The herald and news. [volume] (Newberry S.C.) 1903-1937, 1907-04-12


capitalized. After the war between
the states the entire railway system
or the South had to be rebuilt. The
owners of the securities Of the old
lines had equities that had to be
taken care Of in the new capitaliza-
ton. Large amounts Of new capital
had to be obtained on the best terms
possible and the net result is that the
railways of the Southern states are
not capitalized today for a dollar
more than has been put into the
properties from time to time. Some
Of them are capitalized for very
much less.
This matter Of capitalization in
terests investors in railway securities
rather than buyers of railway trans
portation> for it is we'll understood that
there is practically no connection
between the capitalization Of rail
road and its charges. Transporta-
tlon charges are fixed almost entire
ly by commercial conditions, and a
railroad must accept the rates that
will enable the products Of its terri
tory to reach competitive markets.
a road with a high rate of capitali-
zation per mile can not charge any
more than one with low rate. This
is shown by the fact that many roads
III different parts Of the country find
themselves unable to charge rates
that will enable them to pay divi-
dends on their total capitaliza-
ton. In fact, at the present time,
when operating expenses have been
very largely increased by advances
in wages and in the prices Of mater
ials and supplies, some roads are not
even able to earn enough to pay in
terest on their bonded debts. No one
has succeeded in working out any
practical plan for basing rates on
capitalization, but if it could be
done, it is apparent that rates OH
roads that arc now earning dividends
and interest would have TO be ad-
vanced. There are insurpcrable diff
ficultics in the way Of basing rates on
capital. One of these lies in the fact
that charges between all competitive
points must be the same on all~roads,
whatever may be the difference in
their rates Of capitalization. An
other reason why ii is impossible is
that the higher rates that would be
charged on road with q high cost
oS construction and h?h capitaliza-
ton would shut the products Of its
territory out of competitive markets.
Tt is also impossible to figure out the
rates that should be charged on each
commodity and between each two
points to yield a predetermined in
come on the capitalization Of the
road. There is not road on which
this can be done. Governmental
valuation would cost the tax payers
a lot of money and would furnish
statisticians with a lot Of interest,"
ing figures but would be Of no prac-
teal benefit to shippers. The exper-
ience of the past eighteen months,
since the administration awoke to
thc value of the Elkins act and be-
gan to enforce it, indicates that
shippers will be more benefited by
the enforcement of this stringent
law against discrimination, supple
mcntcd by the Hepburn law against
unreasonable charges, than they
could be by any plan Of basing rates
on cost which would certainly neccs-
state the raising Of many rates if
the government should undertake to
tx them at a level that would yield a
moderate income on the money that
has actually been invested in the
railways Of the United States.
Judging from the talk Of people
who come to Washington from all
parts Of the United States, interest
in the Jamestown Exposition is uni
vcrsal and an excellent attendance
from all parts Of the country is as
surcd. AS this exposition is essen
tally a Southern enterprise and as
the exhibits of the products of South