The Birmingham age-herald., 1907-11-11
SMITH WRITES ON
 L.& N. EARNINGS
President of Road Answers
 NeSbittS Statement
NET RESULTS DECREASE
July, August and September Showed Increase of $1,252 ,7ee.1o in Gross Earnings and Decrease of
 $223, ,5o8.12 in Net Results.

The Age-Herald received last night the following letter from Milton II. Smith. president of the Louisville and Nashville Railroad company, which is in answer to the statement of W. D. Nesbitt, associate lished in these columns yesterday morn- ing:
 To the Editor of The Age-Herald:
 In your issue of this date you publish d statement from Associate Railroad Commissioner w. D. Nesbitt, referring to pending legislation.
 As I have not yet succeeded in obtain ing copies of all bills affecting railway in terests that have been introduced and referred to the joint committee on com- mon carriers and judiciary committee of the senate-and which I learn from the morning press said committees have unan- imously agreed to report favorably-and have not had an opportunity to consider the bills of which have received copies, I am not in position to clearly comprehend the statements made by MT. Nesbitt rela- tive to the alleged increases in the rates on certain classes of property to be ''vot- ed on by the legislature" but cursory examination of some of them shows that upon the articles constituting much the larger proportion of the tonnage cov- cred by them no percentage of increase is allowed.
 MT. Nesbitt calls attention to the fact that 76 per cent of the total tonnage moved by the Louisville and Nashville and South and North Alabama Railroad companies consists of coke, coal, ore, pig iron and naval stores, and that the rates on none of these articles have been re- duced. He does not tell you that the rates on these articles are much lower than in the state of Georgia or elsewhere in the world If Georgia rates are desired, would it not have been fair for the state to have ordered an advance of these low rates. It may be interesting to note that during the 12 months ending June, 1907, the Louisville and Nashville and South and North Alabama railroads moved for the Tennessee Coal, Iron and Railroad company in the Birmingham district 66,- 072 carloads, containing 2,2SS,269 tons, for which they received approximately Il cents per ton of 2000 pounds.
 MT. Nesbitt asserts that the claim that
  fiscatory, is fallacous; and to prove his statement he refers to the gross and net earnings, or the result of operations in cluding revenues from investments, etc. of the entire system during the fiscal year ending June, 190A He does not seem to be aware that the state of Alabama may not-and. may 1 add, should not-require the Louisville and Nashville Railroad company to transport property and per sons between points within the state al loss because 1t may be operating at profit in another state, or be transporting interstate traffic at a profit His atten- ton Is respectfully called to the follow ing extract from the syllabus of the de- cision of the United States supreme court in the case of Smythe Vs. Ames, or what is known as the Nebraska freight rate case:
 "The reasonableness or unreasonable ness of rates prescribed by state for the transportation of persons and prop ertyl wholly within it's limits must be de- termined without reference to the inter- state business done by the carrier or to the profits derived from that business. The state cannot justify unreasonably low rates for domestic transportation consid- cred alone upon the ground that the car rier Is earning large profits on it's in terstate business, oyer which, so far as the rates are concerned. the state has no control. Nor can the carrier justify un- reasonably high rates on domestic busi- ness upon the ground that it will be able only in that way to meet the losses on it's interstate business
 However, if MT. Nesbitt and his asso- ciates, including the governor, represent ing the state are assured that the claim of the Louisville and Nashville Railroad company, that the rates fixed by statutes are confiscatory, is fallacous, why do they not energetically proceed to prose- cute the litigation now pending in the United States circuit court, to con clusion? If the statement of the associate commissioner is correct, the decision must necessarily be in favor of the state.
 MT. Nesbitt says: While the full figures for 1906-T have not been analysed 1t is true that both the gross income of this line and it's net income increased over the same figures for 19o5-6" In letter to Hon. B. B. Conner governor, dated Au- gust 2s, 1907, I said:
 "The gross receipts of the Louisville and Nashville Railroad company for the 12 months ending June, 1906. were $43 0oS,- 996; for the 12 months ending June f907 s4S, 263 945; increase, s5, 254, ,949 The Increase in the net result, after paying operating expenses. interest, taxes and dividends 6he amount of dividends being the same in each yeaD was s102147. Of the net in- crease of s5,254.949 in the gross receipts, over 9S per cent was absorbed by the in- crease in operating expenses, interest and taxes. And yet it is your purpose to still further aggravate an unfavorable result by reducing the remuneration which the railway companies receive for transporta- tion by increasing taxes, and in all other ways that your ingenuity can suggest"
 I have recently received a statement showing the results of operations for the months July, August and September, 1907. It showed an increase in gross earnings of S1 1252 7S9. .19 and a decrease in net re- suits of s22S, sos .12
 Again I quote from Mir. Nesbitts state ment; While 1t is true that about 76 per cent of the tonnage furnished by this state is low revenue producing. 1t is also than the average cost of moving all ton true that this tonnage costs vastly less mage, and it is susceptible of proof that the net earnings on this class Of business is approximately as great as on their av- craze business" l for one wish that MT. Nesbitts statement that ''the net earn ings on this class of business is approx imately as great as on their average bus mess" may prove to be correct. It seems to me he will have great difficulty In proving that the enormous tonnage han dled by the Louisville and Nashville and South and North Alabama railroads. for which they receive approximately but Il cents per ton, produces net earnings as great as the average business or any net earnings whatever.
 MILTON H. SMITH.
 Montgomery November 10 1907.