An order is entered below cancelling the schedule now under suspension. Upon presentation of a new schedule in accordance with the plan above outlined, it will, after approval by the Commission of form and detail, be permitted to take effect upon short notice.

ORDER.

It appearing that by successive orders of the Commission dated October 26, 1918, November 29, 1918, and December 14, 1918, respectively, the rates and charges described in tariff M. P. S. C. No. 3 of the Holyoke Street Railway Company have been suspended until December 23, 1918, unless otherwise ordered;

And it further appearing that a full investigation of the matters and things involved in said tariff has been had, and that the Commission on the date hereof has made and filed a report containing its findings of fact and conclusions thereon, which said report is herein referred to and made a part hereof, · It is

Ordered, That the Holyoke Street Railway Company be and it is hereby notified and required to cancel the rates and charges stated in the tariff specified in said orders of suspension.

And it is

Further ordered, That a copy of this order be filed with said tariff at the office of the Commission and that a copy hereof be forthwith served upon the Holyoke Street Railway Company.

By the Commission,

ALLAN BROOKS,

DECEMBER 21, 1918.

[P. S. C. 2292]

Assistant Secretary.

MASSACHUSETTS NORTHEASTERN RATES.

Notice of the Massachusetts Northeastern Street Railway Company relative to proposed changes in rates of fare upon its railway.

DAVID A. BELDEN

FREDERICK E. WEBSTER

GEORGE R. FRENCH

for Massachusetts Northeastern Street

Railway Company.

ALBERT P. WADLEIGH for Towns of Amesbury, Merrimac and

Salisbury.

ESSEX S. ABBOTT

ARTHUR L. NASON

CHARLES H. MORRILL

for City of Haverhill.

DANIEL J. MURPHY for City of Lawrence.

WALTER P. HOPKINSON

CARL C. EMERY

for City of Newburyport.

HERBERT E. HARRIMAN for Plum Island Improvement Association. On April 15, 1918, the Massachusetts Northeastern Street Railway Company notified the Commission of a proposed change in passenger rates to become effective May 15, 1918. Pending investigation, the operation of this new schedule was suspended by the Commission until July 1, 1918, and public hearings were held on May 8 and May 9, 1918.

The fares now charged by the company were established in compliance with the order of the Commission in the Massachusetts Northeastern rate case decided October 14, 1916 (4 P. S. C. Rep., p. 122). The present unit of cash fare upon all lines is 6 cents, but a ticket rate of 5 cents is available for a distance of approximately 3 miles from the centers of Haverhill and Lawrence, and certain commutation and workingmen's tickets are sold at reduced rates. The present fare zones vary greatly in length, the maximum being 6.45 miles, the minimum 1.35 miles, and the average approximately 4 miles. Including transfer privileges, a maximum ride of 7.65 miles and an average ride of approximately 5 miles are available for a single fare. Upon certain lines lapover privileges have also been granted, which enable local passengers to ride some distance beyond the regular fare collection point without additional charge.

For this system of irregular overlapping zones, the company proposes to substitute a new fare scheme which embodies certain features of what is commonly known as the "copper zone" system, and retains certain features of the fare system which has heretofore been commonly employed upon the lines of New England street railway companies. The company proposes a re-division of its system into fare sections varying according to the density of population and other local conditions from 1.7 to 3.8 miles in length, and a subdivision of each fare section into two fare zones of approximately equal length. The average length of the proposed fare sections is about 2 miles, the average length of the fare zones or half sections about 1 miles, and the average fare per mile approximately 2 cents. The cash fare is to be 5 cents for each fare section, but passengers may ride from any point in the first fare section to any point in the first zone of the adjoining fare section, or in other words over any three consecutive fare zones at a rate of 7 cents by the use of tickets which are sold in strips of ten for 75 cents. This arrangement amounts in effect to a reduction in the length of existing zones from an average of 4 miles to an average of 2 miles, a reduction of the unit of fare from 6 cents to 5 cents, and a graduated increase, instead of the payment of a full additional fare, for rides beyond the first fare. section. The plan proposed involves also the abolition of overlapping zones, the discontinuance of certain free transfer privileges and a reduction of the transfer area where such privileges are retained. The tariff provides also for the sale of 20-ride workingmen's tickets, good during certain hours between designated points at 75 per cent of the regular cash fare, and for certain round trip summer excursion rates to Hampton Beach and Canobie Lake park.

An exception to the general fare scheme just described is made. on four short lines having an aggregate mileage of 7.6 miles, on Plum Island and along Salisbury, Seabrook and Hampton beaches. On these lines, which serve beach resorts and are operated during the summer months only, it is proposed to retain the present fare zones and the present 6-cent unit of fare.

The company has made a careful estimate of the revenue results from the plan proposed, applying the new plan and rates to the 1917 travel, with certain allowances for a loss of travel on suburban and country lines, due to the higher rates, and for an increase in short-haul travel, due to the reduction in the unit of fare. The result shows a net gain of approximately $72,500 or

about 9 per cent. While estimates of this kind must be more or less speculative, we are of the opinion, after an examination of the data upon which this estimate is based, that the actual increase in revenue under the new fare plan would not be likely to exceed, and might indeed prove to be somewhat less than the amount named by the company.

In proceeding to determine the company's need of additional revenue of the amount indicated, and its justification for seeking authority to raise its rates, the findings made by the Commission in its report on the Massachusetts Northeastern rate case of 1916 may be taken as the starting point for the present inquiry. In that case, after a review of the financial history of the company, based upon the evidence presented in that proceeding, the Commission found that the company was justly entitled to secure from the operation of its road an income sufficient, after caring for operating expenses, depreciation and taxes, to cover the interest on all funded and unfunded debt, with the exception of an item of approximately $65,000 representing the cost of an abandoned power station at Newburyport, and to pay a return of at least 6 per cent upon the full par value of its outstanding stock. The Commission also found that the management of the company had been efficient, that the property had been well maintained and that the failure to provide for accrued depreciation had not been due to the payment of excessive dividends or other forms of mismanagement.

The findings then made were based upon the comparative balance sheet and the income statement of the company for the year ended June 30, 1916. At that time the company had outstanding stock to the amount of $2,165,000, bonds to the amount of $1,000,000, and floating debt to the amount of $411,000. On December 12, 1917, the Commission authorized an issue of additional bonds to the amount of $100,000, the proceeds of bonds to the amount of $36,000 to be applied toward the payment of floating indebtedness then outstanding, and the proceeds of the remaining bonds to be applied to the payment of the cost of contemplated additions and improvements to the property (P. S. C. 1497). For other additions and improvements to the property since December 12, 1917, the company has expended to December 31, 1917, the sum of $21,953.28.

As the result of these transactions the funded debt of the company was increased to $1,100,000, and the floating debt was reduced by $14,046.28. The floating debt was further reduced by

writing off the cost of the abandoned power plant in Newburyport, which was referred to in the former rate case, through the cancellation of notes to the amount of $64,000 held by the holding company. With these adjustments, the floating debt now outstanding should amount to $332,953.28. The actual amount shown on the company's books is $335,000, but the variation is not material. It would appear, therefore, that the interest on the company's present funded and unfunded debt is a legitimate charge against operation, and that the company is entitled to an annual return of at least 6 per cent on its capital stock, which would amount to $129,900.

The income statement of the company for the year ended June 30, 1916, and subsequent fiscal years, as shown by its annual reports on file with the Commission, is as follows:

As appears from the above statement, the net income of the company for the year ended December 31, 1917, amounted to