The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-07-31
THE REAL VALUE Of
THE SOUTHERN
RAILWAY.
Lowest Market Price is $685.
235 a Mile on N. Y. Stock
Exchange.
ITS FRANCHISE WORTH
According to Last Years Assessment, Franchise
Is Valued at $27, ,0I4, 322.4l in This
State, or Nearly $4,000
Per Mile.

very interesting topic just now is
what value The Corporation Commission
is going to put upon the franchises of the
various railroad companies in the State,
as required by the famous Section
Fifty" of the Machine ry Act, section 55
of the new law.
This is the first year that this section
will go into effect, and it is very in
teresting question as to what the State
is going to gain thereby.
The Commissioners have received the re-
ports from the railroads on their valua-
tlcns OF tangible property, and also number
of shares of stock outstanding, and bonds
and other certificates of Indebtedness, and
have been hard at work for some time
over these figures; but as yet have given
out nothing for publication. Very soon,
however, they say some of their figures
will be ready.
In the mean time, a News and Observer
reporter has been doing some figuring on
his own account along the line laid down
by the new law.
Here IS what the law says as to the
method TO be pursued in determining the
value of the franchise:
''They shall then assess he value of the
franchise. which shall be determined by
due consideration of the gross earnings
as comared with the operating expenses:
and particularly by consideration of the
value placed upon the whole property by
the public (the value of the physical
property being deducted). rs evidenced by
the market value of all capital stock GER
tifcates of indebtedness. bonds or any
other securities, the value of which is
based upon the earning capacity of the
property
The method followed in arriving at the
value of that portion of the road in North
Carolina according to the market value
of stocks is authorized by the following,
from section 50 of the Machinery Act:
when any railroad has part of its road
in this State and part thereof in any
other State, the said Commission shall as
certain the value OF railroad track, rolling
stock, and all other property liable to as
sessment by the Corporation Commission,
of such company, as provided In the next
preceding section. and divide it in the
proportion to the length of such main line
of road in this State bears to the whole
length of such main line of road. and
determine the value in this State ac-
cordingPy
Takirg up the Southern Railway, the
reporter found by referring to the last re
port of the Corporation Commission that
that road had in 1902 total mileage oper-
sted of Sc, 765 81. OF this total there were
in North Carolina 1,2S9.26 at all average
valuation of $12,275, a total valuation of
$15,S25, ,67759.
Accordingly the mileage in this State IS
nearly one-fi fifth of the total mileage of
the road So, the value of a mile OF
Southern Railway in North Carolina is
equal to that of a mile outside the State,
it will be figured that the market value OF
the road in North Carolina is nearly one
fifth its entire market value.
Now Jas ITO fwhat that entire mar
ket value is, determined by the quotations
of the stock and bond market.
That same report for 1902 gives the
number of outstanding shares of COM
mon stock as 200, 900, and the number of
shares of preferred stock as 100000. On
June 10th the common stock was quoted
on the New York Stock Exchange at 81,
and on July Is preferred stock was quoted
al So. These are the lowest quotations
from a number at hand, of recent date.
ccordlngly the market value of the COM
mon stock is s25, 200, 900, and the preferred
is worth sol. 600, 900. total of s76, 200, ,OoO
But the outstanding funded debt, or
bonds, mortgages and other certificates OF
indebtedness, must be added to the value
OF the stock. From quotations of the
bond market at the beginning of the
present year, this funded debt has been
estimated at $13S, ,000, 900 IN round Sum-
bers ,NE'
Adding that to the stock value, we get
$2l4. 200. .O00 Taking onc-ffth of this gives
Us $42, SAC, 900, which is approximately the
wolue of the Southern Railway in North
Carolina, as placed by the public.
Now we must deduct the value of the
physical property, to arrive at the value
of the franchise. That physical property
in 1902 was assessed at SIS, ,S25, ,677.59. De
Quoting that from s42. $40, 900 gives s27, OLA
32241, which is approximately the value
to be placed upon the franchise of the
Southern Railway in North Carolina if the
assessed valuation of the physical prop
erty has not materially changed since last
year.
This would make the franchise worth
nearly $21, 900 per mile in North Carolina,
while the assessed valuation last year
was only $12.275, showing that the South
ern Railway is paying test an assess
ment of s12,275 mile. whereas it is act
ually selling ON the market at the lowest
price at $33 235 mile.
Query: Is it any surprise that there Is