Page:The Green Bag (1889–1914), Volume 19.pdf/192

 COST OF CARRIAGE

169

cost to a carrier for doing the freight ser vice in that state during the year 1905 upon a ton mile basis. It was in evidence from the carrier what amount of the money was properly chargeable to the intra-state freight traffic. This was separated by the carrier into two parts, one chargeable to haulage or transportation and the other to services other than haulage or transpor tation, such as terminal charges. It was decided that the total of the amount charge able for haulage is fairly apportionable between intra- and interstate freight upon the basis of total ton miles. The charges for services other than haulage or transpor tation was said to be fairly apportionable between each of the two classes of freight based upon the number of tons. The car rier having given figures as to the average length of haul of interstate and intra state freight, the amount chargeable to charges other than for haulage was divided by the number of tons (inter-plus intra-state) and this was found to give an average charge per ton for station loading and unloading, advertising, damage, and, in fact, all ser vices except haulage of 16.25 cents per ton. This amount was then divided by the aver age haul of the state traffic and produced a result of .1659 cent. In order to secure a comparison between the inter- and intra state traffic the average charge per ton was divided by the average haul of interstate freight, producing a result of .1092 cent. That is to say, by reason of the difference between the number of tons of state traffic and the number of tons of interstate traffic hauled by the carrier, and the variation in the length of haul between these two kinds of traffic, there is chargeable for expenses other than haulage .1659. cent on the local traffic and .1092 cent on the inter state traffic.1 The Commission then proceeded to ascer tain the cost per ton mile for haulage.

This was accomplished by dividing the operating expenses for the state traffic by the number of ton miles of state traffic, which produced a haulage charge per ton mile of .3884 cent. To this amount charge able for haulage (.3884 cent) was added the cost for charges other than haulage (.1659 cent) producing the fair estimated cost of all service for state traffic per ton mile, .5543 cent. By the same method the interstate cost for haulage was found to be .4976 cent per ton mile. That is to say, the cost of haulage was estimated to be the same upon state traffic as upon interstate traffic, while the cost for stations and other services except haulage, is more upon intra- than upon interstate traffic.1 At this point the Kentucky Railroad Commission approached the serious ques tion of the value of the physical property within the state and the amount of money which ought to be earned upon it. The Commission having been furnished by the carrier the physical value of the property and having ascertained the rate of interest which securities of this kind are accustomed to produce, the quotations on stocks and bonds being considered, it remained to ascertain how the fair valuation should be divided so that one portion of it should produce adequate revenue from state freight and another portion produce revenue from interstate freight. The first propo sition is to separate this valuation into freight and passenger business. While the Kentucky Commission assumes that this separation must be made, it does not seem to have done so. Having determined the proper total amount to be earned by the carrier, from both inter- and intra state business, it attempts to ascertain what shall be used as a basis for dividing this fund equitably as between the two kinds of traffic. "Certainly neither gross earnings nor net earnings can be a satis-

1 The expenses for terminal charges, damage, advertising, etc., were therefore 51 per cent more on intra-state traffic than on interstate traffic.

1 The total cost upon the ton mile basis on intra-state traffic as found in this case is. n. 4 per cent more than on interstate traffic.