It is too early for most of the May reports of the large carriers to have reached us, and at the time of writing only two of the principal carriers have filed their reports for May. While it probably would be incorrect to say that these two are typical, it is not without significance to point out that the operating income of the Southern Pacific Company for May, 1917, is more than 30 per cent greater than for May, 1916, and that while that of the Delaware, Lackawanna & Western, the only large eastern carrier whose last monthly report has been received, shows a falling off, it is yet substantially greater than for any May in the four years preceding 1916. The figures for the Delaware, Lackawanna & Western for the month of May for the last 10 years are shown hereunder: In our reports relating to advanced rate cases which have preceded this one more or less has been said about operating ratios. I fully appreciate the limitations inherent in the use of operating ratios. However they have been among the more prominent factors which appear upon the respective records and in our reports. The table below states the operating ratios for all class I carriers in the eastern district for the first four months of each of the last 10 years: Table of operating ratios for class I steam railways, eastern district. January. April.. 76.35 70.66 80.68 83.91 76.44 79.16 77.34 72.44 74.71 80 82 An examination of this table shows conclusively that so far as operating ratios may be used as a barometer, the first four months of 1917 do not necessarily predict unfavorable results for the entire year. In fact it will be observed that for the banner year 1913, three out of the four operating ratios were more unfavorable than the corresponding ratios for 1917. I would be unwilling to state that this necessarily indicates that 1917 will result in larger net incomes than 1913, but I am equally unwilling to agree that the ratios for 1917 and the relatively unfavorable indications of certain other factors together support the conclusion that an emergency now exists which requires an immediate increase in the scale of class rates. Future events may justify this increase. Events up to the present have not done so. MCCHORD, Commissioner, dissenting: Upon the facts before us, I concur in the dissent by COMMISSIONER MEYER. The issue presented is in reality one largely of governmental policy, rather than a question whether the rates sought to be made effective July 1 are reasonable for the service of transportation. The nation is at war, costs of fuel and other commodities are abnormal, the conditions affecting the volume and movement of traffic are without precedent. The future of these conditions, immediate or remote, can not be predicted with even a fair degree of certainty. Thus the situation before us is not sufficiently normal or stable in character to make possible an intelligent inquiry into the reasonableness of rates. That the operating costs of certain carriers, particularly in eastern territory, have been substantially increased by the increased costs of fuel and supplies is apparent. Should this Commission upon the showing here made approve an increase of rates predicated in a large measure upon prophecies for the future, to strengthen the credit of the carriers, or should the prices of fuel and supplies be supervised by governmental authority? It is argued with much force that this is a question for the Congress to determine and that until it is clear that such control will not be exercised and that the carriers' fears as to what may happen in the future have been realized, this Commission can not be justified in placing the burden upon the general public in the form of increased rates, especially in view of the showing made by the carriers as to their earnings. At the present moment it appears probable that the Congress will act in the matter. The Committee on Interstate and Foreign Commerce of the Senate is now holding hearings on the general subject of the control of prices. Coal operators have been in conference with the Federal Trade Commission and other government officers on the same subject. It appears that a special committee representing coal operators in all sections of the country has proposed that prices of coal during the war be fixed by a joint governmental commission. Congress has now before it the report and recommendations of the Federal Trade Commission on the bituminous coal situation. No report has yet been made to the Congress by the commission appointed by the President to observe the operation and effects of the so-called Adamson law. It may be fairly said that the matter of the governmental control of prices of various important commodities affecting these carriers is now before the Congress. 45 I. C. C. With reference to the assertion that prices of certain commodities are affected by car supply it should be remembered that by the carservice act, approved May 29, 1917, the Congress has given this Commission full authority over the movement, distribution, exchange, interchange, and return of cars, and I do not doubt that through a vigorous exercise of that authority substantially better transportation conditions and additional revenue can be secured. It is my judgment, therefore, that this Commission should report to the Congress the essential facts disclosed by this record. If it should be determined by that body that the prices demanded of the carriers for fuel and supplies are reasonable under present conditions, or are not such as to warrant control by the government, and it should hereafter appear that the apprehensions expressed by the carriers have been realized, then I am prepared to sanction such rate increases as will permit the carriers to so equip themselves as to enable them to perform, in the most efficient manner, the transportation required of them. Those apprehensions were expressed by the chairman of the carriers' presidents committee on March 22, 1917, in the opening paragraph of his statement to the Commission in this case, as follows: Mr. CHAIRMAN AND GENTLEMEN OF THE COMMISSION: We are here on what we regard as a very serious question. We realize that the conditions of the railroads to-day present a menace to the country, not alone to the owners of the properties, but as affecting directly the international situation. It is absolutely essential that the railroads of this country shall be in splendid working order, not merely workable physically, but in a position to fulfill their full duties to meet what we all believe is coming—a crisis in our history; and to do it effectively and properly. Operating revenues sufficient to enable the carriers to perform their full duties are unquestionably required. In the event that the apprehensions expressed by the carriers are realized and increased charges for transportation become necessary, I would not limit those increases to certain classes of traffic, nor, in the absence of very clear proof of differences in conditions, to particular sections of the country. Rate increases, made necessary by war conditions, should be borne by all sections of the country and all classes of traffic, in so far as influences of those conditions are national in scope. It is admitted by the carriers that they do not seek the increase in freight rates for the purpose of purchasing additional equipment. motive power, or extension of terminals, but for the sole purpose of paying increased cost of wages, material, fuel, and supplies. Metals include various quotations of pig iron and partially manufactured and finished products, as well as minor metals, coal and petroleum. TABLE NO. 3.-Statement slowing cost of freight cars in 1917 as compared with prices in 1916 or prior thereto. Ill. Central R. R. Co.. ..do. C., B. & Q. R. R. Co......do.... 1,681.95 2 808.00 21.63/.00 2, 00.00 1,531 03 1.540.00 81,891 00 (This company has had bid submitted in 1917 of $42,510 for 2 combined steel baggage, mail, and express cars. This compares with the price paid the same company in 1916 for 2 units of same equipment of $23,640.) $1,468.05 2 1915. $2,806.96 Oil tank cars. Gondola cars. Combination baggage and mail cars. 1916 price is for 1917 delivery. Box cars. MAR. I APR. / MAY I JULY I AUG. I SEPT. I OCT. I 1 ΛΟΝ DEC. I JAN. I FEB. I MAR./ APR. / |