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NOTE. All these figures are for lines in California, and are preliminary and subject to revision by the Interstate Commerce Commission. *Equipment (Accounts 51 to 58 inclusive) has not been allocated to the various states and has not been included in these amounts. (a) Land reports have not been received.

All the tentative valuations have been protested by the carriers who, through their "Presidents' Conference Committee," which is the central railroad valuation organization, have adopted a standard form of proThis protest consists, first, of a general protest based upon principles, and second, the specific protest the particular carrier makes to the engineering or land reports submitted by the bureau of valuation. Copies of these objections made by the carriers are filed with this Commission.

The Engineering Department of this Commission has already made complete valuations on a large number of the interstate and intrastate railroads and when the bureau of valuation's tentative reports on road and equipment have been received a detailed check is made to ascertain the methods used and the results obtained. A check is also made of the claims and objections submitted by the carriers.

Since attendance at public hearings of these matters in Washington, D. C., is not practicable, a written protest is then made by this Commission and forwarded to the Interstate Commerce Commission.

There have been many objections raised by both carriers and the various state commissions as to the principles used by the bureau of valuation. If the Interstate Commerce Commission does not uphold the bureau of valuation upon these matters of principle all valuations thus affected will have to be changed. In order that the various objections may be presented and receive consideration, the Interstate Commerce Commission has held several hearings en banc for oral argument upon these contested basic principles before finding the tentative valuations.

At the hearings held in Washington on valuation dockets which included the following California roads, Western Pacific Railroad Company, Tonopah and Tidewater Railroad Company, and Death Valley Railroad, this Commission's chief engineer, Mr. Richard Sachse, and its attorney, Mr. Hugh Gordon, appeared and presented evidence on behalf of the Commission.

Hearings were also held in the valuation dockets of the Riverside, Rialto and Pacific Railroad Company (now a part of the Los Angeles, Salt Lake Railroad) and the Cement, Tolenas and Tidewater Railroad Company, but decision in these matters is being withheld, it is understood, pending the Interstate Commerce Commission's action in the leading cases.

INVESTIGATIONS OF SERVICE, OPERATING AND FINANCIAL CONDITIONS.

Investigations of this kind are usually made in connection with proceedings involving rates or the issuance of securities. The purpose is to set forth the facts as relating to the revenues and expenses to show as a result of a careful survey the quality of the service rendered and any possibilities of increasing the revenues or decreasing the expenses; to determine if the book charges follow the physical changes in the property and to set forth the past, present and future return to the utility is one factor of measuring whether or not a fair return is earned from a fair value of the properties.

Necessarily these investigations include a study of the traffic, the methods of operation and include, in some cases, recommendations to the political divisions of the state which are thought helpful in increasing the efficiency of operation.

A year's experience with these careful studies has substantiated the previous conclusion that they are a successful measure toward assisting the utilities to render more efficient and economical service.

Three investigations into the operating revenues, expenses and service of transportation utilities have been completed during the year. These investigations included the Rodeo-Vallejo Ferry Company-Mare Island Run (Application No. 8512), Bakersfield and Kern Electric Railway Company (Application No. 7230) and Fresno Traction Company (Application No. 7205). In the case of the Bakersfield and Kern Electric Railway Company the transportation division made a report on the service and operating expenses of the railway system within the city of Bakersfield and made recommendations, the result of which made possible the continuation of the five-cent fare. The investigation of the Fresno Traction Company was made in connection with the resettlement franchise.

SPECIAL INVESTIGATIONS.

Los Angeles Street Railway Survey-The Commission in its Decision No. 10930 involving the rates and fares of the Pacific Electric Railway Company stated, in brief, that satisfactory local street car transportation in Los Angeles could not be brought about and the necessary expansion of a growing city properly met until there is a unification of the two local systems into one ownership and one management, and stated further that this could be accomplished in one of three ways:

(a) Pacific Electric to take over the Los Angeles Railway lines. (b) The Los Angeles Railway to take over the local lines of the Pacific Electric.

(c) The city of Los Angeles to acquire both.

In Decision No. 10929 it was suggested and recommended that a conference be held by the representatives of the city of Los Angeles, the Commission and the street railway companies with a view to working out this problem. As a result of the Commission's suggestion the Los Angeles city council and board of public utilities extended an invitation to discuss this matter at a conference. Such a conference was held and as a result of further negotiations it was arranged that a survey should be made with the object of preparing a report dealing with the different plans of consolidation as outlined above and pursuant to these negotiations a memorandum covering the scope of the survey and method of handling the work was agreed upon by the board of public utilities, the Los Angeles Railway Corporation, the Pacific Electric Railway Company and the Commission.

The memorandum of agreement between the four parties provided for the making of an inventory and appraisal of the railway properties of the two utilities within the city of Los Angeles and a survey investigation dealing with matters of service, operating revenues and expenses and of improvements and extensions to the systems. Under the heading of "Inventory and Appraisal" it is proposed that both the historical reproduction cost and the reproduction cost new, together with estimates of accrued depreciation, should be made. Under the service investigation, careful consideration was to be given to the various means of possible consolidation of the operating systems.

