The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1897-07-11
A REDUCTION OF
RAILROAD RATES
Discussed by Gov. Russell in
a Long Letter to the
Commission.
NET EARNINGS THE TEST
First-Class Fare of Two Cents
for Roads that Pay
$4,000 a Mile.
FREIGHT RATES ARE ALSO TOO HIGH
THE RAILROADS SHOULD BE
VALUED AND TAXED LIKE
OTHER PROPERTY.
FREIGHT RATES ARE ALSO TOO HIGH
ASCERTAIN THEIR NET EARNINGS
The Southern is Now Let Off With Valua-
ton Of $1,000, OOO--About One
Half of Its Market
Value.

Half of Its Market
Value.
At a recent meeting Of the North
Carolina Railroad Commission, July 2,
a resolution, introduced by Commission
er Abbott, was passed, inviting the rep
resentatives OF the different railroad
companies Of the State Ito appear before
the Railroad Commissioners on Monday
the 18th day of July, 1897, and there
show cause in writing, il any they may
have, why a very material increase in
the valuation Of the railroad property for
assessment and taxation shall not be
made by the Railroad Commissioners sit
ting as Board Of Appraisers and As
SCISSORS, and why a revision of the
freight and passenger tariffs shall not
also be made"
Gov. Russell, and other well known citi-
zens were also, ~ this resolution, in
yited to be present at the hearing and
present their views or any information
or facts they may be in possession of
touching the questions at issue.
The Governor will not be present. In
stead he sends to the Commission the
following letter setting forth his views
on the subject of reduction Of freight
and passenger rates and an increase in
the tax valuation of the roads in North
Carolina T.
State of North Carolina. Executive De-
partment, Raleigh, July 8, 1897.
To the Railroad Commission, Gentle
men: have your note inviting me to
come before your Board and present my
views with regard to the valuation of
railroad property for taxation and as to
the reduction of freight and passenger
rates. I observe that you cite the repre-
sentatiyes of the railroads also to appear
and present their briefs and arguments
in writing. As the railroad lawyers and
officers are to present themselves in writ
ing, it is perhaps more decorouss and
more fair to them that the discussion
on both sides should be in writing. This
10 the rule in the Court of Claims and
perhaps in other high courts. 1t is con-
ducive to accuracy and moderation in
statement and is calculated to prevent
recklessness in assertion.
The resolution proposed by Commits
sioner s. Ohio Wilson is in substance
this: "Look at the net earnings Of a
railroad, that is, the net income or net
profit, the net amount that 1T yields to
ats owner over and above all expenses,
Just like the net rent Of a store or mill
or farm; then fix the valuation at sum,
the interest upon which, at six per cent
per annum, will equal such net income
All property values, with certain limited
and peculiar exceptions, depend upon
their net earnings. This rule Of ascer-
tanning values is generally accepted and
is almost universal in the affairs of men
Why should it not apply to railroads
Why has it been ignored as to them and
their values arbitrarily fixed in way
that seems to indicate a refusal to re-
cognize their net earning power as the
essential element in ascertaining value!
As a result of these arbitrary assess
ments, what have we got? We have all
the railroad property in the State taxed
on an assessment Of about twenty-six
million dollars. According to their re
ports. their net incomes are three mil
lion two hundred and fifty-seven thou
sand dollars. -Four per cent for money is
reasonable. Five per cent is liberal
But suppose in consideration of the ex
traordinary expenses of some railroads
when they undertake to conduct our gov
eminent, control Legislatures and GOV
ernors, appoint Federal judges and evel
postmasters, maintain daily newspaper
and other luxuries with royal outfits o
secretaries, servants, and salaries, we al
low them six per cent. This would CIV
a valuation of about fifty-four million
lollars-more than double the arbitrar.
assessments Of the past year. 1t woult
add twenty-eight million dollars to on
taxable values. 1t would give new ne
income OF about two hundred and fit.
thousand dollars for the State, tn
schools, the counties and the towns.
Now why are not our taxpayers, on
farmers, merchants, manufacturers an
all other property owners entitled to hav
the benefit Of this addition to their loca
State treasures? Their property is ger
orally valued according to its net earn
ing.
Why not apply the same rule to raj
roads? The existing law requires tina
il shall be done. The act of 1895 e,
pressly directs your Commission to ascel
tain the value from the earnings as con
nnred with the operating expense
lChapter 40, Laws Of 1895, Sectio
541 The law means that, while yo
shall put a valuation upon their rollin
stock and any other tangible propert.
you shall look to the net earnings as th
+est for thinning the total amalg'