road, in unreasonably low compensation to the Boston and Maine Railroad for the service rendered, it was free at once to file new tariffs with the Commission increasing these rates. The removal of the discrimination against the National Dock and Storage Warehouse Company in no way, it seemed to the Commission, imposed obstacles to such procedure. The Supreme Court, however, decided that the Commission acted without authority of law and that, before ordering the Boston and Maine Railroad to remove the discrimination, it should have proceeded, if we understand the decision correctly, to determine and fix the rates which would thereafter be just and reasonable for the haul upon that road.

"Orders to remove discrimination, as commonly framed, do not fix rates. They merely determine the relation of rates, by prohibiting the carrier from charging more for carriage to one locality than under similar conditions to another; and they usually leave the carriers free to remove the discrimination either by raising the lower rate or by lowering the higher rate or by doing both." See St. Louis S. W. Ry. Co. v. United States, 245 U. S. 136, p. 145. The case above mentioned, which was considered by our own Supreme Court, differed from the usual discrimination case, in that it was necessary, under the peculiar circumstances existing, to lower the higher rate in order to remove the discrimination. The following passages from the decision point this out clearly (italics ours):

An order baldly directing a carrier to remove a discriminatory rate when the only possible way in which that discriminatory rate can be removed is by making a substantial reduction in its rates, and where there is no election to raise some rates or reduce others, without at the same time determining what is a reasonable rate, is not an exercise of the jurisdiction conferred (p. 202).

When the orders of the commission according to its own statement required a reduction of rates, it must make a further decision based on evidence that such reduced rate would be fair and reasonable and not confiscatory before its earlier orders would be ripe for enforcement (p. 202). In the present case it is quite unnecessary to reduce any rate, for the discrimination complained of can be removed merely by discontinuing the present practice of absorbing the charge for switching by the storage rate. While the petitioner is of opinion that the latter rates are insufficient to yield a reasonable return upon investment, the railroad company apparently holds a contrary view, and in any event would not be prevented, by an order requiring the discontinuance of absorption, from raising

the rates if that should prove necessary to secure reasonable compensation for service rendered. In other words, for present purposes the reasonableness of the storage charges, aside from the absorption, may be assumed, no reduction of rates is involved, the only issue presented is the relation of rates, and, if the Commission establishes a proper relation, it will in our judgment do all that the statute requires.

Summarizing the situation, the Commission is of opinion that the present practice of the Boston and Albany Railroad Company, prescribed in its tariff I. C. C. No. 7514, M. P. S. C. No. 955, under which the rates named for storage of property in its warehouses at East Boston for the first month or part thereof include the cost of moving the property from the Boston and Albany Railroad piers or other East Boston piers into the warehouse, results in a material variation in the charge for identical storage service; that such variation is unjustly discriminatory; that the matter has been properly presented to the Commission; that it has jurisdiction and power to require the removal of the discrimination complained of, so far as it relates to intrastate traffic; and that the discrimination ought to be removed by ceasing the absorption of the switching charges as above described. In other words, the storage charge should be separate and distinct and should not include the charge for any other form of service; but this is not to be taken as a finding that the railroad company may not, in any given case, absorb the switching charge in the rate for some longer rail haul. In view of the fact, however, that the Boston and Albany Railroad is now under direct control of the federal government, which was not in any manner made a party to the proceedings, the Commission feels that it is sufficient at present for it to state the facts and its conclusions with respect thereto, believing that the United States Railroad Administration, when the situation is thus brought to its attention, will effect the desired change. In the meantime, and until such change is made, the case will be kept open, and the Commission will be prepared at any future time to take such further action as may seem appropriate and necessary. If the federal authorities should for any reason desire a rehearing, it will be granted.

For the Commission,

ANDREW A. HIGHLANDS,

OCTOBER 29, 1918.

[P. S. C. 1602]

Secretary.

BOSTON, REVERE BEACH AND LYNN RATES.

Notice of Boston, Revere Beach and Lynn Railroad Company of proposed increase in rate of passenger fares upon its railway. The Boston, Revere Beach and Lynn Railroad Company operates a ferry service between Boston and East Boston and a narrow gauge railroad from the latter point to Lynn. It also operates a loop line in the town of Winthrop about 4 miles in length, connecting with the main line at Orient Heights in East Boston. Under the passenger rates now in effect the fare is 5 cents from Boston to any station in Winthrop, a maximum distance of about 6 miles, or as far as Point of Pines, Revere, on the main line, a distance of about 7 miles. The charge for the ride of 92 miles to Lynn is 10 cents. No commutation or other reduced-rate tickets are sold. In the above distance the ferry ride is computed at its actual length, about 1 mile, although the company claims that the separate operation of this service represents an expense equivalent to the operation of 3 additional miles of railroad track.