The cost of this work is to be borne by the two railway companies,

to pay on presentation of bills by the respective public authority the salaries and expenses of the engineers assigned by the Commission, or the board of public utilities of Los Angeles. The work of this survey commenced early in 1923 and, at the close of the fiscal year, the work was approximately 40 per cent completed, there being employed at that time thirty-one men by the Los Angeles Railway, four by the Pacific Electric, three by the city of Los Angeles and nine engineers from the Commission's engineering department. It is expected the work will be completed about January 1, 1924.

TRANSPORTATION DEVELOPMENT AT LOS ANGELES HARBOR INVESTIGATION.

The city council of Los Angeles on August 9, 1922, passed a formal resolution calling a conference of the board of public utilities, the California Railroad Commission and the harbor department of the city of Los Angeles to consider the promulgation of a comprehensive plan and survey for adequate and proper means of transportation for the harbor district of the city of Los Angeles.

Thereafter a conference was held with the Commission where it was agreed that the proposed line of the Los Angeles and Harbor Railway (a Santa Fe subsidiary) should be studied and should be made the first part of the harbor transportation problem. At this conference an engineering committee consisting of Mr. H. Z. Osborne, Jr., chief engineer, board of public utilities; J. W. Ludlow, harbor engineer, city of Los Angeles; Richard Sachse, chief engineer of the commission; and H. G. Weeks, transportation engineer, was appointed to make this report. The first part of the report above referred to has been made and submitted to the city of Los Angeles and the Commission in addition also presented it at a hearing before the Interstate Commerce Commission on the application of the Santa Fe and Harbor Railway for a certificate of public convenience and necessity as mentioned elsewhere.

After a careful consideration of the construction of the Santa Fe line to the harbor the engineering committee came to the conclusion that the franchise applied for should be granted by the city of Los Angeles with clauses providing:

(1) That the city can take over such portion of the trackage as should be needed for an outer belt line.

(2) That the city can take over the trackage in Wilmington for unified

use.

(3) That the Santa Fe will in the future change its line to avoid any inner harbor development at Bixby Slough if it is deeded a free right of way in another location.

It is also concluded that the investigation should be continued for the investigation of a plan of the facilities in Los Angeles harbor and pursuant to this recommendation the city council of the city of Los Angeles asked that the investigation be continued.

Because of the press of work it has not been possible to continue this investigation as diligently as the circumstances seem to demand, but it is hoped that in the last half of the present year this investigation will be completed as the extremely rapid growth at Los Angeles harbor, both on the docks and particularly in the railroad yards, demands an immediate solution of the transportation problem.

LOS ANGELES TERMINAL AND GRADE CROSSING PROCEEDINGS.

The scope and purpose of this large proceeding have been discussed in previous annual reports. During this year the State Supreme Court decided that the Railroad Commission did not have authority to order terminal unification in Los Angeles because such power, if any existed, had been transferred to the Interstate Commerce Commission by the Transportation Act, 1920.

Soon after this decision was rendered the city of Los Angeles instituted a proceeding asking the Interstate Commerce Commission, in brief, to order what the California Commission had ordered in its decision on rehearing. The Interstate Commerce Commission set this proceeding for hearing in Los Angeles on July 5 and at the close of the year the transportation division was engaged in the preparation of evidence in this matter, the Railroad Commission having decided to enter an appearance as an intervener.

The preparation of evidence was made jointly with the city of Los Angeles, and, while a large part of it was available in the record for the California Commission, practically all statistical matter was brought up to date before the hearing of the Interstate Commerce Commission.

NEW RAILROAD CONSTRUCTION.

During the year there was more new railroad construction in California than for several years. The new lines constructed or commenced are as follows:

(a) By Southern Pacific Company:

Branch line south and east from Calipatria.
Branch line southerly from Magunden...

(b) By Pacific Southwestern Railroad:

From Lompoc to White Hills.

(e) By Minarets and Western Railroad Company:

Northerly from Fresno...

(d) By Pacific Electric Railway Company:

Main line connection between Glendora and Lone Hill....
East San Gabriel extension..

(e) By the Atchison, Topeka and Santa Fe Railway Company:
Los Angeles and Harbor Railway extension to Los Angeles..

WORK UNDER TRANSPORTATION ACT.

21 miles

19 miles

4 miles

.75 miles

4 miles

3 miles

13 miles

Under the Transportation Act, 1920, passed by congress and approved that year, it became necessary for interstate carriers to apply to the Interstate Commerce Commission for certificates of public convenience and necessity authorizing them to construct new railroads, either as new construction or as extensions, or to abandon existing service or tracks. This does not apply to secondary tracks, such as sidings and spurs. The act also makes it incumbent upon the Interstate Commerce Commission to give the states in which these lines are located an opportunity to make such representations as they desire, and to ask that a public hearing be held.

In California proceedings of this nature are handled by this Commission and during the year there have been presented to the Commission, for its consideration, several matters which will be described. These proceedings involve only those requiring a certificate of public convenience and necessity and the list does not include similar proceedings in which carriers asked the authorization of the Interstate Commerce Com

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