The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1922-05-25
FREIGHT RATES
CUT 10 PER CENT
Commission Hands Down
Decision Affecting All
Freight Rates.
TO REDUCE EARNINGS
Commission Holds Smaller Per-
centage Reasonable Earn
ing" for Rail Lines.
(By Associated Press Leased wire.)

,(By Associated Press Leased Wire.)
Washington.-Re in freight
rates averaging about 1870 were or
dered today by the interstate com
merce commission in a decision result
ing from its inquiry into the general
rate structure of the nation. The cut
in freight rates was fixed by the COM
mission at 14@o in eastern territory;
1870 in western territory and 1870
in the southern and mountain Pacific
territories. All reductions ordered are
effective July list and constitute
greater cut than was generally ex-
pected. The commission in ordering
the which are on hori-
zontal basis-held that the nations
railroads are entitled to earn 5M9o on
the value of their property rather than
the approximate $50 fixed as reason
able return in the transportation act
of 1920.
No Changes in Passenger Rate.
Transportation charges on passenger
travel and Pullman charges were left
unaffected by today's decision. The
commission in its decision declared
general reduction in the levels "as
substantial as the condition of the
carrier will permit will tend to stab
ilize conditions" Of all business.
Transportation charges have mount
ed to the point where they are imped-
ing the free flow of commerce" Nthe
commissions decision which ordered
far greater reduction of rates than had
been anticipated in any quarter, said,
"and are thus tending the defeat of
the purpose for which they were estab-
lished, that of producing revenue which
would enable the carriers to provide
the people of the United States with
adequate transportation"
Only Two Members Dissent.
Only two members of the board dis
sented, holding the adjustments should
have been made in commodity rates
rather than on a horizontal basis.
Chairman McChord and other commits
sioners accepted this view in supple
mental opinion concurring with the
majority.
The order of the commission fixing
the new level of rates defined the per-
centages of reduction as follows:
ain the eastern group, also between
points in Illinois territory and between
illinois territory and the eastern
group, 269o instead of the 408o author
lied in the decision last cited (the rate
increases of 1920.
"In the western group and between
the western group and Illinois terri
tory, 81 5/10%o instead of the $3.50 so
authorized.
"In the southern and mountain Paci
fc groups, IL 5 1000 instead of the
$3.50 so authorized.
con inter-territorial traffic except
as otherwise provided herein, 300
instead of the 33 1s@o so authorized"
No Effect On Farmer.
Agricultural products will not be af-
fected by the reduction granted under
the commissions order today. The
reduction of 1910 made in the west
ern hay and grain rates last fall and
the volutary 1920 cut made in all agri-
cultural products by railroads January
1st would be substituted for the deci-
sion on these comm oQlJleS.
In the matter of reasonable return
the commission pointed out that until
March 1, 1922 railroads had legally
been entitled to $50 annual earnings
on the aggregate value of property
used in transportation. The sum was
fixed by the transportation act as the
amount equal to 515Fo with one-half of
one per cent additional to be granted
in the discretion of the commission for
provision for improvements and bet
terments to railroads. The commits
sion exercised this discretion and the
reasonable return consequently has
generally been known as "the $50 re.
turn" The commission in modifying
the fair return standard, reviewed
testimony taken by it in the genera.
rates case and concluded that "a sub
stantial reduction in the percentage Of
return of 6fo would be approximately
particularly in light of the fact that
the return allowed in 1920 was not
realized"
eve may observe that fair return
of 5.75Te," the commission said in fur
Their explanation, "after deducting the
federal corporation income tax on a
return of $50 would be approximately
the equivalent of fair return of SEQ
out Of which the federal income tax
was payable"
In this connection the commission
concluded that its 1920 estimates of
the aggregate value of railroad prop
erty in the country, which was SIS
900, 100000, as made for rate making
purposes, could still be accepted. TIE
changes in valuation made since would
be immaterial in calculating earnings.
Chairman McChord in his dissenting