sippi River crossings of the Chicago lines, or from Memphis, New Orleans, and other lower Mississippi River crossings. The Commission thereupon instituted this proceeding of its own motion, for the purpose of inquiring whether the advances in the rates were unreasonable or otherwise in violation of the act to regulate commerce. These advances in the class rates are shown in the following table:

Many advances in rates resulted from changes made in classification. A few of the advances made in commodity rates are as follows:

Many other commodity rates were advanced.

The respondents, in obedience to the orders and requirements of the Commission, each filed an answer, except the Chicago, Rock Island and Texas Railway Company, denying that the rates or advances of the rates in controversy were in violation of any of the provisions of the act to regulate commerce. While the answers differ somewhat in detail and set out more or less alleged facts in support of the general allegations, yet for the purpose of briefing this case the substance of the answers may be stated as follows:

First. That the rates resulting from the advances made are reasonable, just, and otherwise lawful.

Second. That the advances in the rates were rendered necessary and were justified by an increase in the cost of operating respondents' lines of railway, (a) because of the increased cost of labor, which had partly occurred previous to the advances in the rates, and which partly occurred thereafter by reason of the demands of labor organizations and other employees, and (b) because of the increased cost of supplies and materials used in the operation and construction of the respondents' lines of railway.

The evidence was taken with respect to these issuable facts, and in its scope embraced (I) cost and comparative cost of labor; (II) the cost and comparative cost of materials and supplies; (III) the financial condition, expenditures, operating expenses, net earnings, and various other matters pertaining to the operation; (IV) the method and manner of making the advances in the rates, and the reasons which actuated the respondents in doing so.

We will discuss the case under these heads.

1. Cost and comparative cost of labor.-Whatever advances were made in the wages of employees-which, when compared with 1892, are quite small and in some instances less than they were in 1892 are more than offset by the various economies in using that labor as a means of producing profit from railroad operation, as will fully appear from tables subsequently to be introduced in this brief. It must not be overlooked that a large amount of the total labor cost is due to extensive improvements and betterments during the past few years; therefore the ratio to earnings for those years is greater than it otherwise would be.

The average wages paid by respondents to their employees for the years ending June 30, 1888, 1892, 1894, and 1903, were as follows:

For the fiscal years ending June 30, 1888, 1892, 1894, 1902, and 1903, the percentages of the total compensation paid to employees to the gross earnings were as follows:

NOTE. These percentages of total labor cost are made much higher than they would be were it not true that large items of labor cost were incurred in improvements, betterments, etc; for example, the St. Louis and Southwestern. (See quotations, p., this brief.)

The deductions to be drawn from the foregoing tables are that the average price paid to employees for labor was greater in 1903 than in former years, as a general proposition, while the percentage of total labor cost to gross earnings was not on the average greater than in 1892 or 1894. There was a decrease in the wages paid to general office clerks, other station men, switchmen, flagmen, and watchmen. In other lines of employment there was an increase in wages, the most material of which were those paid to general officers, machinists, enginemen, and trainmen.

For the purpose of showing the relation between the total cost of labor and the tonnage handled by that labor, the following tables are introduced, computed from figures furnished by the annual reports of the three respondents, Texas and Pacific Railway Company; St. Louis, Iron Mountain and Southern Railway Company, and the Missouri, Kansas and Texas Railway Company: