As just observed, the most essential thing in the express busi ness is expedition; indeed, the very word express stands for expedition. And this is largely the excuse for the existence of an independent express service. Whatever interferes with the promptitude of this service interferes with the service itself and decreases its value to the public. Now, both the defendants and the railway company which intervened in this proceeding insist that express rates should be so adjusted in comparison with railway rates as not to attract to the express business transportation which should properly be handled by freight, since when this is done the quality of the express service is depreciated and the operations of the railroad itself may be seriously interfered with. It is familiar knowledge that express matter is handled upon passenger trains. Usually, both passengers and express are carried upon the same train. The car transporting the express matter must stand at the station while the packages to and from that station are taken out and put in. If such rate were made as would draw to the express service large amounts of business the operation of the passenger trains of the railway might be interfered with. At the present time strawberries are moving from the state of Florida to New York and northern markets. Two rates are applicable to the transportation of these berries, an express rate of so much per box and a freight rate, under refrigeration, of so much per car. The express service is somewhat more desirable than the freight service, although it is found that strawberries can be moved most advantageously and most cheaply by the carload. Several carloads are shipped from a single station each day. If, now, the express rate and the freight rate were the same, it is evident that the express service from these strawberry-growing stations in Florida would be paralyzed; and that the service of the railway to the public generally might be seriously impeded. The defendants are undoubtedly correct in saying that express rates ought not to be too low, or, more properly, that they ought not to be too low with reference to the freight rate. They ought not to attract to the express service business which can be properly handled, and more cheaply handled, by freight. When a reasonable freight rate has once been established the express rate in many instances ought, without doubt, to be fixed with some reference to it. While, however, express and freight rates do, within certain limits, compete, there is a very wide field in which express charges may vary without unduly diverting traffic from freight to express. Railroad companies generally protect themselves against too low express rates by providing in their contracts for transportation with the express companies that no express rate shall be lower than a certain percentage of the first class freight rate, usually 1 times. The testimony tends to show that rates by express per 100 pounds are generally about 3 times the first class freight rate. The first class rate from Omaha to Denver is $1.25; the express rate $4. Plainly, we derive but little assistance from considerations of this kind in passing upon the question before us, since this express rate could probably be reduced at least 25 per cent without unduly turning traffic from freight to express. An express company, like a railroad company, is a common carrier. It is also a monopoly. Indeed, the express companies of this country to-day constitute a much more complete monopoly of the business which they transact than the railroads do in respect of the traffic which they handle. The Supreme Court of the United States has decided that a railroad may give to an express company the exclusive right of doing business upon its line, and these five defendants under such exclusive contracts operate upon 167,000 miles of railway, 73.51 per cent of the entire railway mileage of the United States. Their rates between competitive points are fixed by tacit if not express agreement, and there is a complete understanding as to the conditions under which business shall be received and handled. Every consideration requiring supervision of railway tariffs applies with equal force to express companies. In passing upon an entire schedule of railway rates (and when in this proceeding we pass upon the base rate of these defendants we really consider their entire schedule) the controlling factor is the value of the property which is devoted to the public service. The cost of originally producing or of reproducing that property is an important consideration, as is also the capitalization of the company and the value of its securities. In revising the rates of these express companies those considerations can have but little weight, since there is no real relation between the value of the property and the service perforined, nor in the case of these companies, between their capital stock and just earnings. The fundamental question is, however, still the same, and is, What ought these defendants to be fairly allowed for the public service which they perform? To answer this we must know the character of that business, the capital required for its conduct, the hazard involved, and especially, in passing upon present rates, the profits which these companies are making from those rates. In the latter part of 1906 the Commission required various express companies, the defendants among others, to file with it statements showing their receipts and disbursements and giving certain other information, and all the defendants have filed these returns in a more or less complete form. Some of them have also filed statements in this proceeding which supplement those and bring the record down to a more recent date. As illustrative, we may select the United States Express Company. This company showed, for the year ending December 31, Total earnings. Total expenses.... Net income..... For the year ending June 30, 1907, the figures were: Earnings from operation... Operating expenses Net earnings...... Income from investments... Total income.... 1906: $16,935, 157 16, 076, 994 858, 163 $17,484, 376 16, 969, 681 514, 695 425, 143 939, 838 This company filed in this case a statement of earnings and expenses for the year ending November 30, 1907, as follows: Earnings from operation... Operating expenses. Income from operation. $17,904, 863 17, 526, 750 378, 113 The phraseology above given is that of the express company and leaves the meaning of the first table somewhat doubtful. For the purpose of showing the general character of the operating expenses of these defendants we give below the detail as furnished this Commission by the United States Company for the year ending June 30, 1907: In "expense" is included fuel, light, telephone, and such items; in "general expenses" traveling, legal, and general line expenses not chargeable to any local office; in "salaries" the amounts paid the employees at local offices; in "general salaries" the amounts paid general officers and other employees which are not directly chargeable to a local office, and "commission" includes those agents whose compensation is paid in the form of a commission. It will be seen that of these expenses about 50 per cent is for transportation and 35 per cent for compensation to employees, and such would be about a fair average for all the defendants. The United States Express Company is an association with a so-called capital stock of $10,000,000. According to its statement to the Commission it had, as of June 30, 1907: Real estate...... Cash....... Total......... $2,648, 883 600,000 7, 224, 226 1,081, 925 11, 555, 034 Its balance sheet also showed various other assets aggregating a considerable amount. The Adams Express Company, for the year ending December 31, 1906, showed: The same company filed a statement in this case showing, for the eleven months ending November 30, 1907: Gross receipts...... Operating expenses... $25, 105, 426 24, 639, 728 Net income from operation..... 465, 698 This company handled during this period 57,211,226 items, showing an average receipt per item of 43.9 cents, and an average profit of eight-tenths of 1 cent. This company, as already stated, has a capital stock of $12,000,000. Its total investments, as shown by its return to the Commission, are $22,131,325. The American Express Company shows, for the year ending December 31, 1906: Gross earnings from operation.... Net earnings from operation.. Income from other sources... Net income.... 13 I. C. C. Rep. $26, 864, 971 25, 753, 820 1, 111, 151 2,091, 376 3,202, 527 The statement of this company filed in this case showed, for the year ending June 30, 1907: Gross earnings.... Net income from operation.... $29, 100, 784 27,793, 468 1,307, 316 This company handled during the year 48,290,310 packages, at an average expense per package of 57.3 cents, and an average profit per package of 2.69 cents. Its capital stock is $18,000,000; its investments aggregate $17,622,741. The Pacific Express Company, for the year ending December 31, 1906, showed: Gross earnings from operation.. Operating expenses... Net earnings from operation... $7, 187, 851 6,604, 785 583, 066 The capital stock of this company is $6,000,000. We have no account of its investments. Wells, Fargo & Company makes return to the special circular of this Commission showing: This company has filed no statement showing earnings in this case. Its capital stock is $8,000,000, including its banking department; its other investments, according to its return to this Commission, are $4,605,701. It is apparent that these figures afford no satisfactory basis for the expression of an opinion as to whether these companies are or are not at the present time receiving more than reasonable returns. The statistics cover, in most cases, the operations of but a single year. So far as detailed statements of operating expenses are given, they are not constructed upon the same basis and are worthless for purposes of comparison. We have no satisfactory statement of the amount of property which is actually devoted to the conduct of this business, nor the amount of hazard which may be involved, nor the amount of capital which is required to successfully conduct the busiThese facts must be known and we must also have some reliable account of the results of operation extending through more than one year before an opinion can be expressed with any confidence. ness. |