REPORT AND OPINION OF THE SECRETARIES.

GARBER, Secretary:

The proposed compromise rates in comparison with the rates previously ordered in effect, are as follows:

Distance, Mile Haul.

25

50

Rates ordered...

.60

Rates as proposed by roads .80

75 100 150 200 250 300 350 400 .80 1.04 1.20 1.50 1.80 2.05 2.30 2.50 2.70 .90 1.20 1.40 1.70 2.00 2.25 2.50 2.75 3.00 "Hard coal rates to be 30 per cent advance over rates for soft coal."

In support of the request for the modification of the rates, ordered by the board, the railroad representatives have in particular denied the reasonableness or the justice of the rates as ordered for distances under fifty miles; and requested that the basing charges established by the board at thirty cents per ton be raised to forty cents.

No evidence is introduced in support of the denial and consequently members of the board may be at a loss to arrive at a just and equitable decision as between the shipper, on the one hand, represented at this stage of the proceedings by the reports and recommendations of the secretaries bearing upon a just and equitable charge for this service, and on the other hand by the statements of the carrier employes.

It is an established principle for the determination of the cost of transportation of any given commodity, that the service is made up of three separate items, viz: Initial and terminal expenses, and expenses of the haul.

The first of the two items of expense remain practically the same, whether the haul be ten miles or 300 miles.

As previously submitted in the report upon this matter, the initial, and terminal expenses of coal transportation is the minimum, compared with the expense of hauling all other commodities. Warehouse room is of course unnecessary. Protection from the elements is in no case demanded of, or furnished by, the carrier for the article. Labor of loading and unloading is in no

case at the expense of the railroad. So that the measure of a reasonable charge for the initial and terminal service is resolved into a determination of what is just com.pensation for the switching service likely to be performed by the carrier in the performance of this transportation service, and no other questions need arise as aids to an arrival at just conclusions.

A comparison of the compensation allotted by the board for this service, with switching charges voluntarily established by the railroads, will, we think, demonstrate beyond question the liberality of the rate ordered.

Fifteen to twenty tons of coal, with an average of say, eighteen tons, is loaded in a car. Eighteen tons at thirty cents a ton is an initial charge of five dollars and forty cents ($5.40).

The maximum switching service necessary in transporting a car of coal between any two points in the state would be setting in the car to the place of loading, taking it out after loaded, and setting it in for unloading, a service, which if performed by a terminal railway company-such as the Omaha Belt Line-would carry with it a charge of $4.00 at the utmost.

The South Omaha Stock Yards Company operate twelve miles of track, own the engines and employ the necessary labor for the handling of all traffic within its yard limits. For taking a car of stock from a delivering road, setting it in at the sale pens, and returning the car when unloaded, the company makes a uniform charge of one dollar per car, to cover cost of service and secure returns upon invested capital.

The Chicago, St. Paul, Minneapolis & Omaha Railway Company, in a suit in the Circuit Court of the United States for the District of Minnesota (December Term, 1887), to restrain the Railroad and Warehouse Commissioners from proceeding in the enforcement of an order regulating the switching charges of all roads,

at or within the city of Minneapolis, to a maximum of $1.00 per car, sets out in the bill:

"That at Minneapolis it is compelled, in the ordinary transaction of its duties and business, to receive and deliver many cars from and to shippers of freight, and from and to other railroads; that in the receipt and delivery of such cars it is compelled to move them short and long distances, and take them out of the trains of cars and put them into other trains of cars destined for other points, all of which requires many movements of such cars by the aid and use of locomotive engines, and many men engaged in such service; that such work is known as and called 'switching,' and is usually performed in and about the yards and terminal grounds of complainant, but in many cases requires such cars to be moved and hauled to considerable distances outside of and beyond such yards and and terminal grounds; that for the performance of this switching work the complainant has always charged a reasonable and fair compensation to those for whom said work was done, to wit: $1.50 per car, and never charged more than a reasonable and fair compensation therefor."

Now this charge of $1.50 set forth by the Milwaukee road as a charge affording them a sufficient compensation for labor performed and for returns upon large sums of money invested in terminal facilities, covers the dual performance of setting in the car at place of loading and taking it out when loaded and ready for shipment-a service which would in all likelihood be equal to the maximum initial service to be performed in the case of any local shipment of coal in the state. It is entirely reasonable to suppose that a very small proportion of the local shipments would call for more than the minimum switching service.

The coal mined in Wyoming upon the lines of the Fremont, Elkhorn & Missouri Valley Railway, for instance, will reach consumers of that grade of fuel who are located upon the line of the road in Nebraska, direct from the mines, and upon inter-state tariff rates. If,

however, a dealer at Columbus desired to handle the same grade of coal in competition with Rock Springs coal, brought in by the Union Pacific Railway, he would, we will say, buy a car of a Norfolk dealer, and the movement of the car would be from the mines over the Fremont, Elkhorn & Missouri Valley Railway, consigned to the Norfolk dealer, who pays the freight upon the receipt of the car, and directs that instead of placing the car at his sheds, it be delivered to the Union Pacific Company, at usual place for interchange of traffic. The car is thereupon sent forward to Columbus, consignee to pay charges.

The charges of the Union Pacific Railway would be, in case the car was well loaded, with say twenty tons, $6.00 for initial and terminal service; and one cent per ton for each mile between Norfolk and Columbus. For similar service in the yards at Omaha, I doubt if the charge is more than $1.50. The transportation department of the stock yards company at Omaha is now doing more service at $1.00 a car.

Therefore we cannot, from this view of the matter, conceive of any reasons of weight why the initial and terminal charge of thirty cents per ton, which upon earlier considerations was deemed just and reasonable, should be advanced thirty-three and a third per cent. upon the request of the carriers.

And now with regard to the carrier's request for a differential of thirty per cent. for anthracite coal over the maximum rates established for the various grades of bituminous coal.

As previously shown herein the basing charge of thirty cents per ton, is not considered an entirely equitable charge against the shipper in all cases. In a majority of local shipments, we feel sure, it would be far in excess of the charge voluntarily made by the carrier for similar service, but it would be entirely impracticable

and opposed to the public good for this board to establish a minimum rate, under which the carrier most favorably located can perform the business at a bare protection against loss; and therefore, the rates proposed were fixed upon, after careful consideration, as applicable to different lines under their more unfavorable conditions; and to competition would be left that further adjustment needful to the consumer. In other words, the schedule is considered high; that the rates therein are greater than will prevail at competitive points as soon as the effects are felt of active competition between the various kinds of bituminous coal which now find their way into the state. It was in this view of the case that like rates were recommended for anthracite and bituminous coal. While no justifiable reasons were conceivable why a grade of coal occupying less space in proportion to its weight than another grade, and carrying with it less risk in transportation than this other grade, should be practically made to bear an arbitrary duty of 333 per cent. on entering the state in competition with bituminous coals, still, in face of the custom of many roads west of Chicago, and in view of the fact that the question of a like classification for two grades of coal was pending before the InterState Commerce Commission, we did not desire from the board at this time an official expression of opinion, but much preferred that the matter be left, as it has heretofore stood, upon the distance tariffs of all roads in the state, to wit: One classification and one rate for both qualities when shipped between points not governed by terminal or distributive tariffs, and to let it remain optional with the roads whether they maintain the usual differentials in the adjustment of terminal and distributive tariffs, or make a like rate from competitive points, as well as non-competitive.