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

with the aid of credit loaned By the
government. shows al average capi-
talizaiion Of over 100000 per mile, or
nearly 20 per cent higher than the
United States.
The capitalization representing
American railways consists Of Securi-
ties Of many different grades. each
grade making its claim for annual re-
turns to its owners with separate
force and having its own degree Of
power OF lack Of power to enforce its
demands. The highest grade Of secur-
ity consists Of mortgage bonds which
carry the right to a 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.
If it we're possible to obtain COM
plete statistics concerning the vast ex-
penditures made within the last de-
cade for the betterment Of the great
railway sysems of the country the
facts disclosed would amaze those
who are inclined to accept the char
ges Of "over-capitalization." Fl
cures recently published showing the
combined expenditures Of the eleven
operating companies Of the Pennsyl-
vunia railroad system during the per-
iod Of six and one-half years that
ended with June 80, 1906, show total
outlay exceeding the total par values
Of all the stocks outstanding against
the system.
If it were true that "over-capital
ization" does exist, to the full extent
of the widest charge Of the noisieSt
demagogue, 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 extorting excessive
rates from the shipping and travelling
public is one Of the strangest Of
phenomena in the whole history Of
popular delusion.
If 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
terr;; orial divisions Of the United
States.
The Importance Of mere par values
to influence charges for their own
benefit is further established by the
fact that throughout the entire his
tory of American railway development
large portions Of the aggregate capital
ization have gone without any return
whatever Even the amazing pros
perity of the last five years has not
suficed to prevent more than one
third Of all railway shares and con-
siderable volume Of railway bonds
from going portionless.
The wages Of railway labor have
been repeatedly advanced since 1897;
the 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
sr; the owners Of such property are
threatened with double taxation by
means of taxes on incomes and on in
heritances-bu rates have gone down
and are ever tending downward. How
much further these processes can and
ought to 60 constitute the gravest in
dustrial problem that the people Of
the United States have to solve.
James S. Mccarthy.