The herald and news. [volume] (Newberry S.C.) 1903-1937, 1907-07-19

with the aid of credit loaned by the
government, shows an average capi-
tallzation Of over 100000 per mile, or
nearly 20 per cent higher than the
United States.
Ihe capitalization representing
American railways consists of securi-
ties OF many different grades, each
grade making its claim for annual re-
turns to It's owners with separate
force and having its own degree of
power or lack of power to enforce its
demands. The highest grade of secur-
''y consists Of mortgage bonds which
carry the right to definite income
with the property itself pledged
against default. Other funded debt
includes bonds based upon income
which involve no lien upon the pro-
perty and equipment trust obligations,
secured by liens upon rolling stock.
II it were possible to obtain COM
pete statistics concerning the vast cx-
pcnditurcS made within the last de-
cade For The bettelmcnt Of the great
railway sysems Of the country the
lacts disclosed would amaze those
who arc inclined to accept the char
gcs of over-capitalizatio FL
cures recently published showing the
combined expenditures Of the eleven
operating companies Of the Pennsvl-
I"n'a railroad system durin" the per-
l"d Of six and onc-half years that
ended with June 80, 1906, show total
outlay exceeding the total par values
OF all the stocks outstanding against
the system.
II it were true that "ovcr-capital-
lz"tlon' does exist, to the full extent
OF the widest charge Of the noisiest
demagoeue, the fact would be Of no
INJURY and of no consequence to the
purchaser Of railway services. The
persistence of the erroneous notion
that there Is some occult force in par
values which make their initiation an
easy means Of cXtortin~ excessive
rates from the shipping and travelling
public is one Of the strangcst of
phenomena in the whole history Of
popular delusion.
II more comprehensive proof that
there IS no such relation as is alleged
between capitalization and rates is
desired it is at hand. The statistics
published by the Interstate Commerce
Commission permit the separation of
the data supplied into totals each
representing one of the three great
territorial divisions of the United
States.
The Importance of mere par values
to Influence charges for their own
benefit is further established by the
Tact that throughout the entire his
tory of American railway development
large portions Of the aggregate capital
lzation have gone without any return
Whatever Even the amazing pros
perity of the last five years has not
suificed to prevent more than one
third Of all railway shares and con-
siderable volume Of railway bonds
from going portionlcss.
The wages Of railway labor have
been repeatedly advanced since 1897:
he cost of fuel for locomotives. Of
rails and ties, Of lumber, in fact of
every item Of railway expenditure has
been constantly soaring; taxes ON
railway property are everywhere high
>r; the owners Of such property are
threatened with double taxation by
means of taxes on incomes and on in
herltanccs--but rates have gone down
and arc ever tending downward. How
much further these processes can and
ought to 90 constitute the gravcst in
dustrial problem that the people Of
| the United States have to solve.
James S. Mccarthy.