The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1897-07-13

large railroad systems in this State.
You have fixed the railroad valuation
at SIG, 900, 900, but the bonds and stocks
of the railroads in this State amount to
S94. 600 900 1t is clear therefore that
rates high enough to pay interest or
dividends upon the latter sum is grossly
in excess of what is just to the pubic.
Freight and travel are thus being taxed
to pay dividends and interest on nearly
$40. 10000 OF fictitious capital
There are three different methods
zach of which will demonstrate fhat the
present rates are grossly excessive.
1. Take the three great railroad sys-
TENS of the State which embrace nearly
As of the total valuation. Your report
for 1896 shows as follows:
Valued. Net earnings. Miles
Iine $3.50. o s o,s5aooo eas'olo eS'
Soutre,n Is Il. LOO, ,o,ro,, no,
system ,.... sloiooo i'''o'oo' i'oo'
Svstem :" SEQ % $4,000 6s
saleOO s2t7o,uOo
That is to say property invested Oh
S20. ooO, 900, (but costing present owners
far less( is allowed rates high enough to
earn nearly S3,000,000, net or ID per cent
interest annually out of the people OF
North Carolina. Your report says the
property is worth $20,000,OW including
franchise Your report says the net
earnings are nearly S3,000,0Oo and even
in this we are at the mercy of the cor
porations. There has not been cross eX-
animation or inspection of their books.
We do not know whether in pro-rating
they have allowed the North Carolina
portion of their roads as much as an inn
partial calculation might prove to be
Just. We do not know how much the
net earnings would swell if only moder-
ate salaries were allowed and improper
charges disallowed and the Supreme
court of the United States say in Well
man VS.. Railroad, 143 U. s.. and they
say it again IN Reagan VS.. Trust Co.,
| 154 L. s., at page Az that no rates Will
1 be held too low until the salaries are
shown not to be excessive or that lm-
! proper charges have not been made,
that the rates fixed by the public author
| ity can not be supervised till those mat
| tiers are shown up. In the absence of
any examinations by your board of the
original books, it is proper to say this in
support of a suggestion that an auditing
of the books might show that the net
earnings upon calculation by impartial
accountants are probably far more than
! - per cent.
| The railroad returns as made TO you
are ex parte and among very many
things requiring explanation IS this. In
| 1891, the gross receipts were returned
/ by railroad at $S,651 900 and net earnings
| as S3.120.0O0. In 1896 the gross earn
81. arIx . hrrH
| in some unaccountable way there is an
| increase of operating expenses of over
| 81 .O50.00O, or in other words the more
business these corporations do the larger
the percentage of expenses, which is
contrary to experience. Besides we
| know that improvements cheapening
the cost of operation have been constant
| " made in the railroad world and that
the wages of the men, the rank and hle,
/ have been rather decreased than d1mln-
/ ished The Interstate Commerce Com
mission report sharp reduction as to
| the pay of the men and an increase only
| in the salaries allowed by the higher of
| fcials to themselves, but it would take
| d great deal Of this to account for the
addition of $1,050,000 to operating ex-
penses in North Carolina in five years
out of an increased business of less than
! 81 200, 900. Then the North Carolina
| Railroad, 223 miles long, reports its
pro rata contributed to salaries of gen
eral officers" in 1891 81, 800; the same
item in 1894 is $24,0S9 (more than the
total salaries paid by this great State to
the Governor and all the heads Of the
the Executive Departments combined)
while in 1896, after public criticism,
this same item has shrunk without ex-
PLANTATION to $3.50. This and many
other matters which seem unaccountable,
may it is true be explained. They need
it. As / have said the value Of .'the
investment" Of these three chief lines
in North Carolina is reported by you
as being S20,000,000. At 4 per cent net
the rates should be high enough to al
low them 100000 net earnings, but
the actual net earnings reported upon
the showing Of these three companies
for 1896 is $2,975, 900, l. e., they car
red off to their nonresident owners the
sum of 900 in excess of the fair
and legitimate rate of i per cent on the
investment. 1t must be remembered that
this 4 per cent is net above charges for
railroad wrecks, betterments, repair, law
expenses, taxes, high salaries and every
possible charge which the corporations
have seen fit to crowd into their ex-
penses, for the sum total of the money
received by these three lines for their
operations in North Carolina in 1896
is admitted to be $S,476,00O.
Thus the sum in excess of a reasona-
BILE allowance of 4 per cent on the in
yestment which these three systems have
carried out Of North Carolina since the
day your Commission was established to
reduce rates-the excess above legal
rates in these six years-has been near
S13 100000 exclusive of interest This
sum under the decisions of the highest
court in this land could justly and prop
erly have been kept here and its pre-
sence to-day would make this State bios
som like a rose. Talk about frightening
capital from coming into the State by
knowing our rights and daring to main
tain Them What we need is to keep
a just part of our own capital in the