February 11, 1922





RECORD   AND    GUIDE





167







Coal Consumers Organize to Secure Lower Fuel Costs

Will Petition Interstate Commerce Commission for Reduction in Freight Rates
to New York and Ask Congress to Regulate Quality of Shipments





CONSUMERS of anthracite coal in the Metropolitan District
have formed an organization which will attempt to secure
a reduction in the cost and an improvement in the quality
of the huge amount of fuel shipped into this territory annually.
The plans of this organization, known as the Anthracite Coal Con¬
sumers' Association, Inc., have been approved by the Board of
Governors of the Real Estate Board of New York, the Directors of
the Fifth Avenue Association and the Executive Committee of the
Building Managers' and Owners' Association of New York.
Charles G. Edwards, President of the Real Estate Board; John
H. Towne, Chairman of the Board of Directors of the Fifth Ave¬
nue Association, and Lawrence B. Elliman, of Pease and Elli¬
man, have accepted membership on the Advisory Committee and
the organization has been completed by the election of Henry
Mace Payne, a mining engineer, as President; Charles C. Heffley,
real estate, as Vice-President, and Charles S. Allen, freight rate
specialist, as Secretary-Treasurer and the appointment of George
Gordon Battle, of O'Gorman, Battle & Vandiver, as General
Counsel.   An office has been secured at No. 90 West Street.

Efforts of the organization will be directed mainly to trying to
secure through the Interstate Commerce Commission a reduction
in the freight rate on coal from the mines to tidewater terminals,
and to obtaining congressional action which will standardize the
quality of coal shipped which now carries a large quantity of
waste material. This program is expected eventually to reduce
the present exhorbitant freight rate from $2.61 to $1.31 per ton,
a saving of $1.30 per ton to the consumer; and to improve the
quality by elimination of refuse on which freight is now paid,
saving 13 cents a ton in freight charges, and $1.20 a ton in value
so that there will be a total saving to the consumer of $2.63 per
ton.

Further activities of the organization will be in the direction of
urging the passage by Congress of a bill to require the Interstate
Commerce Commission to have put into effect lower freight rates
on coal in the spring and summer months than in the fall and
winter, and thereby lower the price of coal in the spring and sum¬
mer and encourage storage by consumers who are equipped for
same; encouraging consumers to economize in fuel costs by a
proper and scientific mixture of bituminous (soft) and anthracite
(hard) coals; and advising consumers to effect savings in fuel
costs by following simple scientific methods in burning coal eco¬
nomically.

The Anthracite Coal Consumers' Association, Inc., has made the
following statement with  reference to  the rate  question:

Anthracite coal is found in a very small area In the northeastern por¬
tion of Pennsylvania, In and about the cities of Scranton and Wllkes-
Barre.

From this region It Is brought to tidewater, New York, by seven rail¬
roads, namely: Prlaware. Lackawanna & Western, Lehigh Valley, Erie,
Central of New Jersey, Philadelphia & Reading. Pennsylvania, and New
York, Ontario & Western.

The exproRsIon "tidewater. Now York" refers to the terminals of these
various railroads on the Jersey side of the Hudson river, from South
Amboy north to Weehawken. The freight rates apply to those terminals
and. contrary to popular belief, do not Include delivery to coal yards on
Manhattan Island or other parts of the greater city.

The actual average distance from the anthracite producing sections to
those terminals Is 172 miles; but In the computation of rates. Inasmuch
as the two carriers which have the longest haul handle a very small
proportion of the total tonnage, n fair and just computation must be
based upon what is known as a weighted average, which Is ir;5 miles.

Until a comparatively recent date the principal anthracite mining
companies were owned or controlled hy the railroads on which their
mines were located and over which the coal was and Is shipped to tide¬
water. These r.Tnroad-owned mining companies are referred to as "line
companies."   as   distinguished   from   "Independent   companies."

The distinction between the "line companies" and the "independent
companies" should be borne In mind, to have a proper appreciation of
the significance  of the  findings  of the Interstate  Commerce  Commission





as to the relations between the anthracite-carrying railroads and the
"line companies" and the bearing ot that relationship upon the present
day freiglit rate to tidewater.

At the date ot the inception of the freight rates which forms the basis
ot the present rates to tide-water, the relationship between the anthracite-
carrying railroads and the "line companies" was of the most intimate
character.

