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probably materially affect the rate per passenger per mile. So far as can be determined from the reports of the railroad companies on this subject, it is only conjecture for us to assign any reason for the discrepancies of a glaring character which seem to exist in the average receipts per passenger per mile.

It is important that the data disclosed by these figures as to the average receipts per passenger per mile should be reliable, as there appears to be a strong disposition shown on the part of the com mercial bodies of Pennsylvania, and indeed, backed by a strong sentiment of the people, favoring the establishment of a flat rate of two cents per mile for the transportation of passengers in Pennsyl vania, without reference to the distance such passengers are carried. The reports from which these figures are computed are verified by the oaths of the officers of each corporation, who should have thorough knowledge of the subject certified to as representing the facts in the premises.

When the Legislature shall assemble and shall be confronted with the responsibility of passing upon legislation on this subject, the knowledge of the amount now received per passenger per mile will be of the utmost importance to each Senator or Representative upon whom the responsibility may rest of establishing a maximum rate per passenger of two cents per mile.

Take therefore the ten leading railroad companies. The receipts per passenger per mile of the Baltimore and Ohio are practically 2 cents; of the Delaware, Lackawanna and Western, 1.435 cents; of the Erie, 1.484 cents; of the Lake Shore and Michigan Southern, 2.018 cents; of the Lehigh Valley, 1.747 cents; of the New York Central and Hudson River, 1.747 cents; of the Pennsylvania, 2.027 cents; of the Pennsylvania Company, 2.006 cents; of the Philadelphia and Reading, 1.597 cents, and of the Pittsburg, Cincinnati, Chicago and St. Louis, 1.997 cents.

The average receipts per passenger per mile on these ten leading railroads practically control the average receipts per passenger per mile of all railroads, as their passenger traffic constitutes so large a percentage of all the passenger traffic of all the roads reporting to this office.

The table affixed is self explanatory, but is susceptible of the deepest study. For instance, the Pennsylvania Railroad Company has received per passenger per mile for the year ending June 30, 1905, an average of 2 cents. That average has now advanced .027 of a cent per passenger per mile, and when there is taken into consideration the fact that the Pennsylvania Railroad Company carried 1,389,897,107 passengers one mile, it will be seen that the infinitesimally small fraction of .027 of a cent per passenger per mile produces an B-9-1906

increase of $375,272, hence it is that the change produced by a smal fraction in the average receipts per passenger per mile is sufficient to make millions in general results.

TABLE SHOWING THE "AVERAGE RECEIPTS PER PASSENGER PER MILE" FOR THE YEARS 1902, 1903, 1904, 1905 AND 1906 ON THE RAILWAYS MENTIONED.

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In considering the average receipts per passenger per mile coupled with the fact that legislation is to be had to make a uniform rate of two cents, it must also be remembered that there are a large number of companies that are to-day receiving more than an average of two cents per passenger per mile, while there are a large number of companies also, whose average receipts per passenger per mile are less than two cents.

Whether the Legislature in its wisdom shall require railroads to charge maximum rates of not exceeding two cents per passenger per mile, or whether it shall provide that uniform rates of two cents per mile shall be charged, has not yet been developed. It is certain, however, that the establishment of a maximum rate of two cents per passenger per mile will deprive some companies of no inconsider able amount of their passenger revenue.

In studying the computations made on this subject it is found that the average receipts per passenger per mile of a number of companies is far beyond 2 cents, but these are usually the smaller companies. For instance, the Rupert and Bloomsburg road has an average receipt per passenger per mile of over 3 cents; the Sheffield and Tionesta, 4 cents; the Susquehanna and the Bloomsburg and Berwick both 3 cents, and the Tionesta Valley nearly 5 cents.

The data given under the caption of average receipts per passenger per mile are undoubtedly reliable, but must not be construed as meaning more than they purport to mean. If, for instance, the Pennsylvania Railroad shows an average receipt per passenger per mile of 2.027 cents, it does not mean that that is what the company charges passengers per mile for tickets, neither does it mean that

this company does not, in a large number of cases, charge very much in excess of what it has received as an average of 2 cents and a fraction per mile. It means that in calculating the amount of money received as a passenger revenue, based on the number of passengers carried one mile, the average receipt per passenger per mile has been 2.027 cents.

At first thought it might seem that a company, such as the Erie, that received last year an average of 1.484 cents per passenger per mile, would not be affected by the establishment of a maximum rate at 2 cents per mile. This, however, is not a fact for this reason, the Erie Railroad Company in many instances and through no small amount of its territory, charges 3 cents a mile for the transportation of passengers, but notwithstanding the fact that it receives 3 cents a mile for a portion of its passenger traffic, yet for no small portion of its passenger traffic, it receives a very much less amount than 3 cents per mile, and no doubt there is a small fraction at least of its passenger traffic for which it receives not more than 1 cent per mile. All these conditions placed together, the total amount of passenger revenue and the total number of passengers carried one mile,— produce the average as above indicated of 1.484 cents received per passenger per mile. It follows, therefore, that if the Erie Railroad were limited in the maximum rate to not more than 2 cents per mile, the average receipts per passenger per mile would be materially reduced, the amount of such reduction depending upon the portion of its passenger traffic on which it charges a rate beyond 2 cents per mile.

