were in force. In other words, the cost of carrying to the market has averaged a smaller percentage of the value of the commodity, since the first report in this case, than it averaged under the previous rates. Regarded as a tax the rates now condemned are certainly not more burdensome than they were under former conditions. This increased value of the property may not of itself justify an increase in the transportation charge, but it is a circumstance which may properly be taken into account in determining the reasonableness of the rates in question.

2. Since the first report there has been a marked and unavoidable increase in the cost of operating the defendant roads, and that increase, so far as can now be seen, is likely to be permanent. Not only have materials and supplies of nearly every kind commanded higher prices, but in a variety of ways the operating conditions and requirements have involved greater outlays, while the item of wages has materially increased. For example, in the early spring of 1907 there was an increase which amounted, as is reliably estimated, to an average of 10 per cent for all classes of employees on the defendant railways. Bearing in mind that the wages paid to employees are fully two-thirds of the total expenses, it will be seen that this increase of a year ago amounted to a large sum in the aggregate, to say nothing of prior increases made about the time these cattle rates were last advanced. Without taking up the matter in detail, it is sufficient to refer to the fact of common knowledge that the expense of conducting railway operations has been materially greater during the last two or three years, and will probably continue to be greater for an indefinite period. If these carriers were not receiving under former rates a larger revenue than they were entitled to, this increased cost of operation justifies increased earnings, unless the increased cost is offset by proportionate increase in the volume of traffic. While the entire business of these lines increased greatly during the last few years, I do not understand that there was a corresponding increase in this particular traffic. Its volume appears to grow only moderately, and there is nothing to indicate a more rapid increase in the future. Increase of traffic generally may compensate for increased expenses, and that increase may be so great as to require a reduction of charges, but this, in my judg ment, would hardly warrant the reduction of rates on a particular commodity whose volume remains fairly stationary.

3. The record in this case convinces me that these carriers handle no other commodity, moving in large volume and contributing a substantial part of their earnings, which is less profitable than the cattle traffic at the rates now in force. It is an expensive and somewhat hazardous traffic, requiring comparatively rapid movement and involving a large return haul of empty cars. I am satisfied that

the defendants ought not to be required to shrink their earnings from the transportation of live stock, if their aggregate earnings are not now excessive, because there is no other traffic on which the rates could be justly increased to make up for the loss resulting from a reduction of these cattle rates. This is a feature of the case which seems to me quite important. Having reference to the territory in which these lines mainly operate and the character of the traffic on which they must rely for the bulk of their revenues, it seems clear to me that the rates in question are relatively among the lowest as respects both gross and net earnings per car or per 100 pounds. This being so, there would be no warrant for imposing higher charges upon other commodities to compensate for reduced earnings upon this particular traffic. Therefore, so far as the reasonableness of these rates is determined from the standpoint of comparative earnings, I entertain the belief that the present rates are not excessive. They ought not to be reduced, in my judgment, unless there is something in the nature of this traffic which requires that the rates at which it is carried shall be relatively lower than they have been since the last advance, or the aggregate earnings from all traffic can be diminished without injustice to the carriers.

4. It is evident to my mind that the earnings of these carriers are not excessive. Taken together or separately, so far as they operate mainly in the territory affected by the advance in question, their average earnings for the last few years, leaving out of account the less favorable results in previous years, do not indicate that they should be compelled to perform the transportation service required in that section at lower cost to the public. In no case has the return to invested capital been more than moderate, in most cases it has been actually meager. Even in the recent period of exceptional prosperity, in which these lines undoubtedly shared, the amounts paid in interest and dividends were comparatively small in practically every instance. It is of course true that they showed handsome earnings during a season of phenomenal business, but the results then obtained ought not to be accepted, it seems to me, as proof that their cattle rates were unreasonably advanced.

