The Somerset reporter., 1891-02-12
Taxation of Railroads.

number Of miles Of railroads IN the | nited
States. Were 1877 5S SO miles. OF this
l4g. 9iS &C miles are covered by their re
port They give employment to 70l 7i3
persons. aud provide living for at cast
three million people. The gross earnings
as reported were 1904, FOG 7ol leaving
net income of $50, l09, i2S over operating
expenses. This gives an average OF gross
earnings per mile of So, 300, and I'D aver
age of net income per mile of s2,OS7.
The earnings of the Maine Central sys'
tenn were 81 905 per mile or $685. less
than the average in the Uoited States, aud
net income of 81 ,s4S, or s239 less than
the average income per mile in the United
States.
Poor's Manual of 1890 gives the mileage
Of railroads in the United States as 49,
397 miles, and the average cost per mile
a. measured by the stocks and indebted
ness to be $50, 300, and the earnings ON
capital invested 3 per cent. The funded
debt and capital stock of the Maine Cen
tral System, is sl7,97G,0 900, or an aversge
of 1924, 26S per mile. 1t will therefore be
seen that the Maine Central Railroad il far
from being over capitalized, claim that
is being extensively made in some quar-
tiers.
The net income of the Maine Central,
as shown by their report for 1890, was ST.
3G7. 79S l6. The rentals and accrued in
terest were 81 los, s20.75. leaving bal
ance of S26l ,977 81 From this they paid
a dividend of six per cent of the amount
paid i'll for stock, amounting to S2l5, 6l6.-
90, leaving SiG, 1861 81 to surplus account
1t has been urged by petition, and 9TH
erwise, that the railroads of Maine should
pay tax equal to that assessed upon 9TH
in, tIa nj a.
rate of municipal taxation is probably not
far, upon the average, from 81 SO on ev-
cry 500. Apply this to the Maine Cen
trail Road and what will be the result In
the first place we would have to deter.
mine the fair value of the road to be taxed.
1t has been publ ely claimed that $685.
900 600, would he a fair value. The more
conservative, put an estimate of $40 ,000,-
600. Taking the assets of the road as re-
turned by them. which is S19, 79S. 867 ~
and tax of Sl,50 per 800 would be in
round number $297 900.
1t must not be forgotten that this class
of property can never be c'assed with 9th.
er property.
They are to the business of the State
and to every interest connected with and
dependent upon that business what the
air is to breath and life, without 1t there
could could be no existence. To proper
| ly measure our dependence upon them,
imagine il possible what the State would
be il the railroads could be blotted out
and cease to he. Yet everybody who
knows anything about the Maine Central
Road and its management understands
that no uncomfortable part Of its train ser
vice to-day pays nothing to the road di-
rectly, but is kept on to serve the public
pf hair IN kar
era, income. The inevitable result of the
proposed taxation would be reduction in
the extent and character of that service,
putting the State back in that particular
half score or more of years Then, too,
the roads are common carriers, and as
| such are liable to losses that no other prop
erty is. 1t cost per cent of their earn
ings last year to pay damages for freight
| and passengers. Tnke from this the tax
they paid last year Of $4,000, and we
have left S239, 900 to take from their net
income of 1851 ,977.9l. Thus it will be
seen that no dividends at all could be paid
How quickly the road would sink in val
ue, and cease to be factor in the devel-
opement of the industries of the State.
| Apply another method of reasoning.
How much capital have the corporators
and owners invested in this enterprise.
Leased roads, capital of.............$ 4,6os,573 Is
Paid for construction ............. iio3o,oyS. 81
Paid tor equipment. '''''.. I,8s6,SS7. 60
What would be fair com pen sation for
the investors to get upon the amount iu
busiucss2 II costs annually, or it cost last
year for expenses so 1858, 666.77. The in
come was "a 226. 1855 49, Net income
bove operating expenses, 81 367, 1893 &c,
This is about 2 per cent of investment,
And It'll out Of this they paid tax to the
State Of more than fifty eight thousand
dollars, and various taxes In Inunicipali-
ties.
II your horse is frightened by the steam
whistle of some mandatory down town
and runs away, you get no damage for
breakage of limb or loss of life. rail-
road runs over you or you get hurt in al
most any way, and the road is in for dam
age.
But suppose we apply this tax rule sug-
gested, to some of the smaller roads in
Maine. Take the Bangor & Piscatsani,
road. After ded1cting the interest on
funded debt, and rehtsls the income from
opssating expenses was insufficient by $12,
f023.01 to meet tho expenses. Take the
road on Its assets $l.50 per 500. and they
would have carried over q deficit of
more than $3.50 600.
|
of having sufficient to pay the interest on
funded and other debt. after deducting
operating expenses. At the date of report
the road had deficit of COG, 601.56 The
tax advocated would have added $l,IT0
more. These small roads might pay a
small tax, upon the same principle that a
man who has no property pays a poll tax.
A tax for the right to exist or live. The
larger roads, which are earning sufficient
to keep their road of value, and to encour.
age the operators to push on their i'm.
provements, are paying all that wise pol.
10y could demand.
1t will be seen by these examinations
that all the money saved above expenses is
laid out In the opening up Of bettor busI.
ness commune atoms, and benefitting the
general public.
Do they use too much of their earnings
in salaries etc.. which should go Into in
conner The valuable report of the inter
state commerce commissioners gives the
cost Of conducting the transportation OF
the roads In the whole country to be 90
per cent of the expenses. This is almost
the exact cost of conducting the trsnspor-
tation Of the Maine Central Railroad. Up.
on smaller roads the expenses will often
double this per cent
1
Its way into the part of the State where in
dustries are springing up from the advan
tages given them by railroad tIansporta
ton. industries which could not exist with
out the road, and the report shows thai
last year the road was able to pay the &C
crued interest on the funded debt of $11,
$50 and have a small surplus of 80. 543 80
Levy State tax as suggested, and they
could not have paid their interest on the
funded debt by IS 1893 to say nothing
about paying dividends. Would the PEG
pie of this State have the roads pay Out
less for improvements, every one of which
opens up some new industry, or gives the
people better chance TO dispose of the
products they have2
Today o,pital Is seeking investment in
Maine, both home capital and money from
away. Roads are contemplated in various
parts OF the State. II they cannot hope tc
have az liberal treatment as heretofore, is
it to be expected that men will invest thei'
money? Nevertheless 1t is true that CAPT
tai is waiting the granting of charters tc
begin railroad building, but the last shovel
of earth has been lifted that would form q
road, III by unjust, and oppressive legisa-
ton the struggling roads of Maine are OBJ
structed.
The Sebas.icook Railroad without paving
any int rest on Indebtedness was able &c
carry a surplus of s4b246 beside simply
paying the operating expenses of the road
If compelled to pay tax as mentioned, the
road would have to DO Abandoned in 9
short time.
The report of Hon. Carroll D. Wright
as the present cost Of operating the roadt
In %hia Couutrv with ATTAIN n ho AE00 COO