The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-05-10
PAYS TAX ON ONLY ONE THIRD OF VALUE
Secretary of the Southern Railway Swears That Its
Property, Assessed in North Carolina at
SI3,55S.o 8 Per Mile is Worth S4o,-
900 Per Mile Minimum.

ability of high order. since
January. 1895 he has been con-
nected with the Southern Railway.
He examined, for the Reorgan1za-
ton Committee o. the Oregon Rail-
way and Navigation Company and
tne Union Pacific Receiver co de-
termine whether there was any I'M
fair division of expenses as be-
tween the companies; also similar
examination of the accounts OF the
Missouri Pacific Railway Company
on behalf of the Union Pacific to
determine whether 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 Mr.. 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 determining the
| fair value of 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 III
the value of the terminals and other prop.
erty by reason of such age, and by rea-
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 in
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 it's present earning capacity and is
one that fiuctuates 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? Nj.
Hill: Yes sir
Mr.. Harrison: Considering those ele-
ments which you have just stated, i
ask you, as an expert, to give your opinion
in connection with your special know1-
edge of the property of the Southern
Railway Company Of what may be stated
L Il. 49,
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, $4,000
per mile would be a minimum figure for
an estimate or judgment. 1t would prob
ably exceed $4,000 rather than 20 under
that amount.
Mr.. Harrison: Please state somewhat
in detail how you nave arrived at that
conclusion. Mr. Hill: ! have considered
the securities that were outstanding ii
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 $35 900. That was before
the Southern Railway took the property
and began to make improvements upoI
it, The Southern Railway Company has
added, in the way of cash expenditure
J for improvements, charged capital &C
, count, between $4,000 and $4,000 per mile
additional since 1895 Then there is t.
be taken into account the common stocks
, which amounted to $4,000 per mile o
road, and a considerable portion of which
represented substantially cash value
Taking the latter item into consideration
J would ] believe, bring the total actua
cost well above $40, 900 per mile.
. Mr. Harrison: That is on the basis D
original cost plus improvements? MI
l Hill: Yes. sir.
: Mr.. Harrison: without regard to otheI
things? Mr.. Hill: Yes, sir.
Mr.. Harrison: Will you continue il
regard to other elements? Mr.. Hill
e Looking at it from a point OF view of TIN
probable or approximate present cost 0
producing the properties per mile o
road from the cost of certain lines which
: the Southern Railway Company has bee.
constructing during the last three years
{ or more recently than that-durinl
, the past year. and is now en-
: gagged on or about to construc
it would seem that an ordinar.
= line for railroad, without terminals
through a practically undeveloped coun
: try, and through a country which does no
: present exceptional engineering difficVl
: ties, such a line is estimated by on
engineers to cost from twenty thousan'
} to twenty-five thousand dollars per mil
} at the present time, without terminal
and without equipment; and, of course
when that line is completed, it is then il
y an unfinished state, as compared witt
z the condition OF most of the Souther
Railway properties today which hav
been continuously improved in the way 0
ballast, heavier rails, better and stronge
E bridges reduction of grades and expense
r of that kind which continue through TIL
: life Of a railway, but which are not in
Z cluded in it's first cost. If we take tba
: figure at 5000 a mile as the first cost .
, such a road without terminals, and with
out euuipment. I should estimate that 70