The Washington times., 1906-03-11

/ tiOn of Pennsylvania railroad terminals
/ In New York city would believe he had
! seen one OF the seven wonders of the
world Ii is surprising how few people
appreciate the stupendohs character OF
/ the work that is here being done: and
not only IN New York. but throughout
/ the entire system, by the Pennsylvania
railroad The annual report OF the
/ company for 1905 calls attention afresh
to the condition of the gigantic aggre-
| CATION of capital and makes profitable
! a study of a lumber OF interesting
points about the company which have a
! bearing upon general railroad condi-
tiOns.
The problem OF the profit In modern
railroad enterprise is more f1ttingly fl
I iustrated in the Pennsylvania than in
any other system. 1t must he reneln-
bered that the principal criticism is Of
! fered by skeptics who disapprove of
huge outlays in perfecting a road to
the highest type of physical excellence.
/ But the Pennsylvania capital has all
/ been paid in and there is no chance
| for the criticism OF decentralization
! The authorized issue of stock is S40O 600 -
600, OF which 500. .547. $50 is outstanding
| 1t has all been issued for actual cash
! some OF IL even at a premium Il has
! paid dividend continuously for fifty
years. In 1869 the capital stock totaIed
| SiS. 264, 100; in 1893 IT had reached q total
/ OF yl29, ,3J5. 300. having been at about that
total since 1891. Ia 1893, 5 per cent an
/ nual dividends were being paid Since
then the rate has been . per cent each
year, although the amount Of stock
has more than doubled.
Rapid Increase in Six Years.
/ During the last six years the gross
earnings OF the system have increased
from $751; ,Z25.10s to Sz66. .0e9. .5ss. and the net
earnings from $45,s7l,7I to 1885, ,24s.
while the mileage has been enlarged
from s,Z36 .1liles 10 II Oh miles This in
cludes the whole system east and west
of Pittsburg and Erie, but takes no ac-
count OF an equivalent mileage OF
about ten other railroads, including the
Baltimore and Ohio, the Reading. the
! Chesapeake and Ohio. and the Norfolk
and Western, in which the Pennsylvania
has a substantial interest
The income account OF the Pennsyl-
vania railroad records the equity in the
vast system under the head OF misceI-
{ laneous income. For instance, for the
year under review. the gross earnings
| are stated for the less than 400 miles
. directly operated east of Pittsburg, as
SlS3, 90, ,s9z, and the net operating earn
ings were $s2. Sos, ,772. This was over
twice the s14.sOO.O73 required to pay the
/ fixed charges of the company But the
whole Western section Of the railroad is
/ represented in $S0.9Jo000 of stock of
! separate company. known as the Penn
/ sylvania Company. and the income from
| the Western section is all included un-
! der miscellaneous income, and eQuaIed
/ SS.000oo0. or 5 per cent. The Pennsyl-
vanis railroad records total rniscelIan-
eous income of So, ,098. .91s, the balance be-
| ing made up Of dividends and interest
upon other securities owned
But the Pennsylvania company.
which contributed 100000. earned
| far more than this amount, transfer
ring $4,000, 600 of its earnings to an
extraordinary expenditure fund and
| carrying a substantial balance to the
/ credit Of profit and ioss account An
| analysis OF the earnings of the other
railroads would show ja.se net results
| in comparison with dividends maid
| demonstrating that tLa Pennsylvania
| railroad has larger equities in the earn
! ings Of affiliated roads than appear
/ from the report. Accepting the earn
/ ings as stated, however, there were
| $30,102,51T earned upon the stock of
/ the Pennsylvania railroad, or about 10
per cent.
Own Many Valuable Securities.
The companies in which the Penn
| sylvania is interested earn about as
much as the parent company. but they
paid last year the equivalent of Az per
cent upon the cost OF their securities.
In other words, the Pennsylvania rail-
road has S236, ,604,457 invested in Sc
curities which paid in 1906 s1o.O1s.O26
/ in dividends In 1908 the return was
Az per cent The great bulk of these
securities were purchased well below
par and have appreciated greatly in
value. It Is perfectly plain that the
limit of their productiveness has bv
no means been reached
The greater portion of the funds 1,sed
by the Pennsylvania railroad have been
for the reconstruction of the roadbed
and terminals of the company. and
the enlargement OF its facilities. The
enlargement OF the system during the
past few years has equaled the con-
stFuction OF a duplicate railroad The
facilities OF the system were constantly
overtaxed, and this brought about not
only undue expense In handling the
freight. but also the diversion of large
amount of tonnage to other lines The
1903 annual report showed clearly the
necessity for large outlays. The con-
ditiOns most favorable to an economical
movement OF traffic existed in 1889
when, although the volume OF business
upon the line between New York and
Pittsburg was larger than In any pre-
ceding year. the facilities, though not
overtaxed, were fully employed. But
with the continued increase in tonnage
since 1899. It has become evident that
the limit of your capacity for regular
and economical movement was then
reached, and that largely increased IA
cilities must be provided. 1t Is only by
bringing your facilities to the proper
standard that an easy and steady flow
of traffic can be assured. and the min
inum cost of movement attained, and
IT is to this end that the large expendi-
ture of the last two years have been
mainly directed The greater portion
of the work referred to will be COM
pleted during the present year.
Business Outruns Construction.
THE further rounding out of the sys-
he. Vt