The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1903-05-12
PAYS TAX ON ONLY ONE THIRD OF VALUE
Secretary of the Southern Railway Swears That Its
Property, Assessed in North Carolina at
SI3,558. oS Per Mile, is Worth S4o,-
900 Per Mile Minimum.

January, 1895, he has been con-
nected with the Southern Railway.
He examined for the Reorganiza-
ton Committee OF the Oregon Rail-
way and Navigation Company and
the Union Pacific Receiver to de-
termine whether there was any I'M
fair division Of expenses as be-
tween the companies; also a similar
examination Of the accounts of the
Missouri Pacific Railway Company
on behalf of the Union Pacific to
determine whether a line leased to
the Missouri Pacific by the Union
Pacific was being treated fairly in
the matter of accounts, earnings,
expenses and construction accounts,
etc. This shows the high standing
of Mr.. Hill in the railroad world.
Here is the testimony of MI. Hill
as to the value of the Southern
Railway:
Mr.. Harrison: Mr.. Hill, what do you
understand to be the elements which
should be considered in ermini the
fair value of a railroad property used for
the convenience of the public in making
Mr.. Hill: understand that there
are several elements to be considered,
and that such a valuation must neces-
sarily be an approximation; it cannot BE
an absolute amount. One of those ele-
ments would be the original cost of the
property. Another would be the cost Of
improvements and additions that had
been made upon the property since first
constructed and the element of increased
valuation owing to the age of the prop
erty; good will and natural increase i'll
the value of the terminals and other prop
erty by reason Of such age, and by rca-
son of the growth of the country. That
would to taking the point of view of the
value as determined by the original cost,
plus the improvements, good will, and III
creased valuation due from age; another
view of the value of a railroad is the
present market value Of its securities;
but that valuation is, of course, based
on its present earning capacity and is
one that fuctuates with the earnings.
Mr.. Harrison: Then the necessary
corollary of that is it is based on the
probable earning capacity of the property
under any proposed basis Of rates? MI.
Hill: Yes sir.
Ii. HARRISON. CONSIDERING CnOSc clC-
ments which you nave just stated. [
ask you, as an expert, to give your opinion
in connection with your special knowl-
edge of the property of the Southern
Railway Company OF what may be stated
to be the fair value Of all the property
of that company per mile of road used
for the convenience Of the public.
Mr.. Hill: AS I said before, while no exact
figure could be stated, on account of the
many diverse elements which enter into
the computation, in my judgment, $40, 900
per mile would be a minimum figure for
an estimate or judgment. 1t would prob
ably exceed $40, 900 rather than go under
that amount.
Mr.. Harrison: Please state somewhat
in detail how you have arrived at that
conclusion. Mr.. Hill: | nave considered
the securities that were outstanding IN
the hands Of the public on the Richmond
Terminal properties, the Richmond and
Danville, and East Tennessee, Virginia
and Georgia properties; and taking into
account only the mortgage bonds and
preferred stock of those companies and
leaving out Of account entirely the com
mon stock, which | understand were issued
for certain considerations, some for cash,
the total per mile on the Richmond Ter
minal System of bonds and preferred
stock was about s35, 900. That was before
the Southern Railway took the property
and began to make improvements Upon
it. The Southern Railway Company has
added, in the way of cash expenditures
for improvements, charged capital ac-
count, between 81 900 and SO 900 per mile
additional since 1895. Then there is to
be taken INTO account the common stocks.
which amounted to SIS, 900 per mile Of
road, and a considerable portion Of which
represented substantially cash value.
Taking the latter item into consideration
would, | believe. bring the total actual
cost we'll above $40, 600 per mile.
Mr.. Harrison: That is on the basis Of
original cost plus improvements? MI.
Hill: Yes, sir.
Mr.. Harrison: without regard to other
things? Mr.. Hill: Yes, sir.
Mr.. Harrison: Will you continue in
regard to other elements? Mr.. Hill:
Looking at it from a point of view of the
probable or approximate present cost Of
producing the properties per mile of
road; from the cost of certain lines which
the Southern Railway Company has been
constructing during the last three years
or more recently than that-during
the past year, and is now en-
gagged on or about to construct
it would seem that an ordinary
line for railroad, without terminals.
through a practically undeveloped coun-
try, and through a country which does not
present exceptional engineering Difficult
ties, such a line is estimated by our
engineers to cost from twenty thousand
to twenty five thousand dollars per mile
at the present time, without terminals
and without equipment; and, of course.
when that line is completed, it is then III
an unfinished state, as compared with
the condition of most of the Souther
Railway properties today, which have
been continuously improved in the way Of
ballast, heavier rails, better and stronger
bridges, reduction of grades, and expenses
of that kind which continue through the
life of a railway, but which are not in
Guided in its first cost. If we take that
flgure at S25 600 a mile as the first cost Of
sucn a road without terminals, and with
out equipment, l should estimate that for
a road whose average age was, say, 30
years, tho cost of such b~etternents and
improvements, additional sidetracks and
additional facilities. would be at least 80
per cent of the first cost of the road