The Washington times., 1902-09-07
GREAT LINES ARE lEsoLVENl
Newspaper Review of Pres
ent System of Manage
ment Stirs Empire.
PEOPLE UNDER A HANDICAP
Cheaper 70 Bring Goods From New York
Than From Remoter Suburbs of Brit
ish Metropolis-clear Exposition of
That Truth.

4uAl 41utu.
LONDON, Sept. 6.-The worst shoci
the British investment and commercial
public has yet received was inflicted by
an article in Thursdays Times al
ready briefly noticed in these dispatches
comparing American and British railway
management.
1t has been taken for granted amid
all the criticisms of the physical in
ertia OF British railway systems in the
past few years that the financial policy
of English railway management was GER
tainly the soundest and most conserva-
tive in the world.
1t has suddenly been demonstrated
that this is the reverse of the truth.
The policy which prevails even in the
so-called best managed English railways
is a policy which inevitably will lead
to insolvency.
Their directors have, in effect, been
paying dividends out of the capital for
years. This process of piling up in
debtedness which should have. been
charged to operating expenses, has gone
on SO long that already the accusation
of insolvency can fairly be brought
against the greatest English railways
A National Evil.
The effect of this upon the commercial
prosperity of the country has now reach
cd 4 1,.
evil Oyercapitalization brought about
by this nefarious policy is the true rea-
son for the excessively high rates Of
fares and freights which burden the
whole British public.
This is the true explanation of the
fact that il is cheaper to bring goods
to London from New York than from
the remoter suburbs of the British me-
fropolis.
This handicap to the national prosper
ity increases the cost of living of all
classes and deprives the English agricul-
turists of a fair market. The facts have
never been clearly brought home to the
public until now. and it is not surprising
that the effect is general amazement ana
resentment.
No newspaper article ever had a more
demoralizing effect on the stock exchange
than the American writer's clear exposi-
ton of the truth, and the Times in its
editorial columns yesterday unhesitating-
ly declared that the writer had fully
proved his case
Some few sentences in which the
American railway expert sums up his
comparison of the annual reports of the
Delaware. Lackawanna and Western, and
the English Northeastern companies are
worth repeating. How many British
lines,'' he asks. could follow the course
of the Lackawanna company and con-
tinue to pay anything like the dividends
they have been declaring for years, or
how many could pay any dividends upon
their present capital2
Situation Most Serious.
| 1.-THE situation is all the more serious
a recognized practice of British directors
to place everything that can be charac-
terized as extraordinary expenditures into
the capital account. as well as a great
deal that cannot, even under the most
liberal Interpretation, be so classified
This has been the vogue for thirty or |
forty years. Ever since the prevailing |
form OF railway accounts was prescribed. |
which gave an apparent and colorado |
sanction to the prevailing procedure. |
financial decentralization has been and is |
as is apparent to anyone who |
takes the trouble to make direct an
alysis of the accounts of any railway
company
"It will be found that each undertake
ing follows the opportunities rather
han the well defined, Straightforward
rule in respect to revenue and capital
charges The increase of capital has
frequently not even an apparent ex-
.use of increase of revenue. The former
Is quite disprcportionate to the latter;
N fact, the increase in capital and the
Increase in revenue have very remote
connection.
TT is not too much to say that the
policy pursued is a prof1igate one, and
he end must be that the railways of
he United Kingdom will go further and
urther behind the times in economical
,quipment and up to date transporta-
ion methods. in addition to being han
licaped with a rapidly accumulating ,
apital debt, to gain any return upon
which it will be necessary to charge s
rates and fares instead of
ontinually reducing charges, as is done :
a the United States.
Menace TO the Country.
THEREIN lies the menace 10 the in
usfrial vitality of the nation and its
bility to maintain it's pre-eminence in /,
he worlds markets. There is danger
head for the railways. but graver !.
nd more immediate danger confronts !,
he country at large :
Such an indictment, backed by incon- y
-oyertible proof, may well alarm even a .,
he richest country in the world and
. is q hopeful sign that the English g
nancial public is promptly showing its
scognition of the peril when il is point .
j out that the depression in investment 8
[rcles is so great that many writer's u
esterday and today have been seeking !,
, Offset 1t by advancing less serious g
ews. The .Statist" today goes SO far as OF
,e facts will allow in this direction e
hen il says: "
Although the policy pursued by our. =
always in the past in charging i'm ~
,ovements SO freely to capital has been vs
lort- sighed. yet the position is not 81
bad as the correspondent OF the
ines sought to make out.
..The pylicy which the s,ockholders