The Bourbon news. [volume] (Paris, Ky.) 1895-19??, 1907-03-29
RAILROAD REPRODUCTION
The Only just Basis For Taxa
ton And Rates.

ton And Rates.
There are two ends to the railroad
question, one is the transportation OF
goods and passengers and the other the
speculative and Wall street end. These
two different interests must be
divorced before there can be justice to
the public through reasonable rates.
There can never be reasonable rates
until the question is settled of how
much of the stocks and bonds that have
been issued are to earn dividends. Are
the fraudulent issues to be changeable
to the public on the same basis as the
securities, the proceeds of which were
actually expended in building and
equipping the railroads? Are the
Chicago and Alton stocks and bonds to
be considered a fair debt upon the
people who are customers of that rail-
road? Are Mr.. j. P. Morgan and his
associates to have the right to tax the
people who do business with the South
ern Railway on the basis of $3.50, 00O,-
900 of stocks and S17O, O48, 945 of bonds,
or at the rate $70,685 per mile IF line,
when it could be duplicated for about
one half Of that amount? Must the
peole forever pay interest upon $780,
847 per mile Of the Erie Railway, when
! it would cost less than one sixth OF
that sum to replace it in better shape
than it now is? The Baltimore and
Ohio with S108, 079 per mile; the Chesa-
peake and Ohio with $133, 7O4 per mile,
the Union Pacific with $133, 535 and q
number of other railroads with but lit
tie less than 500, 900 per mile of stocks
and the bonds are in the same class.
The Union Pacific actually paid ten per
cent. on its enormous capitalization
which would be nearly 80 per cent. on
what it could be duplicated for.
The Census Bureau in 1905 issued a
bulletin on the Commercial value of
the railways of the United States
which gave their total value as the
enormous sum of 81. Pa. 1852, 600. This
is generally considered as a much
greater sum than they could be repro
duced for, yet the average value per
mile given for the railroads in Nebras-
ka, which includes the Union Pacific
. railroad Is s45, 300, or little less than
one third the amount Of the stock and
bonds upon which it is paying dividends
and interest. This indicates the enoJ-
nous over capitalization of many Of
| the railroads, for similar differences
appear with other railroads taking the
same official figures.
No wonder the railroads thus over
capitalized DO not want an investiga-
ton of their value to be made as q
basis for determining what reasonable
rates for passengers and freight would
be, when their fraudulent watered stock
is left out Of the calculation.
1t will be a large undertaking to ar
rive at the actual cost of reproducing
the railroads, but it must be done be-
fore reasonable rates can be establish
ed. The values which the states have
agreed on as the basis for taxation
differ so radically that it is worthless
as even a guide to the actual value.
The official figures of the average tax
paid by the railroads in all the states
IN 1904 for each mile of line is but S3(3
and in Nebraska the amount is but 1924
per mile, which would be but one sixth
Of one per cent on the capitalization
value Of the Union Pacific. That small
sum is about one sixth of what the
people Of Nebraska pay as taxes on the
valuation of their property and in
many states the taxes paid by the rail-
roads are-even less than in Nebraska.
From this partial glance at actual
railroad values and the enormous differ
ence between the stock market value
and the taxation value it is plain that
the Democratic plan of investigating
the value that the railroads can be re-
placed for is the first step and the only
sensible and just proposition for arriv-
ing at what are reasonable rates.