The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1898-04-21
THE GOVERNOR
MADE COMPL AIN 7
Continued From Fifth Page

maining a net income or profit iron
operating expenses. of $41S.625.1S.
This is 1916 per cent. on the assessed
valuation of the property.
In the absence of more satisfactory
information. we will assume that THE
sum was derived from passenger ana
other receipts. in the proportion which
such receipts bear to each other, accord
ing to the company's reports, as appears
in the 18th annual report of Railroad
Commissioners for 1897, mt page 251.
The total passenger revenue was $3.50
99112. see railroad Commission report
for 1897, page 251.
The total of other earnings was 81
111.226S1; making Il grand total of ST.
592,217.93.
Observing this proportion, the profits
from passenger service proper, i'll North
Carolina, including domestic and inter
State. were $126, 432 80: and the profits
for other services were 1922, 192.oS.
Total S41S625.1S.
In the absence of more satisfactory
information. it is fair to assume that the
domestic and Interstate passenger re-
ceipts of the North Carolina railroad.
which together amounted to S4S0,99l.12
(see Railroad Commission report for
1897. page 251). is divided i'll the same
proportion as that reported by Mr..
Samuel Spencer on page 10 of his affida-
Wit of January %. 1898. There the local
or domestic earnings of Il number of
railroads of the Southern Railway Com
pany. are set down as amounting to
S405, 952.74: and the total of local and
Interstate earnings 1904, 1888.
The passenger receipts of the North
Carolina Railroad were thus, 405, 49,. "A
994, $685.
of $4S0,991.12, or S196,330.
\ reduction of fares from three and
fourth to two and half iirst-class. and
from 2A TO y cents second-class. is an
average reduction of about 23 per cent.
ana such reduction affects only the local
or domestic passenger fares.
Twenty-three per cent. of the domes-
tic passenger receipts. to-wit., S196,330,
the proposed reduction of passenger
rates.
The income from operation. as reported
by the commission, is S41S, J2J.1S.
In the absence of more satisfactory
information, it is fair to presume that
this income is derived from interstate
and domestic receipts in the same pro-
portion ms the passenger business is di-
vided, as reported by Mr.. Samuel
Spencer. on page IL of his affidavit of
January %, 1898. that is TO say: The
part of the net income derived from do
nestle business is 405 ,952.24 of S41S.-
994 .559.5S
G25. IS, or S170,S71.5O From which sub
tract. the reduction caused by the pro-
posed change of passenger rates. S44. 15J,
DO
domestic passenger and freight business.
Now, if the road be rated at the
amount for which it was assessed for
taxation. S3,117.233, that portion of
this sum. which for the purposes of this
calculation is to be deemed as appropri-
ated to domestic business, is, according
to the ratio between domestic ard inter-
State passenger receipts. as set forth in
Mr.. Spencer's said report. as above.
405,952.90 of $3,117 ,2a33. or S1.272,373.
1914 ..J59. IS
The net profit from domestic passenger
and freight business, after deducting the
A, 155, caused by the proposed reduction
of passenger rates, is 1926, 1860, which
is Il profit of over 10 per cent. ON the
$1212,373, appropriated to domestic
business.
If the property be valued at the sum
OF $4.00O,000, which is the amount of
its capital stock. instead of $3.117 .S5},
the proportion of said S4.000,000 to be
appropriated to domestic business for
the purposes of this calculation. reached
as above, would be 81 .G32,319, and a
profit on domestic business of S126, 116-
80, would be a percentage of over ~
per cent on ST ,632, 319.
When United States bonds, per cent
bonds are worth 100: North Carolina 1
per cent bonds 1O2; City of Raleigh 81
per cent bonds 107; New York Central
and Hudson River stock. which pays 81
per cent. per annuni, 100; Raleigh and
Castor per cent. bonds 100. it would
seem that 5 per cent. on the value OF
the railroad is liberal allowance for
compensation for its services, The stock
of this company, which pays dividend
of 61a per cent. has q market value Of
about 1870. This makes ii a ) per cent
investment. In view of these facts, it
is considered a net profit Of u ger cent.
upon the value of railroad company's
property, is a reasonable income for any
railroad to make. And that it cannot
complain of n reduction of the domestic
passenger fares, which still permits such
profit to be received. 1t il estimated by
the railroad company. that the expense
of domestic business is greater i'll pro-
portion than Interstate business. The
difference, as estimated in the Nebraska
case, by one of the most reliable witness
es. was about 10 per cent. But suppose
it is 20 per cent. If it were in the same
proportion to receipts as the other bust
ness. the expenses of domestic business
would be about $133, 900, 20 per cent. of
which is $4,000. The local freights and
fares are higher in North Carolina than
the through freights and fares. 1t isl
supposed that the difference in cost of
operation is more than offset by the
difference in rates. But if this were not
so, there is still a liberal margin left
between the 10 per cent of the IA per
cent. profit, and reasonable profit Of j.
per cent. to cover this additional cx-
pense, "a Of S1,652,319 being S43, SSS.
Besides. it must not be forgotten that
the practical abolition of the free pass
system i'm North Carolina, will necessari-
ly add thousands of dollars to the reve-
nue. of the railroads. This and the income
earned by the increase of travel follow
ing the reduction OF rates. will more