The news & observer., 1897-02-26
WILL THE SENATE TO-DAY OPEN
THE DOORS OF THE TEMPLE
OF JUSTICE2

called upon 10 discharge more impor-
+and tr,rst than will come before the Sem
ate to-day.
I'm August. 1895, the directors of the
North Carolina railroad made a contract
10 lease THAT railroad to the Southern
Railway for 90 years at rental of 612
ner cent on the capital stock for the first
six wears. and Z per cent on the capital
stock for the balance of the term. There
were serious objections to the transac-
tion. some of which were;
I It was attended with elements of
secrecy that ought not to obtain when
men transact the peoples business.
.. 1t was entered into six years before
the expiration of the present lease, with
out any reason sufficient Ito justify the
haste.
3. 1t was made with one railroad COM
nanny without any attempt or seeming
disposition on the part of the directors to
secure competition in bidding so as to
make the rental bring it's real value.
4. 1t was accomplished in the face of
the fact that the editor of the Char
lotte Observer. before the lease was made,
stated in his paper, If competition was
permitted, he knew parties who would
nav more rental than the contract calls
for. and after i'm an interview with the
President of the North Carolina Railroad,
the President of the Seaboard Airline
had stated that his road would bid If
action were delayed till the directors
were in a position to turn over the road
10 lessees.
3. 1t was leased for too small a rental.
In 1871, before the Republicans leased
the road to the old Richmond and Dam
VILE railroad company, under the
management of politicians, it earned
net profit of $4,000, and for the three
preceding years, its earnings averaged
about S320,000 In 1871, when, IN
secret meeting, the road was leased for
thirty years at six per cent on ats capital
stock. the stock in the road was selling
at less than 45 cents in the dollar. This
made the rental then secured equivalent
to 10 per cent on the market value of the
stock. In August, 1895, when the pre-
sent lease was made, stock in the road
was selling at S105, so that under the
present contract the State actually gets
less than seven per cent on the market
value of the stock. This shows that the
trade of 1871 was better bargain for
the State than the trade of 1895. Then,
though passenger and freight rates were
somewhat higher than now, the business
of the road was small compared to what
1t is to-day. The towns along the line
of the road were small and the factories
were few as compared with to-day.
6. It was turned over to the Southern
for almost a century without that knowl-
edge of its earning capacity that the di-
rectors should have employed experts to
secure before considering lease. If the
directors caused such examination of the
receipts and expenditures of the road,
as they ought to have done, no publica-
tion Of the result of such examination
has been made. The report of the Rail
road Commission for 1896 shows the re-
ceipts of the North Carolina Railroad to
be 81 ,430, 10. On page 312 the Southern
Railway states that on their owned
lines-in the State (which include such
Improbable property as the Ducktown
branch and others, they averaged AZ
per cent net earnings. Tic they only did
as well on the North Carolina road as on
the other lines, the net profit to them
ON the North Carolina road, is annually
over 5000, 900; from which deduct $780,
600 rental, and their net profit is over
S340,000 But if it was far above the
average as undoubtedly Ill was, then the
annual profit was $500000 to 100000.
While it is true they return only $367,
900 net profits or 100000 per annum
over the rental this is only $27, 900 per
year more than the State made in 1871
out of half as much gross receipts. The
return is clearly doctored for purpose.
They have charged up to the North Car
olina road (page 219) all sorts Of odds
and ends, so as to make the expenses II
per cent of the receipts-a report I'M
paraleled in the reports of railroads any
where. We have no means of knowing
how much they have reduced receipts of
that road by crediting it with less than
it's fair share Of through business Tt is
very certain that it did not cost Y per
cent of receipts to run, while it's other
lines cost only IS per cent of receipts to
run It, That the Southern is capable of
doctoring returns will appear from their
report of 1894, in which they report the
pro rata part of the North Carolina rail-
road of the salaries Of the general of