The record-union., 1893-02-08
NAME OF ROAD.

Compared with the dividend roads, the
ratio OF operating expenses on the Pa
cific system lines is 5S.g3 per cent. Yet
none of these California lines, excepting
the Central Pacific, has ever paid a divi-
dend to its stockholders. The increased
ratio OF operating expenses on the East
ern roads named is not due to the greater
cost OF the service of operation, but on
the other hand is due to the much greater
volume OF traffic, which is accompanied
by much cheaper cost of operation, con-
sIdering the service performed, and re-
suits IN larger net proht, notwithstand-
ng their lower rates.
In contradistinction to Mr.. Leeds con-
cluslons, 1t is also true that road with a
low percentage OF operating expenses
may be Improbable 10 Its owners and be
operated at Il high rate OF cost for the serv-
ice performed. For illustration, the Pa
clhc Coast Railway has shown that its
gross earnings for 1891 were (Report of Gale
liornla railroad Commission, 1871 Sl9l,-
O54 5O; operating expenses, S94, $50 81;
ratio of operating expenses to earnings
tOrty-nlne per cent. Notwithstanding
| this low percentage OF operating eX-
penses, compared with say the Lake
Shore rate as above of siXty-eight per
cent, 1t costs to haul train mile on The
California road 81 I9, and on the Eastern
road 81 %, and the traffic in the train Is
| Statistics Of Interstate Commerce Com
| mission, 1880, p. G39.)
Ihe percentage OF operating expenses
to earnings thus proves nothing as to the
cost OF operating in one state compared
with another State, and it has been here
demonstrated that the results reached by
AIr. Leeds IN the use OF such percentages
are directly contrary to the facts. y Not-
wlthstandlng the lower ratio of operating
expenses to earnings here, the actual cost
OF operation is much greater than in other
portions of this country.
Third-CutJoi71id is paying to this road
the Southern Pacific COnpanl0 tlUjce as
much per mule as is eajWed 6y roads i7s
other portions Of this country. In this
proposition Mr.. Leeds cannot of course
mean literally what ne says, for he must
know that some roads i'll other portions
OF the country earn per mile as high as
three times as much as the Pacific sys-
tenn. Compare for instance the above
mentioned dividend paying roads:
Gross
Earnings
per mile
OF road.
Southern Pacific Company, Pacific
Lake Shore and Michigan Southern. l4437
PIttsourg, Fort wayne and Chicago. 2o,5S&
Pennsylvania Railroad d..................... 269Sl
New York Central aud Hudson River
halllOau.-..----. "a, ,4O7
AS the Southern Pacific gross earnings
per mile are about one-third that shown
on these roads, Mr.. Leeds must mean to
contne his comparisons to other roads.
He has, in fact, named the Atchison sys-
tenn and the Missouri Pacific system in
this connection. The fairness of sut b
comparisons, or, in other words, the
truth of the deduction which may be OBJ
tained therefrom, depends on the fullnesS
of the numerous other facts to be consid-
nra1 A lhInh
indicates in itself neither high rates nor
large profits. The largest earnings per
mile, as a rule, are received where the
rates are lowest, thus the Eastern roads
above quoted have larger earnings and
lower rates than the Pacific system. And
the Pacific system has larger earnings and
lower rates than the other roads in Cali.
fornia. On the Pacific system it is a fact,
also, that on those roads where the eafn-S
ings are largest, the rates are the lowest.
This results from the common relation
between large tToBtc and low rates.
Under natural conditions, and without
arbitrary interference, rates are reduced
wherever 1t is believed that 1t will induce
sufficient additional traffic to give on the
whole an increased net profit. Thus com.
modities which are produced in the largest
quantities are taken out OF the body of the
tariff and given special rates. This applies
to all the principal products of this State.
Applied to the country at large 1t affects
with the greatest force the staples OF life,
and results in the lowest rates. First on
the necessities OF life which are consumed
by all; second, to the common comforts
consumed by a less number and to less
amount, and third, to the luxuries of life
which take the highest rates and are en-
joyed by the few. The reductions of rates
under natural conditions with the OBJ.
iect of securing an increase of traffic with
lower rate but larger net profit thus
results in the greatest good to the greatest
number. On the score of rates there is
nothing to be feared here from large gross
earnings per mile of road. Where the
earnings are largest, the rates are lowest.
For any increase in earnings per mile
which the railroads may secure, the pat
rons of the road and tie people of this
State will be benefited to much greater
degree. What is wanted here is more
such roads, not discrimination against
them such as this measure proposes.
Neither can the profits OF railroad or
its reasonableness be judged by the gross
earnings per mile, nor by comparing this
with the percentage of operating ex-
penses to earnings. There must be con-
sdered, also, other necessary expenses,
interest on the bonded debt and fair
return on cost of the property. These
charges are all greater for the railroads in
California than in the States of the Miss
issippi Valley, for reasons similar to
those stated i'll explanation OF the IN
creased cost of operation. The cost Of
construction is much greater here now
than east of the Rocky Mountains. 1t
was still greater number of years ago,
when the Central Pacific was built. The
characteristics of the greater portion of
California railroads are snow sheds,
trestles. bridges, tunnels. grades and
curves. Under equal conditions of costs
for labor and materials, the character OF
the country would greatly increase here,
Z rad Vii I