Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1907-01-22
FOR A TWO CENT FARE.
[From Governors Message.l

nor's Message1
appears from the arguments laid be-
fore you last winter that they regard
passenger traffic as incidental, and do
not attempt to make 1t source of any
considerable net earning.
The gross earnings of all the rail-
roads upon business done in Iowa for
the year 1905, not including interurban
railroads. was s62,I92,307. In ascer-
tanning these earnings iowa is given a
mileage proportion upon all interstate
traffic. 1t is not safe to accept the re-
port of any particular railway COM
pny respecting the amount expended
for maintenance and operation, mas
much as the variety in the methods OF
bookkeepin destroys the value of any
one report 1t is fair, however, to re-
sort to averages according to the COM
putations made by the interstate
commerce commission. The average
percentage of gross earnings for main
flamenco and operation turnout the I'm
tied States is little less than SO per
cent. If we assume IS per cent as
fair proportion (and ! am OF the opin-
ion that the assumption will do the
railroads no injustice) the net earn
ings of our railroads upon business
done in Iowa for the year 1905, were
500, 093,53S.24. This sum will pay 6
per cent interest upon $334.S92.304. 1t
will pay per cent interest upon $751;
O50,546. The last assessment fixed the
actual value OF the railroads Of the
state at $249,34s,7S0. The executive
council, however, chose to apply the
same proportion OF value as it believes
it had been applied to farm property,
namely, about four-fifths, increasing
the value by the addition of one-fffth
the result is an actual value of $229,-
21S,536 1t will be remembered, how
ever, that In reaching this value the
executive council was largely influence
ed by the gross and net earnings, and
in a less degree by the amount which
had been expended in the construction
of the properties, 1t is manifest that
when you come to determine whether
the net earnings are too great you can
not take as basis valuation found
ed upon such earnings, but must adopt
some other method. If it be asserted
that 1t Is unfair to take the gross and
net earnings of a single year it may be
Of interest to inquire what these earn-
ings have been during the last five
years.
In 1901 the gross earnings were $685.
i079,943; in 1902, $56,456,303: in 1903.
s5S,466,340; in 1904, $57,496,S4S; and in
1905 as before stated, $62,792,3O7 The
average gross earnings for these five
years are $58,240.34S. Using the per-
centage for ascertaining net earnings
heretofore mentioned, the result is $18,-
636,911.36, for the average net earnings
per year for the dast five years. This
sum will pay 6 per cent interest upon
$31O,615, 1879. 1t will pay per cent in
terest upon $266,241,591. These rates
Of interest are sufficiently liberal when
you take into consideration the fact
that practically one-half the capitali-
cation of railway properties is repre-
scented. in bonds, the average interest
upon which is about per cent
The ascertainment of the sum upon
which the earnings of railway COM
panies should make a reasonable return
is not easy. If you accept the basis
presented by the actual investment you
can approximate the proper capitaliza
ton very quickly. have heard it
stated by the representatives of railway
companies before the executive coun-
Gil, over and over again, that the av-
erage actual cost Of the railroads in
Iowa did not exceed $4,000 per mile.
There are now 9,2S7 main track miles
in the state which, tested by this the
DRY of value, are worth $196,540, 900. The
net earnings of 1905, as you will OBJ
serve, were sufficient to pay more than
10 per cent upon SUCH a valuation. The
average yearly net earnings for five
years would pay 9 4S-100 per cent upon
this valuation. If you take the cost of
reproduction as the proper test, an av-
erage Of $4,000 per mile is about right
Upon this basis, the railroads are worth
$245,675,000. You can compute in
moment the percentage of interest
which the net earnings would pay upon
this sum. It will not be overlooked, of
course, that any considerable reduction
in earnings would, in all probability,
result, and ought to result, in re-
duction in the value of the property for
taxation.
submit these suggestions to you to
be reviewed by your mature judgment,
and to be used for the purpose of be-
ginning an inquiry as to the justice
or injustice of any action that you may
take that will lessen the income of the
railway companies, whether from the
passenger or the freight service. 1t is
a subject which invokes high sense
of responsibility, and it demands for
its consideration all the obligations of
an official oath, I know that you will
examine it and act upon it without
fear, favor, prejudice or oppression.
For my own part I am deeply con-
WINGED that reduction in the pas
senger rate is fully warranted, and l
therefore earnestly recommend the
substitution of two cent rate for the
existing three cent rate.
~CRESWELL~
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