The Birmingham age-herald., 1907-03-18
EXPENSES INCREASE INCOME GROWS LESS Murphy Gives Cincinnati South
 ern as an Example SOUNDS NOTE OF WARNING Thinks With President Finley That Public Must Choose Between Bet
 ter and Safe Facilities and
 Lower Rates.
SOUNDS NOTE OF WARNING

W J. Murphy, vice president of the Queen and Crescent Route, has issued a statement from Cincinnati under yes- terday's date on Southern rates; the ee- ments that enter into the problem, and the expenses increasing in greater ratio than the receipts"
 Following is a copy of the statement, sent especially to The Age-IIerald:
 Public attention has been lately directed to the financial requirements Of railroads of this country by two impor- 1 tant papers-the one by MT l. J. lili, president of the Great Northern Railroad company in which the wants of all the l railroad systems of the country are esti- mated to require the expenditure of one billion, one hundred million dollars for each of the ensuing five years; the other by MT. W. w. Finley, president of the Southern Railway company, in which is set forth at length the effort of that company to meet the requirements of in creased business arising from the in- creased and increasing development of i the south.
 1 Near the close of his paper, President Finley uses these pregnant words: The point is near where 1t may be absolutely necessary for the public to take the choice between the better and safer facll- ] ties on the one hand, and lower rates on ] the other. In the nature of things it is impossible to provide both
 l Cites Cincinnati Southern. "If, instead of considering the wants of all railroads, attention be paid to the present conditions and wants of a single railgoad, Che need of additional capital will be no less manifest. l shall speak i of the Cincinnati Southern railroad. There is this aid to clear thinking on the gen. pral question if Ongiupr this road. it has the same mileage today as when 1t was first leased in 1881 All the capital that has been expended on it has been spent in maintenance and development; none in mileage extension.
 "The company that operates this road is purely and simply a leasing company. It owns not a mile, or even a foot, or road or roadbed The entire road and all the improvements of whatever nature that the leasing company makes thereto revert to the city of Cincinnati It has no property of it's own on which 1t can, or even could, issue bonds. The only basis on which it's borrowing capacity can be predicted Is in it's earning power, pres ent and prospective.
 Assumed Enormous Liability. "The leasing company, when it took the lease of the Cincinnati Southern railroad, assumed an enormous liability in the mat ter of rent for a property that, physically in respect to it's bridges side, passing and terminal tracks, was and is now far from being up to standard. It is neces- sary, in order to put this property into standard physical condition, that a large i sum be expended on bridges terminals, main, side and passing tracks and to af- 1 ford the necessary facilities to enable the l leasing company to handle its business. i The earnings are by no means adequate l tp tbaGa ranI1frarppntg. POnSpnnapt1V it is necessary that other arrangements be made for the purpose of securing suf l teient capital to carry to a conclusion contracts that are now under way.
 Referring to the income account for the year ended June 30 1906, what does 1t | disclose?
 "The income from all sources was $S, 499,- S9i. The operating expenses and taxes were $6,S92 61,s0; the interest on equip ment and trust construction obligations were $1 59 permanent improvements that revert to the city of Cincinnati, 1 $4io,S25 .9i rental to the city of Cincip- natl, $1,2070OO; dividends paid, S250.o0O- which makes a total expenditure of $S,36l,- 630 8, which leaves a net profit to be held for other improvement of $137, 764. 34
 Gain in Gross Earnings.
 "rhe gross earnings for 1906 were the | largest by over s1,O0OOO0 in the history ol tue Iodu Alter paying slle Sloch- holders , per cent, there was left but $lS7764.34. At the present date there are contracts outstanding for new steel bridges between Somerset, Ky, and Oakdale, Tenn, and for second main track between Flat Rock, Ky. and Helenwood, Tenn, and at other points on the road. aggre- eating forty-five miles of second main track. These contracts will amount to over $2.500 GOO. It is hoped that post ponement will be necessary, as it is im- perative that these improvements be pushed to completion to enable the com pany to handle it's traffic properly. Tn addition to the above Improvements. estimates have been made for the re- placement of all bridges between Gin cinnati and Somerset Ky, at the cost of $3,250.000. and between Oakdale, Tenn, and Chattanooga, Tenn, at the cost of sl,9o0,000 Under present conditions. how ever, it will be necessary to defer these Improvements.
 Need of Further Capital. After the extension of the lease in 1901 the need of further capital was impera- i tive But capital was not to be had for the mere asking, Recognizing the need, the city provided in the stipulation for the extension of the lease that the company shall cause it's capital stock to be in- creased in the sum Of s2000,000. In 1902, Immediately after the extension of the lease was ratified, the railway company