The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1893-04-11
EARNINGS OF RAILROADS.
The Report of the Interstate Com
merce Commission.
Real Significance of the Figures Pre-
sented in the Report Re-
Gently Submitted.

In their recent report on the Income
of Railroads in the United States" the
Interstate Commerce Commissioners en-
ploy phraseology, which, to those who
are unfamiliar with financial statements
of this character. may not be entirely
clear; nor is the liability to popular mis-
apprehension of the matter lessened by
press comments exclusively devoted to
certain parts of the report, which cannot
be fully understood out of their connec-
ton with other parts of the exhibit. The
form, for example, in which one OF our
leading San Francisco contemporaries
presents the matter is such as to create
the Impression that the owners of rail-
| road property in the United States, during
the last fiscal year, cleaned up and pock-
! eted, net, above all obligations, the sum
of S4O7, SS9,6l6. This is far from correct.
The commission estimates the gross
earnings of the interstate railroads. IG5.OJO
miles, 10 be 81 %, III ,G9S, and by subtract
ing from this amount SSl4. ~, 0S2 paid
out for operating expenses, finds the
difference To he S4O1 ,ySy, Gi6, as above,
which 1t designates as Income from
oPeration.''
! 4Ac lHlleHSIIE OF IueSe aggregates IS
! truly peWllderIng and they suggest the
following comparison TO our contempo-
rary:
The income of the railroads of the United
| STATES Is greater than that OF any two Govern
| ments IN the world. 1t is more thau double
that OF the United States Government and
more than that or all the Go, ernuents OF
| Chrlstendom at the opening OF the century
This is an apt and forcible suggestion
OF the magnitude of the railroad indus
| try and OF the Importance OF its relations
| to the community, but sucn generaliza-
ton is apt to distract attention from the
serious economical aspects OF the QueS-
tons, and To this extent is misleading.
The Income from operations" is by no
means conclusive as to the financial con-
ultion OF railroad; hence any inquiry
which should stop at this point would be
incomplete and detective. In addition to
operating expenses, fixed expenses must
be provided Tor out of this Income" 1t
is only what remains after the fixed eX-
penses nave been deducted from the Fin
| come from operations that is available
Tor dlVlSlon Us profits among The owners
OF the property. The principal item of
fixed expenses is interest on bonds-a
form OF Indebtedness without which or
dlnarlIy the construction aud equipment
OF railroads would be impracticable-and
taxes.
Now, on the basis of the computation
as made by the commission, where the
10000 miles OF interstate railroads had
set aside the funds required to meet these
fixed obligations, the Income from oDer-
alton" was reduced from S4OS, goo, OOO. round
Numbers. to S95,U0J,0O0. II this amount
be divided by 80, which is somewhat less
than the number of roads considered by
the commission, each interstate railroad
OF the Onlted States would be shown to
pay dividend OF $4,000, or 800 per
nllle. The cost OF railroad and equip
mcnt. according to the report of the
United States Bureau of Statistics. for
ISL, averages H53,7S3 per mile. This
brings the average dividend-paying ca
paclty OF the railroads of the country
within the practical COMPREHENSION of
any one who appreciates, however
| roughly, the amount of capital repre-
scented by one mile OF railroad. To put
Inc proposition IN more definite form
using the authority of ''Poors' Manual"
the railroads Of the United States. in the
year 1891, paid but one and eighty-five
/ one-hundredthS OF one per cent. Q.S5 per
cent on all their paid-up capital stock.
These figures are offered merely TO
| show what tho average would be through
/ out the railway system OF the United
states i'll case ali railroads were dividend
paying property. This, however. is not
the case. Many of these roads are oper-
atCd ut loss, while the number of those
which yield dividend to their owners.
or stockholders, is much smaller than
may be imagined. For Illustration, the
Interstate Commerce Commission re-
ports that the Pacific system of the
Southern Pacific Company closed its
operations Tor the fiscal year ending June
80. 1892, with deficit of 574l, 900.
1t is claimed by authorities in the de-
partment of mining that the value of all
the precious metals has never been in
excess of the total cost of producing them.
This is not put forward as Il comparison;
the idea occurs only in connection with
the fact that so large a proportion of the
revenue OF railroads is constantly being
redistributed and indirectly returned to
the sources from which it is derived.
While, therefore, it is true that the in
come Of our railroads aggregates a stu
pendous sam, il Is also true that the aver
age return on railroad investments is
not large as compared with other invest
ments, for while some are making monev
others are run at Il loss; and that, on the
whole, at the end of each year, there is
no great difference in any one locality OF
the United States between the amount
contributed by the public for the advan-
tages OF railway transportation and the
amount expended by railroads to render
this service.
OUT OF REACFs