Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1905-05-11
CUMMINS ARGUES
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overlooking the fact that the railways
reported something more than 81 per
cent of gross earnings as the cost OF
operation and maintenance. but II TIL"
practice of charging betterments into
operation which l have noticed In my
own state, Is prevalent elsewhere, the
proportion l have mentioned is lib
eral one for the railways.
1t appears from the report to which
/ have referred that the operating
railway companies had an income o.
$1007S6,6S4 from sources other than
operation, which, added to the former
sum, makes a net income over opera
tlon and maintenance of $3.50, 1OS,52l.
Capitalized at 6 per cent, this income
represents an investment of $l3, lbl,-
500, 6S9-~a sum vastly In excess of the
investment in the railway properties
OF the United States. 1t represents
$62,aa7 per mile. 1t can hardly be
doubted that rates which pay s per
cent interest upon SG2.927 per mile
will stand very considerable reduc-
ilVli pclpic stllS tIIltls ilhc
occurs. Capitalized Mt per cent. the
net income above given represents an
Investment of $l5.7S2, l70,427. or $780,
512 per mile.
If, however, the income of the rail-
ways from sources other than opera
ton be excluded. and we take the net
income from operation, namely, $685.
,S37 Con the 65 per cent basis, and
capitalize 1t at 6 per cent. the amount
Is Sl1, 5000, Goa sum still greatly
In excess of the railway investment.
Accepting for the purpose of fur
Their illustration the railway reports
showing 67.75 per cent for operation
and maintenance. and excluding en-
tirely the income from other sources,
the net earnings We're, for the year
ending June 30, 1904, $G34,250,sT3. Cap
italiZed at per cent, we have an in
vestment of S1O57oS47,S33, or s50,57s
per mile. Capitalized at s per cent, we
have an investment of $12,6S5, 017.460,
or $60,693 per mile. I.reiterate that
a system of railways paying s per
cent upon s60,693 per mile, and with
an additional income Of $100,7S6,6S4,
cannot vindicate their practices by
the suggestion that the rates are low
er than in other countries.
Railway capitalization.
From Poor's Manual, learn that at
the close of the year 1908, when $685.
600 miles of railway lines were oper-
ated the outstanding bonds aggregat-
cd S6,591, 735,S50; the outstanding
stock, at par $6,207, S69,095; the I'M
funded debt, s439,G11 ,952; aggregating
in all $13.239,21I797, or $65,217 per
mile. l have not been able to secure
like information with respect to the
5000 additional miles reported to the
interstate commerce commission on
the 30th of June. 1904. but assuming
that the stocks and bonds and debts
of the additional mileage were the
same in amount, we have for the en-
tire 100000 miles capitalization, in
Guiding unfunded debts, Of $780,
519,797. Upon the basis Of 65 per cent
for operation and maintenance, the net
earnings of the railways for the year
ending June 80, 1904 would pay SIS
per cent upon all the capital stock.
bonds, and unfunded debt of the rail-
ways Upon the basis Of the net earn
ings aa actually reported, they would
pay 5.4 per cent upon this entire cap
itali2ation.
Watered Stock.
am sure that no one familiar with
the subject will affirm that the rail-
ways of the United States have cost
an average Of $65,217 per mile. 1t is
known, think, by all men who have
observed even casually the course OF
railroad construction and railroad cap
italization that the over issue Of both
bonds and stocks has been gross and
continuous / do not attempt to say
what the railroads Of the country cost,
had some instruction upon the mat
ter, however, in my own state. from
the railways themselves, which may
afford us some light.
Takes Railroads Word For 1t.
We had in Iowa on the 1st day of
January, 1904, 9,799 miles Of main
line. In July, 1904, the executive
council valued the railroads of the
state for taxation. They were valued
at an average Of $23,4S5 per mile. In
view of what has taken place since,
am inclined to think our valuation was
too low, but however that may be, the
railways united in a most emphatic
statement that it was much too high.
1t will be at once answered that the
average value of the railways in Iowa
is not as great as the average value
of the railways thruout the country,
and am quite willing to concede that,
tested by the gross earnings, the ans
wer is good Taking the gross earn
ings as basis Of comparison, 1 find
that in Iowa for the year 1903 the
gross earnings We're $5S,466,340, or
$6,O19 per mile. The gross earnings
turnout the United States per mile for
the year ending June go, 1904. were
$9,41O; that Is to say the general gross
aarninrs ner mile We're sc per cent