Tidewater New York is now and has always been the largest market
for anthracite coal, and the prices there prevailing govern the prices in
other and less important markets.

By an order dated June 10, 1012. the Interstate Commerce Commission
instituted an investigation, under its docket 4,914 entitled "In the Matter
of Rates, Practices. Rules and Regulations Governing the Transportation
ot Antliracite Coal."

Under this order the Commission conducted an exhaustive investigation
into the relationship between the anthracite-carrying railroads and the
so-called "line companies," and. on July 30, 1915, through Commissioner
McChord, then as now the Chairman of the Commission, rendered its
decision, which may be found in volume 3.'5, Interstate Commerce Com¬
mission reports,  at pages 220 to 4fJ0.

Bi'iefly, as a result of the investigation conducted by the Commission,
it ordered a reduction of the then typical rate to tidewater ot .$1.65 per
ton, on  domestic sizes, to $1.45,

Inasmuch as the Commission found that at that time this operating cost
of transporting this coal to tidewater was an average of only 3.;i mills
per ton per mile, or, using the 155 mile weighted average, less than 52
cents per ton, those interesed In the matter were greatly surprised that
the reduction ordered by the Commission was so small ; many feeling, in
view ot the vigorous language employed by the Commission in denouncing
the practices of these carriers and their allied coal companies, that,
instead of $1.45, a very liberal rate would have been $1.00 per ton, which
would have shown a margin of almost 100 per cent, above the cost of
transporting the coal.

However, the rate of $1.45 was put into effect in ir>15 and has, by the
operation of tlie various horizontal percentage increases authorized since
that date, been advanced until today It reaches the exorbitant figure of
$2.61.

This rate of $2.61 shows a ton mile return of 17 mills. It is the
opinion of those who are qualified by training and experience to pass
upon such matters, that this present rate is at the very minimum $1 per
ton in excess of a properly compensatory return to the railroads, and,
when anthracite coal is given a proper relationship to other commodities
of the same character, transported under similar conditions, the rate is
at least double what it should be. In other words, a rate of $1.:!0 per
ton will return to the anthracite carrying railroads a revenue ot 8.4
mills per ton per mile, which is far in excess of that accruing to the
railroads of the country generally tor transporting commodities of similar
character and moving under like  transportation  conditions.

The foregoing has had to do simply with the question of the justness
and reasonableness of the rate, In and ot itself. In addition it is grossly
discriminatory against the users of anthracite coal who pay prices of
which the tidewater rate is a part or upon which their freight rate is
based.    On this point Ihe Commission,  in its decision, at page 227, said:

"Through rates to New England points are made via New York City,
the Poughkeepsie bridge, and the Albany gateways, and are influenced to
a large extent by the rates to tidewater for reshlpment, plus the rates
beyond the tidewater ports by rail or by water to points in New England."

Speaking of the tidewater rate and the conditions which surrounded
its making, as well as the purchase by the "line companies" of the output
of the "independent companies," paid for at a certain percentage of the
prices prevailing at tidewater, the Commission, at page 232 of Its
opinion, said :

"The evidence in this case conclusively shows that the rates on this
commodity were established at an excessive basis, and clearly it was ao
done for the purpose of eliminating the independent output as a factor of
competition  in the markets with the railroad interests' output."

And, at page 233, It says:

"The carriers for many vears were allowed a free hand In the institu¬
tion of freight rates. It Is evident that they used that great power not
with the view ot establishing reasonable freight rates, but with the
Intent to establish rates on this commodity that were high enough to
remove the production of the Independent operators from the field of
competition with the coal mined by the railroad Interests."

The Association quotes other passages from the findings of the
Interstate Commerce Commission in which the rates are declared
to be excessive and in restraint of trade by small, independent
shippers, and comparing the coal rates with those on other com¬
modities. On this question the Commission declared that "freight
rates on many commodities are but an infinitesimal part of the
price which the consumer pays for such commodities. On coal
the freight rate is a more important factor. Anthracite coal is very
largely a fuel for domestic use, and it is a necessity. That rea¬
sonable freight rates should be charged for the distribution of the
great fuel tonnage herein involved is of vital importance to the
producers and of equal concern to the consumers."

In view of the foregoing expressions by the Commission as to
the characteristics of and conditions surrounding the transporta-
(Continued on page 170)