Page:The Green Bag (1889–1914), Volume 19.pdf/194

 COST OF CARRIAGE than those to which reference has been made by the Supreme Court. While the method of the Kentucky Rail road Commission is most elaborate, yet to determine with mathematical accuracy the cost of traffic, a definite method has not as yet been devised. The difficulty is two fold. First, on the one line of road, with a single equipment, two kinds of traffic are carried. How is the capital to be separated for the purpose of producing revenue upon these two kinds of traffic. Again, the method used by the Kentucky Commission considers the whole schedule of rates, rates in gross, and secures its results in figures per ton per mile. In short, in the same focus it takes a broad survey of all kinds of commodities in the two kinds of traffic, and microscopi cally looks at the smallest possible unit of measurement. The shipment of a box of books is augmented to per ton per mile; a shipment of a carload or trainload of vege tables is reduced to the same unit. While this unit may be used in mathematics, it can be confidentially asserted that it rarely, if ever, enters the head of a traffic manager making rates; ordinarily he does not con sider the cost of traffic, for he does not know it. The difficulties in this matter seem to be the unwarranted assumptions, within which there might be such a variation as to cause rates (single or as a schedule) to be unreason ably low on the one hand or extortionate on the other. The assumption that the future quantity of traffic will remain the same,1 the assumption that the average 1 It was said by Mr. Justice Brewer in Chicago Grand Trunk Railway Company v. Wellman (143 U. S. 339), "Must it be declared, as matter of law, that a reduction of rates necessarily diminishes income? May it not be possible — indeed, does not all experience suggest the probability — that a reduction in rates will increase the amount of business, and, therefore, the earnings?" These suggestive queries were quoted and

haul of both inter- and intra-state traffic will not be materially different, the assump^ tion that operating expenses for a particular year are reasonable, the assumption what shall constitute fair valuation of the car rier's property, the amount of tonnage it will transport, the fair rate of return, the arbitrary rule that all parts of the road cost the same to operate per unit,1 the equally arbitrary rule that the rate of return ought to be the same for all roads and branches of roads, that the unit of per ton mile is a safe and equitable one, that any unit ought to apply to the eight thousand articles in numerous classes, that terminal expenses are the same for all classes of commodities, that the haul on interstate traffic costs the same as on local traffic, and finally, but by no means unimportant, that the carrier shall give us correct figures. These assump tions heretofore made may and" may not be true. Until proven correct, we cannot hope to ascertain to a mathematical certainty the cost of transportation to the carrier by any of the methods considered or one hereafter to be devised. Washington, D.C., February, 1907. approved by Mr. Justice Shiras in St. L. & S. F. Ry. Co. v. Gill (156 U. S. 648). 1 It is curious to note that a former president of the Louisville and Nashville Railroad analyzed the cost of carrying freight on the main line and on each of the different branches. Mr. Albert Fink summed up as follows: "A careful investigation shows that, under ordinary conditions under which transportation service is generally per formed, the cost per ton mile in some instances may not exceed one-seventh of a cent and in others will be as high as seventy-three cents per ton mile on the same road." That is to say, the cost may vary from one to five hundred. It is said that the receipts of the Paris and Lyons Company from Paris to Marseilles, about one-eighth of the entire trackage, produces one-half the net earnings of the company.