rate reduction, to where we can confidently expect an answer to the question that you are asking-with this increased volume and steady increase, when will there be a material general decrease and still guarantee the 5 per cent?

Senator HOWELL. But, Mr. Chairman, if you will consider that if we had a 2 per cent increase in volume this year and that presumed a 2 per cent increase in the net earnings this year, that would only mean about one-tenth of 1 per cent added, a little over one-tenth of 1 per cent added. In other words, it would not bring it up anywhere near 5 per cent.

The CHAIRMAN. I was going upon this presumption, that if, as the railroads claim, there are decreases in expenditures and economies in operation that have been responsible for a part at least of this increased net return, that percentage we may not calculate. But, taking the percentage of increase in their net return, in the face of an alleged decrease in freight rates, then the 2 per cent increase over 1923, with other decreases and elements which evidently enter into these figures, would indicate that we are approaching a substantial reduction, even though they got the 53 per cent.

Senator HOWELL. Of course, their comparison is with one of the worst years and their best year, that they are making here, and. as I pointed out

Mr. BLEDSOE. What year is that, Senator!

Senator HOWELL. One of your worst; you are making the comparison with 1921, are you not?

Mr. BLEDSOE. I am making the comparisons for the purpose of showing the reduction in rates below the 1921 level, because that is the high peak of rates, and I am following it down to show what has been done in each year. In 1922 a heavy reduction would be

Senator HOWELL. I am talking now about your return on your properties.

Mr. BLEDSOE. Well now, Senator, if you will just let me make a statement for a moment. We reduced the rates in 1922 below 1921 by $336,000,000, and the rate of return at the same time that reduction was made was increased from 3.33 to 4.14 per cent.

Senator HOWELL. Well, that, as I say, was one of your worst years. Mr. BLEDSOE. Just let me finish, Senator. Will you let me finish so that I may get my statement through? In the year 1923 the reduction was $657,563,000 in rates, and the return increased from 4.14 to 5.19. Now, in January and February, 1924, which you have just asked about, the rate of return was 5.32 per cent. The rate has increased from 3.33 in 1921 to 5.19 in 1923 and to 5.32 for January and February, 1924, and there has been a reduction in rates in the meantime by which a saving of approximately $1,000,000,000 has been made.

You asked me when are rates to be reduced. I say to you they have been reduced $1,000,000,000 already in reductions now effective. Senator HOWELL. By reductions you mean that if the rates that were in effect in 1920 had remained in effect figured on each of these

years

Mr. BLEDSOE. On the tonnage actually moving in those years.
Senator HOWELL. Actually moving?

Mr. BLEDSOE. Yes, sir.

Senator HOWELL. But you are speaking in totals now, and those totals should not be assumed to apply to previous years.

Mr. BLEDSOE. I am not applying such rates to the tonnage of previous years, Senator. Just wait a moment. I am not applying to any year any figure except the traffic that moved in that year, and the rate that it moved on in that year, and not toany estimated rate in any year that it did not move under.

Senator HOWELL. Take the year, 1921, what was the reduction in the percentage?

Mr. S. H. COWAN. On what?

Senator HOWELL. On freight rates.

Mr. BLEDSOE. I can give you the average. The average in 1921, average amount per ton per mile, was 1.275 cents.

Senator HOWELL. That is just on the freight, is it?

Mr. BLEDSOE. That is freight. That is what I am dealing with, because we do not move passengers by the ton-mile. In 1922 it was 1.177 cents. In 1923 it was 1.116 cents. Now, there is a constant reduction in the amount received for hauling the ton a mile as reflected in the revenues above stated.

Senator HOWELL. Will you give me those again, the revenues? Mr. BLEDSOE. You want the reduction?

Senator HOWELL. Yes; the reduction, please.

Mr. BLEDSOE. I started with 1921, the revenue was 1.275 cents per ton mile. In 1922 it was 1.177 cents per ton mile, and in 1923 it was 1.116 cents per ton mile.

Senator HOWELL. Now then, the other day when I asked for some figures you afforded them in units, including passengers. Could you apply the passenger rates here?

Mr. BLEDSOE. Senator, if you will wait just a few moments until I get to my own company, which I deal with with a much greater ability to analyze than as to the railroads as a whole, I will give it to

you.

Senator HOWELL. The other day, I asked President Willard for a comparison, and he assured me that he could not afford me the comparisons that I wanted, but he could afford me the comparison in units.

