The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1886-06-28
The Question of Railway Cost.

To the Editor of the Indianapolis Journay:
Thousands of your readers are interested in
taxation The amount of revenue required to
keep the machinery of the government in mo-
ton can be readily appropriated The question
of assessment, therefore, assumes special i'm
portance. The State Board of Equalization,
now in session, in it's relation to the valuation
Of real estate and railroad property, becomes a
body Of special Importance. If valuations are
low, taxes must be high. The rumor is current
that there will be vast falling off in the as
sessed value of real estate some place the de-
cline at from 500, 900, 900 to $50. 100000 These
estimates are doubtless largely guess work, but
that there will be a large decline is generally
conceded. To reduce values for taxation pur-
poses meets with popular favor, but when taxes
are increased, as the consequence of low yalua-
ton, there is general hue and cry throughout
the Commonwealth. 1t is quite probable that
real estate pays too large a share of taxes. At
any rate, the question is debatable. But dis
missing the value Of real estate, what desire to
call your attention to is the valuation of the
railroad property of Indiana Poors Manual OF
the railroads of the United States. for the year
1885, furnishes the following items relating to
the railroads of Indiana:
Length Of line g. 572 miles
Capital stock $l42 442, O96
Funded debt. Observation-Disclosures. 1872 435 1872
Total investment. Observation-Disclosures 307. 1874, 953
Cost of railroad and equipment 283, 324 374
1t will be noticed that the State Board of
Equalization for 1885 valued the railroad prop
erty of Indiana at $54 9S3, 513. 10 per cent of
it's cost as given in Poor's Manual. There is not
question within the entire range Of the fiscal
affairs of Indiana OF more vital Importance
than this astounding decline in the railroad
property of Indiana. We have it stated by the
highest railroad authority in the country that
the actual cost of this property 1888 324. 374
and for taxation this property is valued at $54,
$50, 5l3. A decline OF 1925, SCI. How can
that be9 Can the State Board of Equalization
explain9 The taxpayer of Indiana will place
high value upon official information.
But Poor's Manual supplies more valuable in
formation. IL says that in 1885 the railroads Of
Indiana earned:
For carrying passengers. -.-..-..... SO. 191. $40
For carrying freight 20 623 926
Total freight and passengers 1928 s15, 500
From other sources. Observation-Disclosures. 2,O55, $40
Total from all sources. $50 81 1876
Now it will be observed that the railroads of
Indiana paid 10.7 per cent. on cost and equip
ment, 1888, 1874, 374, and a fraction over 10 per
cent on the total investment. 1907 1914. 953. 1t
is not assumed that this railroad property should
be assessed at its cost 1888. 324 374 but when it
is reduced to $54 $685. 513 the tax payers Of Indi-
ana have right to an explanation.
have shown that upon the total investment
the earnings of the roads was a. fraction more
than 10 per cent.-and it may be said that when
road cannot earn more than 10 per cent. (gross
earnings) it should be valued low for taxation.
On the actual cost of roads and equipments the
earnings in 1885 amounted to TO- z per cent. Still
too low But suppose the State Board of Equal
ization to place the valuation at Sl00 000 600.
In that case the earnings in 1885 would be 3D.
per cent. Such a valuation as that would be
more like justice all round and far less open to
criticism. AS the case now stands the owners
Of the railroads in Indiana obtain valuation
for taxation at $54, 983 513 upon which in 1885
the gross earnings amount to $50, S71, 1876, or 81
per cent, and yet am told they are not salts
fed.
But there is still another phase of this subject:
The funded debt of the Indiana railroad is $751;
435. 1872. That is $780, 888, 592 less than their
cost and equipments. The roads ought to be,
and are worth the bonded debtor funded debt
worth it in cash, the bonds mean cash. and
they are worth it for taxation. On that amount
the roads earned in 1885 $50 81 1885, or more
than 20 per cent That amount would pay, as is
shown by the operations of the roads in 1885,
the 500, 547, 678 expenses. wages. repairs etc.,
and leave a remainder of $6,323, 458, or more
than per cent. on the investment. In railroad
valuation and taxation there is ample room for
reform. and it is to be hoped that the State
Board of Equalization will De equal to the occa
sion. FAIR Play.