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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 corpora. tion 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 afford 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 passen. ger 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 aver. age would probabiy 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 different managements, it is found that a uniform or maximum rate would not so seriously affect one railroad as another, that in some cases revenues would be remunerative and to other railroad managements such uniform or maximum rate would result in loss and perhaps lead the more unfortunate roads whose lines are not through districts densely populated into the hands of the sequestrator.
Again, there must be considered not only the location of railroads with reference to density of population, but the expense of operation such as high grades and expensive construction and maintenance.
A railroad company may have been constructed across the plains of Nebraska to the foothills of the Rocky Mountains and be able to carry into Denver its passengers at 2 cents per mile, from which it would derive a substantial profit, but how about the railroad whose lines are constructed through the canyons and over the passes of the rocky mountains and other natural barriers attaining an altitude of many thousand feet above tide, where the cost of construction and operation is many fold greater than on the plains? Certainly equity demands that the railroad whose construction is most expensive and whose cost of operation is high, should be permitted to charge a greater rate per passenger per mile than the other road that is built and operated under more favorable conditions.
While such disparity of conditions may not exist to that extreme extent in Pennsylvania, yet these conditions are here in great force and equity demands their consideration in any legislation that is to be placed upon our statute books fixing maximum or uniform rates.
In making these suggestions they are not meant to oppose in the remotest degree the establishment of a flat rate of 2 cents a mile for the transportation of passengers, the only purpose being to sug. gest a few obstacles which are difficult of being passed, or problems which are not easily solved if the legislative action is to be based upon equitable principles.
It seems difficult to establish a flat or maximum rate, or indeed a uniform rate at 2 cents per mile, based entirely upon the receipts per passenger per mile. If there is a departure from these considerations as a basis upon which to predicate legislative action, to the broader field based on the income of transportation companies from all sources including the receipts from transportation of commodities, the interest on bonds, and the dividends on stocks, and nu heed is to be given to whether passenger traffic is found remunerative or whether it is conducted at a loss, then a 2 cent rate may possibly be the more easily justified, but even then the restrictive features of rate legislation, fixing a maximum price per passenger per mile would fall perhaps as a gentle burden upon some railroad companies and as a severe and perhaps injurious one on others.
If at the coming session of the Legislature this problem shall be solved with fairness to the people and to the railway security holders, there will have to be a display of wisdom, a considerate action, which is not always found in the preparation and passage of our laws as they are seen upon the statute books of Pennsylvania.
In conclusion, if sincere and earnest study and consideration of all phases of the rate problem as applied to the different railroads of the Commonwealth, shall lead to the conclusion that a 2 cent maximum rate would not be equitable and fair to some of the railroads, then there should be given to the Bureau of Railways of the Department of Internal Affairs the power to pass upon the question whether on some roads the carrying of passengers at 2 cents per mile would be injurious or ruinous, and if so found, then to so adjust rates on such roads on such a basis as will insure fairness and prevent loss and the infliction of wrong upon such corporations.
Passenger Earnings Per Mile of Road. Referring again to Table G, it is found that the passenger earnings per mile on the Baltimore and Ohio for the year covered by this report were $3,400; on the Delaware, Lackawanna and Western $9,261; on the Erie $5,193; on the Lake Shore and Michigan Southern $7,560; on the Lehigh Valley $3,236; on the New York Central and Hudson River $10,079; on the Pennsylvania $8,612; on the Pennsylvania Company $6,000; on the Philadelphia and Reading $6,949, and on the Pittsburg, Cincinnati, Chicago and St. Louis $6,273.
Tonnage of Freight Carried. Passing from the consideration of the number of passengers carried, the compensation for the same and the deductions therefrom, the more important feature of railway transportation is that relating to the transportation of commodities which make up the products of the country and constitute its commerce.
Tables H and I contain classifications of freight as follows: First, products of agriculture; second, products of animals; third, products of mines; fourth, products of forests; fifth, products of manufactories; sixth, merchandise; seventh, miscellaneous shipments, and eighth, number of tons of freight carried earning revenue.
Products of Agriculture,
For the year ending June 30, 1901, under the above classification relating to agriculture, the total tonnage was 404 millions; in 1902
about 341 millions; in 1903 about 37 millions; in 1904 about 36 millions; in 1905 about 35 millions, and for the year covered by this report the total amount of such products is 40,137,225 tons.
The varying conditions denoting the transportation of the products of the farm are disclosed in the figures above given with reference to the transportation of these commodities in each year named. It is a somewhat remarkable feature of transportation that with the increase in passenger traffic, which has been of a decisive character, the tonnage from products of agriculture was less for the year ending June 30, 1906, than for the year ending June 30, 1901.
In the products of animals, the products of mines, of forests, of manufactories, in merchandise and in miscellaneous shipments there is a most decisive advance in the tonnage. Why a reduction in the tonnage representing the products of agriculture? It is claimed by some writers that there is a strong tendency to consume the products of the farm on the farm, as in the feeding and fattening of cattle, the cattle alone being shipped to market. Other causes have been assigned the reliability of which cannot be established or well refuted by any data disclosed by the reports of railroad companies to this office, but whatever causes may be given, it does not seem possible that there is any falling off in the actual production of farms in Pennsylvania.
If reference be made to the returns of the county commissioners of the several counties of the Commonwealth, covering a period of twenty years, which are based on the sworn returns of assessors of the several assessment districts of the State, it would be found that there is a material increase in the number of acres of cleared land, which denotes an increase in the territory from which farm products are produced. Again, it will be found that there is an increase in the number of cattle, horses, mules and other stock upon the farms of the Commonwealth. These facts could hardly be true if there were, in reality, a falling off in the production of our agriculturists.
Products of Animals.
In 1901 the tonnage under the classification of products of ani. mals was 11 millions; in 1902 it was over 11į millions; in 1903 it was a little over 102 millions; in 1904 it was 113 millions; in 1905 a little over 12 millions, and for the year covered by this report 12,693,849, there being an increase in this class of tonnage of something over 500,000 tons in the last year.