Evening star., 1922-05-24
than was generally expected.

cut than was generally expected.
The commission. in ordering the
decreaseS-which are on horizontal
basis-held that the nations rail-
roads are entitled to earn So per
cent on the value of their property,
rather than the approximate per
cent under the transportation act of
1920.
Passenger Charges Unchanged.
Transportation charges on passen-
ger travel and Pullman charges were
left unaffected by today's decision.
Agricultural products will not be
affected by the reduction granted un-
der the commissions order today.
The reduction of 161a per cent made
in the western hay and grain rates
last fall and the voluntary 10 per
cent cut made in all agricultural
products by railroads January l will
be substituted for the decision on
these commodities.
The commission in its decision de-
clared a general reduction in rate
levels as substantial as the condi,
tion of the carriers Will permit Will
tend to stabilize conditions"
of all business.
Transportation charges have
mounted to the point where they are
impeding the free flow of commerce,
the commissions decision, which or
dered far greater reduction of rates
than had been anticipated in any
quarter. said, and are thus tending
to defeat the purpose for which they
were established-that of producing
revenue which would enable the car
riers to provide the people of the
United States with adequate trans
portation-"
Only two members of the board,
Commissioners Lewis and Cox. dis
sented, holding that the adjustments
should have been made in commodity
rates rather than on a horizontal
basis. Chairman McChord and other
commissioners accepted this view in
a supplemental opinion, concurring
with the majority.
The order of the commission fix
ing the new level of rates defined the
percentages of reduction as follows:
In the eastern group. also between
points in Illinois territory and be-
tween Illinois territory and the east
40 per cent authorized in the deci-
sions last cited (the rate increase
of 1920.
In the western group and between
the western group and Illinois terri
tory, 81 $40 per cent. instead of the
50 per cent authorized.
In the southern and mountain Pa
cific groups. u $40 per cent. instead
of the 25 per cent SO authorized.
"On interterritorial traffic, except as
otherwise provided herein, 20 per cent.
instead of the 33 Is per cent SO
authorized"
High Basis Called Futile.
Commissioner Potter in a separate
opinion concurring with the majority
declared that the fixing of 1.-The per
centages mentioned, is in effect
a requirement that present rates and
charges shall, generally speaking, be re-
duced 10 per cent-certain reductions
heretofore made to be treated as part
of such 10 per cent reduction"
The majority opinion reviewed the
recent history of rate regulation and
set forth summaries of arguments made
by shippers in favor of reductions and
carriers against reductions. 1t ex-
pressed the conclusion that assumption
that railroad rates can or should be
stabilized on the present high basis is
futile.
The majoity further said that until
the public is convinced that there is
little likelihood of immediate further
material reductions in prices or trans
portation charges, confidence necessary
to normal business will to that extent
be impaired"
Explaining the reason for adopting
a horizontal method of reducing freight
iocin col WI a
alterations in price levels had un-
equally affected different commodities.
the needs of commerce cannot be met
if rates are to fluctuate with market
prices of commodities" Its conclu-
sion was that reduction should be
made generally upon all commodities in
substantially equal ratio
How Fair Return Was Fixed.
In the matter of reasonable return,
the commission pointed out. that
until March 1, 1922, railroads had
been legally entitled to 6 per cent
annual earnings on the aggregate
value of property used in transporta-
ton. The sum was fixed by the trans
portation act as the amount equal to
5h per cent, with one half Of per
cent additional to be granted in the
discretion of the commission for
provisions for improvements and bet
terments to railroads. The commits
sion exercised this discretion. and
the reasonable return consequent
ly has generally been known as ''the
6 per cent return"
The commission in modifying the
fair return standard reviewed testi-
mony taken by 1t in the general rate
case and concluded that "a substan-
tial reduction in the percentage of
return might be UnsettliliS in las
asteel. uarticulariy ia light of the fact