Mr. BLEDSOE. I think I know what you are asking about, Senator. That is when you asked him to divide, the amount paid for labor and the amount paid for materials and supplies and so on, by the ton miles.

Senator HoWELL. Yes.

Mr. BLEDSOE. I have made no division of that kind. I have a study a little further along relating to that subject.

Senator HOWELL. I am not asking for the cost. What I am asking is this, I would like to have the figures. You have given the figures there for the ton mile. I would like to have the figures per unit, the same unit that he used the other day.

Mr. BLEDSOE. The ton mile is the unit.

Senator HOWELL. I understand, but he gave us passengers also. Each passenger was a unit, and he added passengers. Mr. BLEDSOE. I can tell you the average on our line.

We secured

per unit of service in 1923 $1.50, for what we got $1 for in 1916, combining the freight and passenger service.

Senator HOWELL. Couldn't you furnish me these figures in units, the same as President Willard did the other day?

Mr. BLEDSOE. Senator, I could furnish you, of course, any kind of a computation that the statistics will permit, but the statement that Mr. Willard gave you means nothing because it

Senator HOWELL. I really felt the other day that it was not particularly enlightening and therefore I want you to give me a statement on the same basis. Now, you say that his statement was worth nothing.

Mr. BLEDSOE. I say your basis of comparison is worth nothingnot his statement.

Senator HOWELL. I see.

Mr. BLEDSOE. Whenever you assume that labor is responsible for every bit of increase in efficiency and productiveness, and that is what that comparison does, you indulge in an assumption that is so far from the facts that it could not be relied upon for any purpose.

Senator HOWELL. I did not have that in mind the other day; I simply wanted a comparison, and now I want a comparison with his figures to show what the labor cost was per ton-mile as compared with previous years. He had afforded us these figures with reference to other things, but when he came to labor I could not get any statement. But he finally came in with a statement that he offered, and that statement was in units, in which he regarded every ton-mile of freight equivalent to every passenger-mile. I have asked you for the similar figures here in connection with the reduction in ton-miles that you afforded here for the years 1921, 1922, and 1923.

Mr. BLEDSOE. Do you mean, Senator, that you would like to have me divide divide the amount of labor expenditures by the tons 1 mile, and the amount expended for materials and supplies by the tons 1 mile?

Senator HOWELL. I am not asking you for that at all. I am asking you to give me these figures here that you have afforded in units, including passenger service.

Mr. BLEDSOE. I do not understand you. I can give you the earnings per passenger per mile. I do not know what you mean by unit comparison. If you will tell me what you really mean by it, I may be able to give it. It is my purpose to give you anything you want. Senator HOWELL. I had not heard of this method of presenting statistics before, but President Willard, in reply to my request for comparisons, included in his statement a cost per ton-mile and included in that figure, or assumed in that figure, that each passenger was equivalent to a ton-mile.

Mr. BLEDSOE. Yes.

Senator HOWELL. Now, you have given me the reduction in the rates per ton-mile for 1921, 1922, and 1923. I would like to have you add the reduction that you made in passenger rates during the same period.

Mr. BLEDSOE. Well, I can give you that right here. I have the reductions in passenger revenue per passenger-mile. They are very slight. In 1921 the carriers received 3.086 cents per passenger-mile. That is three cents and eighty-six thousandths of a cent, and in 1923. 3.019-three and nineteen-thousandths of a cent per passenger-mile. There was no general reduction in passenger fares, and the smaller earnings per passenger-mile are perhaps due to a more general use of

excursion rates.

Senator HOWELL. I can not apply these figures, but you have your statisticians, and I would like to have these figures.

Mr. BLEDSOE. Do you want a percentage of reduction, Senator? Senator HOWELL. No. I will give you the statement made by President Willard in writing, and I would like to have these figures placed upon the same basis made in his statement.

Mr. BLEDSOE. The statement that Mr. Willard made is applicable to the same traffic that these figures are applicable to, and Mr. Willard's figures would be my figures if I made the computation on that basis. I take no exception. My point is that when you get it, it does not reflect anything. That is all. I am not taking any exception to Mr. Willard's way of making the computation. You asked Mr. Willard to divide the total amount paid for labor, for fuel, and for materials and supplies used in handling both freight and passenger traffic by the tons 1 mile, but inasmuch as these expenditures were incurred for handling both freight and passenger, he divided by the sum of the tons 1 mile plus the passengers 1 mile, and if such a computation would serve any useful purpose what he did would be a little more nearly correct than to divide by the tons 1 mile as requested by you.

