The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1906-12-26
Railroad Stocks and Rates.

Mr.. Hartman stated to the trans
Mississippi congress that if rates are
to be lowered the railroads must be
able to carry their traffic at less
cost than row. -~-. FL,
This is an opinion from a man who
controls great many miles Of rail-
road, but who is not a railroad man
in the best sense Of the term, a man
whe has grown up with railroads. Har-
riman's interest in transportation is
recent. He is Wall street railroader
and while very, keen one, he cannot
be expected to take any but the Wall
Street view of the railroad problem.
Still there .is no. doubt that in many
respects the railroads have gone very
far toward the limit in economy Of
management.
There is one important aspect, how
ever, in which the railroads have some
what disappointed public expectation.
This is in the matter Of issuing securi-
ties on which rates are partially based.
The railroads have not been economical
in this regard. This is shown by some
very old and some quite new illustra-
lions. Some years ago Daniel Drew,
when Commodore Vanderbilt had Erie
stock cornered, started a press print
ing more certificates and soon had Van
derbilt g corner broken by this simple
device. The people are still paying in
terest on this little joke of Daniel
Drew on Commodore Vanderbilt. One
of the new illustrations Is the recent
annual meeting Of the Pullman COM
pany when it declared stock divi-
dend and increased it's capitalization
from $74, 100000 to $1oo,ooo,Ooo to get
rid Of it's surplus. The people will have
to raise nearly $3,ooo,ooo a year in
sleeping car fares to pay the dividends
on this new stock, which does not APP
pear to have bsen needed at all.
When the Northern Pacific and Great
Northern jointly bought the Burling-
ton, $216, 100000 of 4 per cent bonds
were issued and it was the expressed
| intention. to pay interest on these bonds
in addition to earning dividend upon
the old stock Of $lo8,ooo,ooo. It has
| been done. i>r.- :: ? ':-> -
James J. Hill testified that in the
Northern Securities merger there were
issued on the Northern Pacific $22,50O,.
600 and on the Great Northern $780,
! 100000, or a total of $62,000,0O0 in ex.
cess Of the old capital. w. > ..
More recently it. has become known
that the Great Northern stockholders
benefited last year byssa dividend Of
l47 per cent, 100 on the deal, z per cent
in cash and the rest in new stock IS.
sued. Leaving out the ore deal the divi
dends in stock issued and cash aggre.
gated AZ per cent.
Other railroads that had the oppor.
tunity have been: doing as literally. in
the way of increasing their stock debt
This kind Of work on the part of the
railroads has been checked up by Sen.
ator La Toilette, who, taking all the
estimates of the experts, came to the
conclusion that the value of the, rail.
roads in the country was $5,oOO,0OO, 1000
instead Of the $11,0o0,ooo,ooO claimed
On this basis he figured that on an 8
per cent basis the railroads were over
charging The country On carrying
freight $2S5,0OO, OO0sannually.
Whether La Toilette figures are cor
rect or not, there is noldoubt that many
Of the richest and strongest lines have
been greatly overcapitalized with the
apparent purpose Of opposing an i'm
pregnable obstacle between themselves
and too radical rate reductions. IS.
Mr.. Hartman and Senator La Fol
lette so directly clash upon the posi-
bility Of a further reduction Of rates
that the question naturally arises, why
Mr.. Hartman would undoubtedly say
it was because the railroads had reached
the lowest point at which they could
perform the service and make . fail