Omaha daily bee., 1885-02-13
The Question fiNet Earnings.
CLEVELAND Lauder.

The Question OF Net Earnings.
Cleveland Leader.
From the very beginning 1t appears to
have been a study with the managers OF
the Pacific railways how tt beat the gov
eminent out of its dues. The money
with which these roads were actually
built was taken from the public treasury
and yet the government holds only a
secondary claim on the works. Since
the construction OF the'roads there have
been constant dissgreements with refer
encs to the compensation for postal
service, government troops and stores,
and the pay ment of interest. The act
of 1862 hound the government to pay for
its service 'fair and rtaionable CON-
pensation and not to exceed
the amounts paid by private
parties fer the same kind of service
The government claimed the right to de.
eide the rates for mail service, but this
claim the management Of the Pacific
railroads disputed. The matter wss car
ried to the supreme court and decided
adversely to the government. Sincs ther
the government has based it's allowauc,
for postal service ON the rates paid tc
other reads for similar service, but thil
did not prove satisfactory, particularly &c
The Union Pacific. The latter claimeC
that the mails should be paid fer as eX
preas matter, arguing thst Its chsrtei
would admit of that construction. Her
was another disagree ement, which result
ed IN carrying the case to the court o
claims for settlement. The cour
has Just ac'cd on the case, tn,
acc uats being stated to the clcs
Of 1882. The indirg of the cour
is in favor Of the government, although
its claims against the company has teer
reduced about So, coo, 900. But in de
termining the case, the court undertook
to eet'le the question of net earnings.
Accord ing to the decision the expenses
not charged to construction or capital
even though they are ''partly In the
nature of permanent improvements" are
to be deducted from the gross earnings
aud the balance Is TO constitute the ne
e,rnings According to the Thurman
acs, which should be the law In the case,
the companies are permitted to deduc
from the gross earnings the cos of oper
ating their reads in the state of repair
and the annual interest on their frs
mortgage bonds. Under the Law
there Is nc difficulty in determin
ing the question of ne'
earnings, but the decision of the cour
a:tually leaves it to the managers of tn,
Pacific roads to determine the question o
net earnings for thems Ives. Under ,hC
decision the companies may expend wha'
money they please snd for any purpos'
they like, and so long as they a,e no
cha'ged to construction and capital the,
ate to be deducted f,om The gross earn
ipgs In reviewing this deci: ion the New
York Times says:
With all due respect TO the court we ar
constrained to say that this puts the govern
ment altogether at the mercy of the CORPORA
tion, and could hardly ha,e had any othe
purpose. AS o definition in fact it i
good for nothing but to permit tn
choose for its own benefit for the purpose o
cutting down the fund from which its obi
cations to the government are to be met. 1
will claim of course, that all it's expenses ar
bona hde paid" and it will easily avoit
charging them, whatever they may be, t
construction or capital. Its methods o
charging and keeping accounts are in it's owl
control, and it is given a loophole of evasion
large enough to run any amount of new con,
situations aud equipments through. AS If thi
were not enough the court specifically state
shat it may cha ge to expenses what may b.
partly in the nature of permanent improve
ments." Why partly" and what does, part
ly' mean? That is practically for the com
pany to decide and it will easily make i
%cover anything it is disposed to add to it,
Iconstruction and equiru emit"