Senator HOWELL. Now, he gave me the increases in cost the other day on that basis, and I would like to have now the decreases in charges on the same basis. That is what I want.

Mr. BLEDSOE. The decrease in charges?

Senator HOWELL. Yes, sir.

Mr. BLEDSOE. Senator, Mr. Willard gave it to you for the year which involved the increase or decrease, whichever it may have been, both ways. I am, however, dealing with revenues, and Mr. Willard was dealing with operating expenses. I do not see the applicability of the request you made upon Mr. Willard to carrier

revenues.

Senator HoWELL. I will write out my request and afford you Mr. Willard's reply, and then I would ask that you give me the figures on the same basis.

Mr. BLEDSOE. I will endeavor to comply with that request.

Mr. THOM. May I call attention, Mr. Chairman, to this, and Senator Howell. The figures just quoted from Mr. Willard had relation to cost of doing business.

Senator HowELL. Increased cost.

Mr. THOм. Well, the cost of doing business. The figures here given have related to the receipts from the business.

Senator HoWELL. I understand.

Mr. THOм. And you can easily find out what those receipts are for the freight and the passenger separate. When you get to the costs, Mr. Willard explained that there was a difference in distributing costs as between the various classes of service, and therefore what you want here is readily obtainable because you can see how much the decrease in freight is, and separately, you can see how much the decrease in passengers is, and that need not be combined for the purpose of affording any relation whatsoever to costs.

Senator HOWELL. Is there any objection to that?

Mr. THOM. Oh, none whatsoever.

Senator HOWELL. To having the figures?

Mг. THOм. None whatsoever. I am not raising any question about that.

I wish also, Mr. Chairman, if I may, to call attention to the pertinency of what was testified a little while ago in answer to Senator

Howell's question of when you may expect reduction in rates. That was a question which the Senator had in mind. The testimony now given shows that the reduction in rates is not waiting for the realization of a return, but it is taking place all the time in these enormous figures which have been given, a billion of dollars in the last two years.

Mr. BLEDSOE. I want to answer the Senator further in respect to the reduction, because it comes up in another part of my statement. but I will take it up now.

Mr. CowAN. What passenger rate is reduced? I wish to inquire. I think, as a citizen, I ought to have a right to know. He says the passenger rate has been reduced.

The CHAIRMAN. What was the question?

Mr. COWAN. What passenger rate has been reduced?

Senator GOODING. Mr. Bledsoe is coming to that, I believe.

Mr. BLEDSOE. I am not familiar with the individual reductions in The rates are measured by the earnings per paspassenger rates. senger mile that have been realized, because if the rates had not been reduced the earnings would be the same. There has been no general reduction in passenger fares.

The CHAIRMAN. That can be ascertained, of course, from the commission, and I think there has been furnished to the committee already a table of the rates obtaining through these years on passenger fares. Now, Mr. Bledsoe, as we are limited more or less to time, you will proceed with your statement.

Mr. BLEDSOE. I will get along just as rapidly as I can, Mr. Chairman. Returning to the question of when we may expect a reduction in the freight rates, I want to call attention to what my own company has accomplished in the matter of economics in operation.

The increase in freight traffic on the Santa Fe system lines in 1922 over 1915, measured by the tons hauled 1 mile, was 36 per cent, in passenger traffic, as measured by the passengers carried 1 mile, 11 per cent, while the increase in the hours worked and quantity of materials and supplies used was in the aggregate 14 per cent. This result was due in a substantial part to an increase in investment in road and equipment of 25 per cent, applied to the improvements of existing facilities, including shop machinery, and the addition of locomotives of greater tractive power (the increase in average tractive power being about 24 per cent) and freight cars of greater capacity (increase in average capacity being 6 per cent).

These additions to road and equipment and increases in the volume of traffic made it possible to increase the average car loading in 1922 over 1915 by 9 per cent, and the net tons of freight handled per freight train by 28 per cent, and to handle in 1923, 36 per cent more freight traffic than in 1915, with an increase of less than 2 per cent in freight train-miles, and an increase of 11 per cent in passenger traffic. with 4 per cent less passenger train-miles. A most important factor in accomplishing this result was the cooperation of shippers and the efficiency of officers and employees.

Senator GOODING. In better loading of cars, Mr. Bledsoe?

Mr. BLEDSOE. Yes; there was a better loading of cars, and particularly a heavier train loading. We are not always able to get our car loading to correspond to our increase in car capacity.

The increased productivity reflects improvements and efficiency in the plant and efficiency of labor and management and cooperation