The Birmingham age-herald., 1913-02-20
The Railroad Commission in
Formal Order DEGREES
New Rates Shall Go
Into Effect March 6
NEW COST BASIS is
USED IN FIGURES
BY THE COMMISSION
Commissioner McCord, in Birming
ham Last Night, Expressed Belief
That Federal Injunction Would
Be Issued Against En-
forcement of Rates

Montgomery, February l9.- Especially
The railroad commission Of Alaban
late this afternoon rendered decisie
ordering the Louisville and Nashvil
Railroad company TO re-establish the ?
cent passenger rate between all poin
on its line of railroad in Alabama, IT,
order to become effective on March :,
next.
The Louisville and Nashville Railroad
company is also ordered to publish ard
make effective joint rates between all
points in the state It's proportion of such
Joint rates not TO exceed the 2ls cents
standard rate prescribed. A rate OF u.
cents is prescribed for children not over
r years of age.
The decision of the railroad commis-
sion Is the result of recent hearings on
citation to the railroad company to
show cause why the commission should
not establish just and reasonable pas
senger rates on its lire in the state. Tho
hearing was completed some weeks ago,
and the railroad eompany's brief was
submitted TO ths commission ON Feo-
ruary IA.
On Is Per Cent Basis
In arriving at its decision the RAILROAD
commission gives a careful analysis OF
the method adopted for apportioning the
expense between inter and intra state
traffic. In the recent hearing the rail-
road company used the unit of service
basis" In the apportionment of expenses
and set out three separate valuation.
employed, the original cost capitalize
,ior values and reproduction values
The commission closely analyses tile
unit of service basis" points ont tie
fallaey which they claim that system
presents, and adopts an entirely new
theory, that of rs per cent load on intra-
slate traffic" which has been adopted
by some of the courts. q
According to this basis of appof-
tlonment, Is per cent is considered a
just cost earning 81 intrastate business
in excess Of the cost of earning 5
from all other business.
I'm this hearing" the commission
declares, there was some data pre-
sented showing same cost to be ID
per cent for intrastate above interstata
traffic This would indicate a differ
ence of less than 10 per cent In the
cost of earning 81 In intrastate as
compared with all traffic.
by applying the Is per cent load
to intrastate traffic in Alabama we
have an operating expense including
taxes on intrastate traffic of approx
imately s3,459,056 and revenue from
intrastate traffic of Sl,00306s. leaving
net revenue of s5Ss,012."
Returns to Stockholders
Following the theory of the us per
cent load on intrastate traffic" the
commission holds that by adopting
equalization values and the net rev
enue for apportioning such values be-
tween interstate and intrastate traffic
and arriving at the expense of oper-
/ ating on the basis of 10 per cent load
J for intrastate business, gives fairly
| uniform returns to the stockholders
/ from the business as a whole. from all
business in Alabama and from intra
state business tho net profit in each
Instance being slightly in excess Of
/ Il for dividends"
In reference to what railroad
should earn, the commission holds that
a railroad should earn all that the best
management can bring II with fair
service and reasonable rates.
Stimulation of Traffic
Answering the defendants complaint
tnat lower rates do not increase and
stimulate traffic, the commission holds
that "A comparison with results OF 9TH
er roads operating in Alabama which
put in effect the 21s cents standard
rate and cents mileage, does not
tend to sustain its claim. The commits
sion holds that this comparison shows
that the increase In traffic over the
roads that made the 2i4 cents rate
effective in 1907 when that rate was
encted by the legislature, was great
1y in excess OF the increase on the
Louisville and Nashville which road
resisted the establishment of the stat
utory rate.
"on shree out of four of these rail-
roads.r declares the commission in foi-
lowing out the line Of comparison, tine
increase in passenger miles was more
than sufficient to increase their rev
enues above the increase OF revenue
on the Louisville and NashNlile ran
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.co,tfuued ON Page Nine.)