We now inquire what the earnings of this property have been upon the basis of the rates charged.

The first statement furnished is for the year 1905, and shows total earnings of $156,000 and total expenses of $154,000. The earnings of the stage line are not separated from those of the railroad for this year, nor are the expenses given separately under that name. There does, however, appear among the earnings an item termed "Miscellaneous" for $28,000, and among the operating expenses a corresponding item amounting to $61,000. It seems probable that these items fairly well represent the earnings from the stage line and the cost of operating that line. Deducting the two, we should have $128,000 for gross earnings and $92,000 for operating expenses, leaving a net income of $35,000.

A certain portion of the $128,000 above stated as the gross earnings of the company is from freight and passengers, which would not have been carried by the Uintah Railway but for the operation of these stage lines, and, in accordance with what has been already said, the earnings from this traffic should be deducted. There is no way, however, for this year in which the amount of such earnings can be even approximately determined, and it is evident that without any such deduction the net earnings shown do not yield an excessive return upon the value of the property used.

The next statement of earnings and expenses is for the twelve months ending January 31, 1907. Just why the fiscal year of this company has been made to end on the 31st of January does not appear; but its books have been kept in this manner, and statements are therefore furnished for this period. In this statement the earnings and expenses of the railway are kept separately and are given below:

For twelve months ending January 31, 1907.

During this same period earnings from wagon operations were $47,000 and expenses $90,000, leaving a deficit of $43,000.

The defendant furnished an exhibit showing the different commodities carried both north and south upon the Uintah Railway for the above twelve months and the amount of revenue derived from each commodity. An examination of this statement enables us to say with some confidence what portion of the freight earnings above specified were due to the wagon road. Without attempting to give the reasons in detail for the conclusion we are of the opinion that probably $20,000 of those earnings arose from traffic which would not have been obtained by the Uintah Railway but for the teaming operations of that company. We think, therefore, that $20,000 ought to be deducted from the total on that account, leaving a total of gross earnings at $157,742.46.

The complainant insists that the item of general expenses contained in the above statement is too large, and from the testimony given upon the trial and from an examination of the general expenses in other years, we are inclined to think that this position is well taken and that the amount of these expenses ought to be reduced at least $10,000, making the operating expenses $110,125.34 and leaving net earnings at $47,617.12.

This would yield a net income of about 7 per cent on what we regard as the fair money value of that property. It can hardly be claimed that such a return is excessive. While the Barber Company with its strong financial position could undoubtedly furnish that money for considerably less than 7 per cent, there are elements of uncertainty in the investment which would fairly entitle that company to at least this return. Possibly it might afford to take the chance of a rate upon gilsonite for the present which would yield to it a less return provided it was given the benefit of whatever advantage might accrue from a subsequent increase in the quantity of gilsonite shipped. But upon the theory upon which we are testing the reasonableness of this rate if shipments of gilsonite should materially increase there would be an increase of gross revenues without a corresponding increase of operating expenses, and we should feel. compelled, for that reason, to reduce the rate on that commodity.

The last statement is of earnings and expenses for the eight months from February 1 to September 30, 1907, and is as follows:

For eight months ending September 30, 1907

During the same period earnings from wagon operations were $35,000 and expenses $50,000, a deficit of $15,000.

We have also a statement covering the same months showing the commodities shipped and the revenues therefrom. It seems probable from an examination of this statement that the total earnings for these eight months should be diminished by $20,000 on account of traffic which would not have come to the Uintah Railway but for the operation of its stage and wagon lines. We also think that since this traffic, especially the freight traffic, is handled without appreciable additional expense to defendant, these operating expenses ought not to be diminished on this account; in other words, that its net earnings should be decreased by $20,000, making them for the eight months $91,829.25.

During these eight months the defendant transported 14,738 tons of gilsonite, from which it derived a revenue of $147,380, at $10 per ton. Had this been carried at $8 per ton the net revenue of the company would have been further reduced by $29,476, leaving a net income for the eight months of $62,353.25. It will be seen, therefore, that had the rate applied to the transportation of gilsonite been $8 per ton the net earnings of the defendant for these eight months would have been as great as we think they should be for the entire twelve months.

The defendant contends that the period covered was one of unusual commercial prosperity and activity and that similar results can not be expected through a series of years. It seems probable, however, that the operation of this property was extravagant during the first two years; that it is now upon an economical operating basis, and that if the uses to which gilsonite is put continue to be as numerous as they are-and there is every probability that they will increase this road ought to be able to earn upon a basis of $8 per ton a fair return upon the property invested. Everything must depend upon the quantity of gilsonite which is transported. At present practically the entire supply of this mineral goes out over the Uintah Railway. Should its use be materially curtailed or should some other source of supply be discovered, or some other avenue of transportation be provided, it would at once change the basis upon which our conclusion is founded and therefore require a reconsideration of the conclusion itself.

Since the preparation of the foregoing report we have received a communication from the attorneys for the defendant stating that during the last few months, shipments of gilsonite have declined from 25 to 30 per cent, and further stating that a recent explosion and fire in the mine of the Gilson Company at Dragon will virtually suspend shipments of that company for some time to come. While we have not seen fit to change the conclusion reached, these facts do confirm. the impression that, in view of the many uncertainties surrounding the operation of this property, the rate above established is not excessive.

The complainant claimed damages by reason of the exaction of this $10 rate and also for other alleged violations of the act to regulate commerce. No evidence was submitted upon the trial tending to show any damage to the complainant by reason of the other infractions of the act which he alleged, and the Commission is of the opinion that no reparation should be allowed under the circumstances of this case on account of excessive freight charges.

An order will issue directing the Uintah Railway Company to establish and maintain for two years a rate of $8 per ton for the transportation of gilsonite from Dragon to Mack.

13 I. C. C. Rep.

No. 933.

IN THE MATTER OF RATES, PRACTICES, ACCOUNTS, AND REVENUES OF CARRIERS SUBJECT TO THE ACT TO REGULATE COMMERCE.

March 9, 1908.

Practices of certain carriers and certain shippers relative to interstate shipments declared to be illegal, and criminal prosecutions requested to be instituted

John H. Marble for the Commission.

Henry T. Wickham for the Chesapeake & Ohio Railway Company.

REPORT OF THE COMMISSION.

LANE, Commissioner:

A hearing in the above matter was held in the city of Richmond, Va., on the 19th, 20th, and 21st days of February, 1908, both oral and documentary evidence being received. From such evidence the following facts appear:

(1) For some years a fraudulent practice, participated in by certain dealers in grain and also by certain dealers in packing-house products and also by the Chesapeake & Ohio Railway Company, has obtained at Richmond, by means of which this railway company has favored such shippers at the expense of the Seaboard Air Line and Atlantic Coast Line, its southern connections. This practice has resulted in the obtaining for such shippers of rates less than local rates over the Seaboard Air Line and Atlantic Coast Line for shipments of grain and also for shipments of packing-house products, which local rates such shipments were legally bound to pay. This result has been accomplished by means of transfer slips issued by the station agent of the Chesapeake & Ohio Railway Company on the written instruction of the assistant general freight agent of this railway company, said transfer slips falsely conveying to the southern lines the statement that such shipments had originated at points beyond Richmond and were entitled to move from Richmond to destination in the Carolinas at a division of a through rate, such division being less in amount than the local rates to which these shipments were legally subject.