The merchandise rate is one which but few people use regularly or daily and the people generally over the state, on an average, would probably receive from one to three packages during the year, but the general special rate which includes all farm products, milk and cream, poultry and eggs, castings for machinery, etc., is of more direct interest to the State of Oklahoma than the merchandise rate.

The Commission is disposed to establish at this time a fairly remunerative merchandise rate as compared with rates now in existence. All farm products, including vegetables, poultry and eggs, cream and repairs for machinery should be carried at a much lower rate than is now charged for these commodities. This class of expressage seldom has any delivery expense and never more than such expense at one office. They are usually carried to the express office and delivered at the station. The express company is only required to bill them and load them on a train and deliver them at the railroad station. By establishing a reasonably low rate on this class of products, would tend to encourage and stimulate the business in this line and would cause the farmers of this state to engage i raising and transporting to the local markets a great variety of fruits and vegetables that are now debarred by the present rates. Witn the exception of one or two main lines in Oklahoma, the express companies could increase their business from fifty to one hundred per cent without any additional increase in general expense. It would not require any additional force of employes or railroad equipment. The hauls would possibly average not to exceed one hundred miles and could be handled in most instances by local passenger trains without interfering with through service. The proper development of this class of express business in the State of Oklahoma requires that the express company handle this business at the lowest rates that will yield a reasonable income for the service rendered.

In view of the increased traffic, low rates on this class of commodities would produce; the only apparent objection on the part of the express companies would be the precedent it may establish.

The Interstate Commerce Commission, in the case of Kendel vs. Adams Express Company, et al., 13 I. C. C. R. 492, says:

"It is probably true to some extent in the express business as 't is in the operation of a railway, that as traffic increases, other things remaining equal, the percentage of operating expense decreases. A railroad company must maintain its railroad and its stations and whatever else is necessary to the providing of a way upon which trains can be handled, irrespective, within certain limits, of the amount of business transacted on that railroad. The expense of maintaining this structure does not increase as the amount of freight handled over it increases. To a less degree, the same thing is doubtless true of express companies. The item of transportation increases exactly in proportion to the increase of receipts, for that service is paid by the percentage of these receipts. The other expenses of an express company up to a certain point do not increase in proportion to the amount of business handled. An express messenger does the work upon a given train at the same price although the business may perhaps double. The same is true of delivery wagons or an office; until the

capacity of the messenger or the office or the delivery wagon has been reached an addition to business does not increase proportionately the expense. Hence it follows that up to a certain point the express company, like the railroad company, transacts its business cheaper in proportion as the business grows."

It may be insisted that the proposed order of the Commission, upon special commodities, does not sustain the proportionate relation to freight rates on similar commodities. However, this may be answered, that freight rates on this class of commodities are relatively higher on account of the perishable character of the same, and the liability of loss and damage by freight being much greater than by express and that the freight rates in many instances, such as on ice, vegetables, poultry, etc., are nothing more than paper rates, upon which but slight business moves.

It is unnecessary to discuss in detail the rates on all the various commodities, but inasmuch as there was considerable evidence and contention as to the milk and cream rate, this evidence will now be considered.

Milk and cream are delivered to the express company at the railroad station usually in ten gallon cans, and the express company performs no terminal service other than billing, and loading the same on the train, and at destination to deliver to consignee at the station. The empty cans are returned likewise. There is perhaps no industry in the State of Oklahoma if properly developed and encouraged that would be of greater benefit or a greater source of revenue to farmers of this State than the creamery business. According to the census of 1900, Oklahoma (including Indian Territory) had 276,539 dairy cows, two years old and over, or about 4 cows to the square mile; 108,000 farms at that time with 3,626 farms that derived forty per cent or more of their incomes from dairy products. The State of New York in 1900 had 1,501,608 dairy cows; 32 cows to the square mile; 226,720 farms, 67,457 of which derived more than forty pet cent of their incomes from dairy products. The State of Illinois, Iowa and Wisconsin have each slightly over one million dairy cows. There are twenty-one counties in Oklahoma that have creameries.

The following table shows the rate of the Wells Fargo & Co. Express now charged in Oklahoma, also what is known in Oklahoma as the Rock Island rate and in other states as the C. B. & Q. rate, and in Nebraska the Nebraska Commission rate; the Wisconsin Commission rate, and Oklahoma Commission proposed rate:

It appears from the foregoing table that the Rock Island or Nebraska Commission rate is as low as any rate west of the Mississippi River, and as low as most rates east of the Mississippi River, except where rates may have been made to certain cities.