In the majority report the eight months ending February 28, 1906, are compared with the eight months ending February 28, 1907, and this comparison shows an increase in the latter period of 44 per cent in net income, as against an increase in gross income of 25 per cent and an increase of operating expenses of 18 per cent. Had the comparison been made between the eight months beginning February 28, 1906, and the eight months beginning February 28, 1907, the net income on many of the lines would have shown a positive decrease, while a comparison between the eight months ending February 28,

1907, and the eight months ending February 28, 1908, would show a much greater loss. It is sufficient upon this point to refer to an official statement of the Texas Railroad Commission, issued on the last-named date, which gives the earnings and expenses of the railroads of that state for the last six months of the calendar year 1907, and compares the same with the last six months of the calendar year 1906. The showing in a word is a decrease of 3.85 per cent in gross income, an increase of 16.63 per cent in cost of operation, and a decrease of 41.82 per cent in net income from operation. Nothing more than this seems to me necessary to prove that the earnings of the defendant lines, whether gross or net, whether on cattle traffic or on all traffic, are from no point of view excessive.

5. All of these roads require considerable outlays, and most of them require heavy expenditures to put them in proper condition for satisfactory service to the public. Indeed, as I see the matter, there is nothing so much needed in the section of country mainly affected by the rates in question as the improvement and extension of its railway facilities. It is a region of vast extent, capable of rich and rapid development, which ought to have now and must have in the future, if its prosperity is to continue, largely augmented and perfected means of railroad communication. It needs more roads and better roads, with increased speed, convenience, and safety, much more than it needs lower rates of transportation. Indeed, I am confident that the general public throughout that territory, including the cattle raisers themselves, will be much less benefited by reducing these rates than they would be by continuing the present rates and devoting the difference to improving the railways on whose service they must depend. With all respect for the views of the majority, with whom I regret to disagree, I am constrained to believe that a different conclusion would be supported by considerations of general public welfare throughout the cattle-raising territory.

One further observation. There is nothing to indicate that the rates now in force restrict the volume of cattle traffic or appreciably affect the prosperity of the cattle industry. The traffic moves freely from all points of origin under the present rates and will not be measurably increased by the proposed reduction. There is no charge of discrimination. The relation of rates as between different sections of production and the various markets to which shipments are made has not been criticised in this proceeding. The sole contention of complainant is that all these advanced rates are unreasonably high, and that contention is mainly based upon the fact that they were formerly lower. But this fact of itself, according to a recent decision of the Supreme Court, carries with it no presumption

that the advance was not rightfully made, and I am of the opinion that its justification has been fairly established. It seems evident to me that a reduction of 3 cents per 100 pounds in these cattle rates will not by the smallest fraction lessen the price paid by the consumer of cattle products, and I seriously doubt whether it will be of any appreciable benefit to the farmer or ranchman. It amounts in the aggregate to a very large sum, upwards of $1,000,000 a year according to reliable estimates, most of which will go, as I see the situation, to the middlemen and the packers.

In my judgment the rates in question have not been shown to be unreasonable, and I am therefore of the opinion that the complaint should be dismissed.

13 I. C. C. Rep.

47251-08- -30

No. 1305.

ROYAL COAL & COKE COMPANY

v.

SOUTHERN RAILWAY COMPANY.

No. 1306.

TENNESSEE COAL COMPANY

v.

SOUTHERN RAILWAY COMPANY.

No. 1307.

MINERSVILLE COAL COMPANY

v.

SOUTHERN RAILWAY COMPANY.

Submitted February 29, 1908. Decided April 13, 1908.

The defendant, the Southern Railway Company, on its Coster or Knoxville division, had in effect a plan of distribution of coal cars during periods of car shortage whereby the available cars were divided between the mines furnishing the defendant with less than their total output for its fuel supply and the purely commercial mines, on the following basis:

The tonnage of the cars for railway fuel supplied to the fuel-contract mines was deducted from the rated capacities of such mines, and the remainder was considered the rating of such mines on which they shared with the comn ercial mines in a pro rata distribution of the car tonnage available for commercial shipments. This plan of car distribution applied only to cars assigned for the carrier's own fuel supply; there were no individual cars or cars owned by others than the carrier itself on that division; and the defendant treated foreign railway fuel cars as though they had been commercial cars, i. e., the billing of such cars was respected, but they were charged against the mines to which they were assigned as commercial cars.