TWENTY-FIRST ANNUAL YEAR BOOK— PART VII 593 



Freight Cases Handled. 



The most important case that has been handled during the past year 

 was the 1920 advance rate case, involving some $1,600,000,000 annually. 

 The commission granted much more than I thought the railroads were 

 entitled to; nevertheless, there are two facts worth remembering — first, 

 the railroads originally asked for a return on a valuation of $20,600,000,000. 

 That is not the figure stated in the decision of the commission, but that 

 is the figure upon which the railroads relied. (It will be shown on page 

 30 of the report.) The commission reduced that by $1,700,000,000. Six 

 per cent on that is equivalent to approximately $100,000,000 annually. Of 

 course, that is a small thing these days of billion-dollar affairs, but it 

 was somewhat worth while. 



Second — at the beginning the railroads tried to force the entire bur- 

 den on freight traffic. The farmers' products constitute about 15 per 

 cent of the tonnage of the United States, but the farmers also comprise 

 about one-third of the population. I think the average farmer consumes 

 more machinery, more lumber, more fuel, more of merchandise, or the 

 products of the country generally, than the average man in the city. 

 Incidentally, folks, you have a pretty important industry. The value 

 of our farms has been estimated to be greater than the total value of our 

 railroads, the total value of our factories, and the value of all of our 

 national banks — all put together. Our factories, railroads and banks 

 combined do not equal the value of agricultural lands in the United 

 States. It is rather important! You are bearing, I think it is fair to 

 say, one-half of the transportation burden, considering the fact that the 

 average farmer consumes more of the tonnage handled by the companies, 

 on the average, than the man in the city. Considering the fact that agri- 

 cultural products, etc., constitute 15 per cent of the tonnage, the two 

 combined, and other factors, have led to that estimate. 



Now, it was important that the burdens of freight traflfic should not 

 be too heavy. It was our thought that passenger traffic should bear 

 its fair share of the burden. During the progress of the hearings we 

 asked for a statement relative to the earnings from passenger rates com- 

 pared to freights. The railroads said it would be impossible to produce 

 such figures. We insisted upon it, and we finally got it. We made such 

 good use of it that the chief counsel for the railroads finally announced 

 they would agree that when the wage advance was put into effect that 

 there should be an advance in passenger rates. This resulted in reliev- 

 ing freight traffic of approximately $300,000,000 annually. Combining 

 the two factors, the reduction in the valuation and the relieving of freight 

 and placing that burden on passenger traffic, relieved freight traffic of 

 approximately $400,000,000 annually, or a little bit over $1,000,000 a day. 

 So much for that phase of it. 



On the other side of the ledger we have this situation: The com- 

 mission adopted a value which is about $5,000,000,000 greater than the 

 market value of the railroads, according to sales on the exchanges of the 

 country. In other words, at a time when railroad stocks and bonds were 

 not worth 75 cents on the dollar, the commission adopted a valuation 

 that was $1,000,000,000 greater than their par value. 



3S 