The Commission of Wisconsin has established a rate on cream and a rate on milk, which to about sixty or seventy miles, the two rates combined would average about the same as the Rock Island. From 80 miles to 320, the Wisconsin rate increases more rapidly, and at 350 miles the milk rate exceeds the Rock Island cream and milk rate 10 per cent, and the cream rate 20 per cent. The average distance that milk and cream would be hauled in Oklahoma is about 80 or 90 miles, at most not to exceed 100 miles. The average earning on each can is about 22 cents on the Rock Island rate; allowing to the railroads 55 per cent, 20 per cent terminal charges in and out, 15 per cent general expense, would leave a net profit to the express company of 2.2 cents per 10 gallon can. If the railroads were paid

50 per cent, would leave a net profit of 3.3 cents. If the railroads were paid 40 per cent, 5.5 cents. On the proposed rate of the Com mission, the average earning per can would be 18 cents. Where railroads are paid 55 per cent, 20 per cent terminal charges, 15 per cent general expense, a net profit of 1.8 cents per can. Where railroads are paid 50 per cent, would be a net profit of 2.7 cents. Where the railroads are paid 40 per cent, would be a net profit of 4.5 cents.

The average net earning per package of all the express companies throughout the United States will not exceed 2 cents each. The average per package for the Wells Fargo Company, running the highest, is about 3 1-2 cents per package. It does not appear from the opinion of the Wisconsin Commission whether the railroad companies perform wagon delivery service at points of destination. If delivery service is performed in the large cities, it would doubtless explain the slightly higher rate established by the Wisconsin Commission and the Interstate Commerce Commission on longer distances.

Cream in most instances is delivered at an office where an agent is maintained on a salary, and while it is true where the salary of the agents is combined with the delivery service, the maintenance of wagons, etc., that the terminal expense, according to the evidence in this case, will average more than 10 per cent of the business done. In the handling of ceram, the service of the agent is only temporarily employed and one hundred cans of cream can be delivered by the agent for approximately the same expense and time that it would be necessary to deliver one can; hence, the actual terminal expense that should be chargeable to cream would probably not exceed 12 per cent or 6 per cent in and out. It is unfair to place any burden upon the transportation of cream for delivery service when the same is not performed. A delivery service is performed for the benefit of those living in town, surrounded by the convenience and comforts comman to cities, and if express packages are delivered and collected, this class of traffic should bear that burden, and the farmers of Oklahoma should not be required to pay any additional express rates on cream to equalize or pay for the conveniences enjoyed by those who have access to special delivery service.

The average earning per ton per mile of freight in the United States will not exceed eight mills, while cream transported a distance of thirty miles, 15 cents, would be 100 mills per ton per mile; forty miles, 17 cents, 85 mills per ton per mile; fifty miles, 18 cents, 72 mills per ton per mile; ninety miles, 22 cents, 49.9 mills per ton per mile. There is a vast difference between 8 mills per ton per mile for freight and an average of more than fifty mills per ton per mile for cream. However, the comparison of the earnings per ton per mile on freight and the earnings per ton per mile on expressage, is not of much value in ascertaining proper express rates; yet, it does illustrate that the service is not being performed at relatively low rates, considering the character of the commodity.

There was no serious contention or objection made as to the other rates proposed by the Commission, although there were some evidence and exhibits introduced showing the relative reduction, but the Commission deems it unnecessary to analyze this evidence here.

The express companies have been given every opportunity to introduce all the evidence and facts and circumstances at their command,to show that the rates now in force in Oklahoma were reasonable and that the proposed rates by the Commission were unreasonable. The evidence introduced by the express companies in many instances and especially in apportioning the expense between state and interstate business was of such a vague and unreliable character that the Commission has possibly not given this evidence as much. weight in its considerations as it would have done had the same been capable of analysis, with accurate conclusions.

The Commission, having arrived at the conclusions herein set forth, finds, from the evidence, no just reasons to change or modify its proposed order.

The Arkansas merchandise rate is slightly higher than that proposed by the Commission. However, the Commission is of the opinion that the proposed rates on merchandise are sufficient to produce a reasonable revenue for the service rendered and the risks assumed and pay a substantial dividend on the amount invested by the express companies in the State of Oklahoma. The analysis of the earnings of the milk rate as shown above shows that the average net earnings on a ten gallon can of milk in the State of Oklahoma is equal to or in excess of the average earnings per package of the express companies throughout the United States. This includes all packages of great and small value. We see no reason why the Commission shoul impose a rate upon the cream industry of Oklahoma that would pay a net revenue per package more than that received by the express companies for the average package handled.

An order will be made establishing express rates in this State consistent with conclusions herein.

CORPORATION COMMISSION OF OKLAHOMA.

ORDER NO. 203.

To the Adams Express Company, American Express Company, Pacific Express Company, United States Express Company, Wells-Fargo & Company Express:

Pursuant to service of Proposed Order No. 40 and hearings held thereon in the office of the Corporation Commission in the City of Guthrie, State of Oklahoma, on the 11th, 12th, 14th and 16th days of January, 1909, and 4th, 5th and 6th days of February, 1909, the following order shall be in full force and effect covering the handling and assessment of charges on merchandise, or property, carried over the lines of the Express Companies named above on and after. August 1st, 1909.

CORPORATION COMMISSION EXPRESS CLASSIFICATION AND RATES.

Applying on:

Merchandise, or property, carried over the lines of the following named express companies in the State of Oklahoma:

Adams Express Company, Pacific Express Company, American Express Company, United States Express Company, and Wells-Fargo & Company.