So with other companies, and there are many, indeed most of the trunk lines, whose average receipts per passenger per mile are less than 2 cents. All companies would be affected by the establishment of a maximum rate of 2 cents per mile. The percentage of change, however, would probably be greatest upon those roads who have received per passenger per mile an average above 2 cents.

Another feature to be considered in the establishment of a maximum or uniform rate of 2 cents for passenger traffic is of much importance to the stockholders of some railroads. It is claimed by the accounting departments of some of these transportation companies that they annually sustain a loss in the conduct of their passenger traffic, even at the rates now prevailing and which have been established and controlled by the railroad managers themselves. In considering this feature of the case, it must be borne in mind that there may not be exact uniformity among all railway accounting officers in the assignment of expense. If all such assignments were made on a uniform basis, such as is contemplated on the blank forms of reports, the data resulting from computations ought to be fairly

reliable, and it would not seem that under ordinary circumstances, railroad managers would long continue to operate passenger departments at rates for transportation that would give them a revenue below the cost of maintenance and operation of such departments.

There are many things to be considered which affect the cost of conducting passenger traffic with reference to the receipts from that traffic. A railroad during one year may haul millions of passengers producing a profit making revenue, and escape accidents, and in the next year it may sustain a frightful accident with great loss of life and limb and destruction of valuable equipment, and with the amounts that are allowed by courts and juries as damages, for accidents, in some cases ridiculously large, the results of such accident will materially affect the passenger revenue of such corporation as to the percentage of profit on passenger traffic and indeed may have so serious an effect as to show a loss on passenger traffic. These observations are only glimpses of problems which will arise, problems which are factors important to be considered when the Legislature shall be confronted with the responsibility of fixing a maximum or a uniform rate of 2 cents per mile.

Another problem of no little importance in the fixing of a maximum rate is that which relates to the conditions of railroads as to density of the population and the number of persons that may be contributory to the passenger revenue of a company in the territory in which the line of such railroad is located.

The Pennsylvania Railroad Company could undoubtedly well af ford to carry passengers between Philadelphia, Lancaster, Harrisburg and Pittsburg for a maximum rate of 2 cents a mile. Why? Because there are millions of people located at the terminals in the cities mentioned and along the lines of this road, making up a density of population not frequently found in the state, or indeed in the United States, and all are contributory to the passenger traffic of this great corporation for whom there would undoubtedly be a good margin at 2 cents a mile.

But if we are to take into consideration the line of that railroad which runs from Pittsburg to Buffalo, covering a distance of nearly 300 miles, we find it located through a sparsely settled community as compared with the other localities mentioned, only thousands being contributory to its passenger traffic, while there would be millions in the other case cited, and of this line the cost of passenger traffic might be, and undoubtedly would be in excess of 2 cents per mile.

It may be said that this line is also a part of the Pennsylvania system and if there is a loss on one division of a line of that road and

profit on other divisions at 2 cents per mile, then the general average would probably give the railroad company a good margin upon its entire passenger traffic. Assuming that this is true, suppose the line of railroad from Pittsburg to Buffalo were owned by stockholders as an independent road in no way connected with another system where the leveling or the averaging of receipts could not affect it, the conditions would be entirely different and this road, under a 2 cent rate might be driven into bankruptcy.

How about those other railroads, as for instance, the Coudersport and Port Allegany Railroad Company, whose average receipts per passenger per mile for the year covered by this report were a fraction over 3 cents? Could this railroad maintain its passenger traffic at a maximum rate of 2 cents a mile without loss? If not, then the Legislature should take this question into consideration in the establishment of either a uniform rate or a maximum rate.

If we look at the report of the New York Central and Hudson River Railroad we find that its receipts per passenger per mile are low, and if we examine the laws of the State of New York, we shall find that this company in its charter was limited to a maximum rate of 2 cents per mile for the transportation of passengers. This road, however, runs from New York, along the Hudson, through the capital of the Empire State, through its great central cities to Buffalo, at the foot of Lake Erie, where the density of population is the greatest that can be found anywhere in that State. Its location is similar to the location of that line of the Pennsylvania lying in districts the density of whose population is great.

Other roads, however, in the State of New York, have greater average receipts per passenger per mile and are not all limited to a 2 cent per mile maximum rate.

In general it may be observed that the great lines can probably make a profit on their passenger service at 2 cents a mile, while the shorter lines, or those passing through sparsely settled communities would be seriously and indeed injuriously affected by such uniform or maximum rate.

A uniform rate might to some seem to be an ideal rate. To the public it would seem fair; to the stockholders of some railroads it would be fair, to others injurious and perhaps ruinous for the reasons which must be apparent from these observations.

In this connection, an argument is observed in favor of a unification, a merger, a consolidation into one management of all railroads. Then it would not be difficult, or not so difficult, as is apparent now, to establish a uniform or maximum rate, for if in such establishment there would be a loss in one direction, it would be made up by a gain in another. Under the present conditions, however, of several

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