The Birmingham age-herald., 1912-05-28

CdH tn6 acdfIleT Juellly uhA 0ess high rates on the ground that In that way 1t will be enabled to meet losses on it's interstate business"
 No intelligent person, at all familiar with our dual system of government, IS ignorant of the truth that a carrier profit from it's interstate commerce can not be included in it's earnings from its domestic business. in determining wneth- CT the returns from the latter are con fiscatory. Yet we frequently find men. sometimes thoughtiessiy, and sometimes deliberately to delude public opinion as- serting that decision pronouncing do- nestle rates unreasonable must be un- just and vicious. because the carrier out of the combined earnings on It's entire business, state and interstate, was en- abled to declare sufficient dividends to keep it's stock at or above par. No just person needs to be reminded that de- cision on such a question cannot be un- just, because the court, in ascertaining the facts which must control its judg- meut. refuses to mingle earnings which the supreme law forbids to be inter- mingied.z Every intelligent person is aware that the operation of a rate statute on carriers domestic business, may not allow just compensation for the use of the property devoted to that ser vice, and yet that it may earn sufficient
 
 give it's stock a rating, at or above par, in the markets of the country.
 In the rate cases lately decided by this court (not yet officially reported) it was said:
 ''It Is admitted that the allotment to interstate and intrastate commerce Of the proper share of the property used in common by the two is an exceedingly difficult problem. arising from the con ceded fact that. though the units of service are the same in each. the rela- tive aggregate cost of the two service< Is very different. If the ton and pas senger miles were of uniform cost in the two. of course, the share of each in the use of the property would be the proportion of the whole value which the gross earnings of each bear to each other. of the earnings of sacn to the whole earnings But where two persons or patrons are served by common property. one may do less business, bur require in doing it the use of the prop erty in greater proportion than the other-and. therefore, the relation of the respective services to each other can only be determined by first settling the relative cost of doing each business. Chicago. etc. vs. Tompkins, 176 |. s. 179. The difficulty of the problem arises from the fact that the cost of transpor- DDTtdliOH iHNOlNcS dii dSccSsfiCnl Ou liit subjects of commerce of charges to GOV CT. common. general overhead or non haulage expenses, and also the haulage cost. and that there is no way of allo- eating such charges to the transporta- tion items when the propery is used in common. ~ It can not be said what share of these common expenses shall be apportioned to an instrastate ton or passenger being transported 1t 1a In he tt, xpif interstate tons and passengers. The solution of the question has heretofore been made to rest entirely on the ex- perience and testimony of experts as to the relative differences in the cost of the two services. and in every case in which the question has arisen the wit nesses have. while agreeing on the fact that local or intrastate business is more costly than through or interstate busi- ness. varied very widely as to the amount of such s9''-According to the conditions under which the two businesses were conducted.
 As the inquiry relates to what is fair return upon the value of the property used in the different businesses. and the cost of doing the two businesses is not the same, 1t Is manifest that the net earnings cannot be the same and that to treat them as such and to apportion the
  strastate business according to the gross earnings in inter and intrastate commerce Is to establish a wrong standard of re- muneration for the use of the value of the property devoted to intrastate com merce Smyth vs. Ames, 169 U. S., 46s, Tompkins ys. Chicago. supra. In the latter case the supreme court, speaking of the findings of the lower court to the ef- feet that it could not determine the cost of the local business with mathematical accuracy, said:
 The statement is undoubtedly true. but there are many things which have to be determined by courts and juries in respect of which mathematical cer- tainty is not possible. Beyond the figures given from the books of the company of the actual cost of doing the total business of the company. there was the testimony of several experts as to the relative cost of doing local and through business. Such testimony is not to be disregarded, simply because 1t cannot demonstrate by figures the exact amount of per cent. of the extra cost That there is difference Is man ifest and upon such difference the opinion of experts. familiar with the railroad business, is competent testi- mony and cannot be disregarded.''
 Various rules have been followed by
 
 master correctly observes. in all the cases since Smyth vs. Ames, distribution of operation expenses has been effected in proportion to the gross revenue. with an extra load for local business varying in amount according to the varying condi- tions, and such distribution made by ex- perts skilled in railroad transportation. with practical uniformity has been ac- cepted by the courts in ascertaining the value of the property the carrier devoted to it's local business. Tn no case which the writer has examined has any testimony ever been given that the cost of earning dollar in intrastate traffic was less than 10 per cent more on the dollar than the average cost of earning a dollar on all traffic. and in nearly all the cases the excess cost of doing intrastate business was shown to be far more. In the three rate cases recently decided in this court method of ascertaining these expenses, without the use of load, in general, was formulated by MT. w. A. Colston. on whats Is called the unit of service basis equalized,. The master in those cases found this method very useful in ascertaining the expenses of freight and passenger services. and their division between inter and intrastate business. and the finding by the master using that plan. whose results were verified in other ways, were approved by this court. It would unduly swell this opinion to enter uron any discussion of the merits of the unit service basis capitalized as compared with the practice of adding load to the cost of doing intrastate business. The special master did not think the unit of service hasis applicable to the conditions with which he dealt and found it inac- curate. in some respects. when applied to scompIa ina ptS' busipe<x