The company now desires to raise the unit of fare from 5 cents to 7 cents, making the charge from Boston to Lynn 14 cents and the charge to Revere or Winthrop 7 cents, an increase of 40 per cent. A tariff to this effect was filed on May 8, 1918. Pending investigation, it was suspended until July 1, 1918. The present charge for ferry service alone between Rowes Wharf and East Boston is 3 cents, which can be reduced to 2 cents by the purchase of tickets, and this charge is not changed in the new tariff.

During the past twenty years this road has been a very important factor in the rapid growth of the suburban communities of Winthrop and Revere and in the development of the great seaside pleasure resort, Revere Beach. The following comments in regard to the service which it affords, taken from a report on the "Transportation Needs of Metropolitan Boston" made to the Commission in 1915 by William B. Bennett, are of interest in this connection:

It has active competition for traffic between Boston and Lynn in both the Boston and Maine railroad and the Bay State street railway. The former it meets with more frequent service and a lower rate of fare;

the latter with a faster schedule. . . . The present schedule of fares was instituted in May, 1899, and that date marks the beginning of a remarkable and steady increase in the amount of business done. The total passengers carried has increased from 3,772,431 for year ending June 30, 1899, to 19,829,240 for the year ending June 30, 1914. . . . This road handles a tremendous summer traffic to and from Revere Beach.

In its report to the General Court in the same year upon the same subject matter the Commission took occasion to make this statement (3 P. S. C. Rep., p. 411):

. . . In passing from this subject we may say also that no convincing reasons have as yet been presented to justify the suggested merger of the Boston, Revere Beach and Lynn Railroad Company with the Bay State Street Railway Company or the Boston Elevated Railway Company or with any consolidated company embracing these two systems. At present the "Narrow Gauge" road is the one transportation company within the metropolitan district whose patrons seem entirely satisfied with its fares and service. So long as that happy condition continues we can see nothing to be gained by destroying its separate identity.

As this indicates, the relations between this company and the communities which it serves have always been very friendly. They have felt that it gives good service and is responsive to their needs, and this feeling was manifested in marked degree at the hearings upon the pending petition.

The capitalization of the company is as follows:

The stock was issued prior to 1894 and without public supervision, although some of it was sold at auction at a price above par. The bonds, however, were issued with the approval of the Board of Railroad Commissioners and it appears that in 1897, in connection with one of these issues, the Board satisfied itself by an examination of the property of the integrity of the outstanding stock; but the evidence on this point is not clear. It is the present opinion of the Commission, based on the general knowledge which its experts have of the property, that there has been no inflation of the capitalization, but no positive finding is made

upon this point at this time and it is reserved for further consideration in connection with subsequent action on this case. The interest rate upon the bonds is 4 per cent. During the past 20 years dividends of 2 per cent per annum were paid from 1898 to 1905, 4 per cent in 1906, 5 per cent in 1907 and 6 per cent from 1908 to 1917, inclusive. An extra dividend of 2 per cent, however, was paid in 1916.

The accounts of the company for the past six years have been examined by the accountants of the Commission and no items were found which seemed to call for serious criticism. The property has been well maintained and the provision for depreciation has been generous. On December 31, 1917, the depreciation reserves amounted to $258,280, in addition to a profit and loss surplus of $143,354. Until recent years it was the custom of the company to write down the value of the property, rather than to set up a reserve, and the following table shows the original cost of the equipment as compared with its present book value:

During the past five years revenue has increased very slowly and operating expenses more rapidly, as follows:

The comparatively small increase in expense thus shown, however, is misleading, since the cost in 1917 was only kept down by a reduction in maintenance expenditures. In 1913, $262,937.58 was expended for this purpose and in 1917 but $156,813.97. The item, "Conducting Transportation," increased in the same period from $559,010.37 to $723,960.96, or nearly 30 per cent.

In the calendar year 1917 the company failed by $1,545.92 to earn the dividends of 6 per cent which it paid. The company bases its claim for increased rates upon the advance during the