits
sion in arriving at the figures presented in it's
report is illogical and unfair. AS matter of
! fact. the Lake Shore has suffered a pronounced
/ falling of in its passenger earnings in Ohio
since the two-cent fare law went into effect on
| March 10. 1906
| IN the first place the commission has failed
/ N aIya he ir0DO md distinC-
| tion between interstate and intrastate traffic
BY that mean, for the benefit Of the uninitiated,
the distinction between local and through traffic.
/ This is one case where figures lie. and it is
unfair, even if unintentional. deception OF the
public.
l. DECREASE IN ROADS EARNINGS
/ "As a matter of fact. the local earnings OF
| the Lake Shore in Ohio for the year ended
/ June 30 1907. instead Of increasing over the
previous year. actually decreased about IL per
| cent The passenger traffic in the year ended
/ last June was the heaviest record all over
the country. and Ohio. taking Interstate and
intrastate traffic into account. was no exception
| According to figures in my possession. the
| average increase numerically in this traffic for
the year considered was between II and is per
cent. Were the 2-cent fare law a stimulus
to passenger traffic the gross earnings of the
| Lake Shore in Ohio for intrastate traffic should
| at least have kept pace with this increase. On
the contrary. I can prove to any expert that the
Increase was only about per cent This shows
| a reduction in gross earnings for the year OF
/ about II per cent when compared with the in
/ creased traffic. And bear in mind that 1 am
/ taIking of gross earnings. When the operating
expenses are deducted the deficit in net earnings
/ is easily to be SEEN
| Il am frank to say that the reduction OF fares
l TTf7 he
/ reason. 1 know, is that the increase in traffic
/ for the period referred to in states where no
/ such reduction in fares took place was far
| greater in volume than IL was in the State Of
| Ohio
s'It should be remembered that about I5 per
| cent Of the Lake Shores passenger traffic in
| Ohio is intrastate. The percentage has been
| greatly increased since the operation or the
! 1-cent fare law. A large number OF through pas
| sengers, instead OF buying through tickets, are
/ now buving tickets to the state line. and then
| buyinC again at Crestline or Lima 70 Youngs-
town. This throws the receipts of what Is really
| Interstate traffic into intrastate traffic. When
| the operatfng expenses are considered 1t does
| not REQUIRE much thought to show the actual
| decrease in earnings in Ohio under 2-cent fare
"As a matter of fact. the intrastate passenger
| rates for the last ten years have not averaged
| more than two and one-quarter cents q mile
I figure that the two-cent fare, instead OF SUM-
Mating traffic In Ohio. has merely made re-
| duction of S3 per cent in intrastate revenue.
| Rear in mind In considering these figures that
| the increase in intrastate traffic last year was
| about 10 per cent
| ORJECTs TO METHOD OF FIGURING.
Ter me show you the injustice Of the COM
| MISSIONS method In arriving at its figures In
the first place 1t takes the total gross earnings
of rbe entire line Then II figures the percent
| age living in Ohio OF the total mileage Of the
| line Finally it multiplies the total gross
| earnings by this mileage percentage and claims
| for Ohio the gross earnings thus resulting
This is manifesty unjust, as Ohio thus gets
credit for decidedly large amount Of earn
ings not hers. In the case OF the Lake Shore
| the mileage percentage IN Ohio is S99 Would
anv business % experience strike on a
balance sheet in this manner?
.eUhat will be the result? In the first place.
the reduction of rates is likely necessarily 10
compel many railroads to abandon the running
OF nopular excursions at cheap rates which were
taken advantage of by the greater masses of
the people The reason is plainly logical
one 1t is absolutely impossible for the rail-
roads to maintain the minimum OF these rates
while the maximum rates are being forced down
bv state legislation. My idea is that 80 per
cent of the travelling public has been benefited
bv these minimum rates. while only 10 per cent
gain benefit through the maximum rates
Il want to say right here that America to-
day has the lowest passenger rate Of any cOun-
try where railroads exist. and at the same time
its railroads give the best service. Railroad
rates are established not by legislative law.
hui siunpIy by the laws of trade. In my judg-
ment. there is law so strong that could be