The Caucasian. (Clinton, N.C.) 188?-1913, 1906-10-25

nsas& Ansaax ssker lseaas szxaass.s /.
Operating ~srwnse*" 81 she sArws great
: systems, | Hna s@ers fhAa ) msllsss
sAslaars charged Ter rxaks IT tracks,
yara* and tsrmtnais,' n~aray u malllam
] Tor .ss1ssaas sg~nxsss. - saa seasiy Aalf
. saallsSn for las exr~ases" 1 pre-
szssms that tie a@ouss 81 nws sMraAnxs
are r~portea ky re railroads themselves
and alghs De considerably insrcasea By
. careful ~erssiny Of the items sneluleA
undsr the bead 81 '.spexaasag exp~a.
ses The supssm~ eoart of The ualsed
States an Railway vs. NeIlman, IL u.
-, -, uses the following sagniae@ns
language Co page as: ssOf what do
ihesr operating expenses eon=assf Are
they made up partially Of extrAvagans
salaries; hfty - enc hundred Thousand
dollars to tie president, aad i'm nke
proportion 70 subordinate ofReersf" Did
that august tribunal have in mind the
salaries said TO be paid TO the presi.
dents Of some Of cur southern railroads.
Again, the same court in Dow W.
/ Beidelman, l25 u. -, ESQ, refuses 10
enloin the execution OF a statute that
would reduce the net income 90 per
cent upon the bonds alone. and saws
on page 600: but there 10 no evidences
whatever as To how much money the
bonds cost, or as 10 the amount of the
capital stock Of the corporation a. re.
organized, or as TO the sum paid for the
road by that corporation or its trustees.
1t certainly cannot be presumed that
the price paid at the sale under the de.
cree Of foreclosure equaled the original
cost of the road, or the amount of out
standing bonded debt. /" The full signifi-
canoe of these comments il shown by
the fact that the Northwestern N. c.
| railroad, running from Greensboro Tor
rather Pomona) to North wiikesboro.
one hundred miles in length, was bought
| by the representatives Of the Southern
Railway, at q foreclosure sale of the
first mortgage bonds under decree Of
the Federal court, for two hundred and
fifty thousand dollars, being at the rate
! OF twenty-five hundred dollars per mile.
| And yet this road appears now among
| the 'owned ines'' of the Southern
bearing its proportion of its eapitaliza-
| ton at the rate OF $36,347 per mile of
stock and $31 ,3I2 per mile of bonds.
A Comparison Of Taxation.
Let us briefly examine the relative
rates of taxes paid by the railroads
and the people. In the year 1905 the
entire amount of taxes, including state,
county and city taxes paid by all the
railroads in the state amounted to $64I,-
100, which is less than one per cent. of
the assessed value of their property, and
about IA per cent. of their net earn
ings. On the other hand, if resident
| of Greensboro loans his money at 6 per
cent, the highest rate of interest al
| lowed by law, he pays taxes at the rate
OF two 9-100 (2.09) per cent, which
| Is more than two per cent. on his
capital and more than 80 per cent. of
| his interest. Is this fart 1t may be
said that real estate pays more. 1t
may pay more in gross; but whether its
net earnings are greater, is another
| question, as it is subjected to the addi-
| tional burdens Of deterioration Of build
| lngs, repairs, insurance, water and sewer
rates, paving assessments, and the like.
As next year new assessment of rail-
road property will be made, let us see
what would be fair valuation based
| on present earnings. There are two
ways of aseertaining the value of rail
roads. One is by taking the aggregate
| market value of all their stocks and
bonds, as explained in my dissenting
opinion in the case of Jackson VS.. Cor
poration Commission, 40 N. c., 404. An
other method of ascertaining the value
OF property is by its productive capac-
ity. For instance, if house rents reg
ularly and uninterruptedly for enough
to net the owner $500 over and above
all expenses, such as the railroads in
clude in their so-called Operating ex-
penses," that house may be said to be
worth 5000, because $500 is 6 per cent.
on 5000. On this plan, taking their
net earnings for the year 1905, the rail-
road properties in this state would be
! worth, on a per cent. basis, two hun
dred and eleven millions of dollars
($2I1 ,762,075). On per cent. basis
they would be worth one hundred and
forty-one millions ($141 ,174,716).
What Commission Can Do.
Taking the figures given in the last re-
port of the corporation commission,
it can be eonclusively shown that
on the basis of the net earnings
for the year 1905, the commission
can add thirty millions of dollars
more to the value OF railroad pro-
perty, reduce passenger fares to an
average of cents mile, reduce freight
rates nearly thirteen hundred thousand
dollars, and then leave the railroads
more than 8 per cent. of net earnings
on the increased assessment of one hun
dred millions. Its demonstration is a
mere question of arithmetic. We have
seen that it would take not more than
81 200 900 to reduce passenger fares to
rate of cents per mile; take 81 ,270,-
600 as a reduction on freight rates;
take per cent. on 500, 000, 900, which |
is $4,000 900, add the three together,
and we have $s,470, 900, which is less
than the net earnings of $s,47O, 4s3 |