The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1906-06-27
capitalization and Freight Rates \ l,t'::''.

Editor OF Tho Times Dlspntcht IL 8at
sir,---1 have read your editorial regnrd.
ing tho relation between rntcs charged
by railroads for services rendered tho
public and the cnpitaltzed value o. II. ths
railroad. II seems clear n TINT o railroad
whose capital stock is represented ~
the cost OF construction Will naturally
charge stch rates M Will give q reason. :.
nblo return on the money 30 NJ Invested. /
YOU olte tho case OF the Louisville and
Nashville Railroad. NJ It's capital stock has,
according to you not been Increased since
1893, and yet Its earnings and dividends
have increased enormously, bocnuso the
country through wEichSit runs and from
which It draws Its earnings has asq In,
crea scd In wealth. But during that snino
period, since 1903, according to YOU, the
Atlantic Coast Line Railway has prac-,
ticnlly Increased its capital stock tet1-,
fold, and Is now paying dividends at tho
ratio OF six per cont. Oh this Increased
valuation. i 3 "a II \, ii5 hi
II the rates charged by this company
inre reasonable; II Its passenger trains
and freight trains are sufficiently n,lmer-
Gus to properly servo the public, it OBJ 9.
viously makes no difference whether the
Atlantic Coast Line Is paying 60 Y per
cont. per nntiunl on n par value OF 100, or,
9 per cent, per annum Oh 1 900. But since
this enormous increase III wealth for tho
stockholders Of that road is only n re-
suit Of the &upbuildtng OF the South by
thousands OF farmers, lunlbermen, y1nnnr-
5facturers and johbers, who only pay
freight and receive no dividends, 1t seems
ID pertinent question whether these un- !.
Willing copnrtners In the Atlantic Coast
Lines prosperity W ould not have received
d more cons derate herring at the hands
OF the Corporation Commissions Of
Georgin and Florida In their request for
lower rntes. Il II could bos shown that dl.
the road complained OF was earning sixty
per cent. per annum.T And rs At not a.
fact that the limitation on tho power OF
tho Richmond, Fredericksburg &: Poto-
mao to pay dividends nbovos15 per cent.
on the ''lnoney actually invested has re-
suited In giving the public both rates
and service oyer that limo that are pratc-
tically uncxceptlo ,Ss 81 u.
1 Perhaps, Sir, you arc rightSin your con-.
clusion TINT capitalization alone does
hot affect rates. but d It "a ppears from the
case OF the AtlantlcAC Coast Ltne. railroad
that paying dividends upon inflated CAPT
tai has compelled, II IT id not Justify
the maintenance of high rites.
ri i... IN QUIRDR. *
Our correspondent reasons we'll. but
these facts remain: ~
Railroads charge all that the traffic will
bear ana the law allow, no matter wheatth'-
err their capitalization be great or small.
So long as that Is the case, i ma tie tiers .
nothing to those who pay the freight ri
whether thd afoad shows lin sits: earnings
"a high 5rate end on q wtcapit t''i1
ization, orr low rate OF dividend on
Is+.watered" stock.
6s,rhn Interstate Commerce Commission
md the State Corporation co Co lon
know whether or not railroads. 9 toc Is
Is 'watered,,''' and they may regulate
rates & as well when the road y over y
capitalized as5iwhen It is 3under-capilttIa7.l-
lied Therefore, as the government mas nag
undertaken TO reg late a az s,ch = z
regulation as Senator La Toilette has pro-.
posed would have no practical value value
Editor Times Dlspa tch .]aSS i5 Is 8,