The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1913-08-02

ORDERS BIC CUT
The State Railroad Commission
of California
Makes Sweeping Reduction
in Express Rates.
AMOUNTS TO $3.50, 900 A YEAR
Finds Companies Are Making
Too Much Money.
Annual Profit Is 1876 Per Cent
on Investment.
AMOUNTS TO $3.50, 900 A YEAR

San Francisco, Aug. 2.-The state
railroad commission of California has
ordered reductions in the express
rates of Wells Fargo & Company,
amounting to a cut of S750.OOO from
present annual revenues. Every rate
of the company in this state is abol-
ished by the order, which is effec-
tive October 1, and a large number of
new rates devised by the commission
on a ten-mile zone basis.
The express company is ordered to
operate six months on the commits
sion's rates, which are on the average
Is per cent below those heretofore
exacted, and then submit a statement
of its earnings, if it feels the rates
not Justified
At present the commission finds
the company makes net yearly profit
of $S42,097 on a property valuation
estimated at $613,233, or 1876 per
cent on its investment. The finding
pronounces the company "a parasite
on the railroads." and suggests that
instead of appealing to the interstate
commerce commission to reduce rates,
1.-The railroads look into this express
situation
possibly" the opinion says,
they will find some relief from at
least a part of the financial difficult
ties which they maintain beset them
I'VE do not See," the opinion con-
tinues, why the railroad companies,
If this service is public necessity,
1t seems to be, could not furnish
and maintain the comparatively
small amount of additional terminal
equipment which is necessary to car
ry on the pickup and delivery bust
ness of the express companies"
Fraud Is Made Possible.
The commission finds a sidelight on
this very question in the intercorpOrate
relationship between railroads and the
express companies which, it says,
makes fraud possible upon both the
railroads and the public 1t cites the
fact that the Wells Fargo company
pays to the Atchison, Topeka & Santa
Fe railroad 80 per cent of its gross
earnings on that line and to the South
ern Pacific only 40.S per cent of it's like
gross earnings. This, the finding assert
enables the Southern Pacific to sac
fifice its own earnings to swell Wells
Fargo & Co.'S revenue" and the COM
mission points out as significant the
fact that neither the Santa Fe nor it's
principal stockholders are heavily. IL
ct all, interested in Wells Fargo & Co.,
nor the Southern Pacific or its stock
holders
The present officials of the Southern
Pacific, the commission says, did not
have control at the time its contract
with the express company was made.
That somebody is getting the worst
of it, there is no doubt" the commits
sion says in commenting on existing
rates.
1t estimates that the Southern Pa
cific in effect pays to the Wells Fargo
company $2,5O0.O0O annually more than
it should on all business in California.
This amount, the commission says
must come out of the railroads other
activities, and hence in the long run
from its patrons.
The decision follows two and a half
years of investigation, during which
more than 2oUO,0o0 way bills were scru-
tinized. The investigation started when
upon taking office in 1911, the commits
sion refused to accept as reasonable
the schedule of rates filed with it by
the Wells Fargo company. Thereafter
the Santa Fe interviewed, asking for
more than the 55 per cent of gross
receipts it was getting, but the South
ern Pacific, which the commission
found to be receiving only 40 per cent
of the companys earnings, took no ac-
ton. This is commented upon in the
findings of the commission.