The Washington herald., 1907-04-04
RATE LAWS INJURE.
President Finley Says People
Suffer with Railroads.
LINES DO NOT FIX CHARGES
Denies Charges OF OvercapifaIiza-
tiOn, and Declares Cost of Trans
Conditions Entirely Beyond Con-
troll of CapitaI-Goes Into Detail.

Greensboro, n. c.. April Sat the an
nual banquet of the Merchants and Man
ufacturers' Club Of Greensboro tonight
Mr.. W. W. Finley. president of the
Southern Railway Company, responded
to the toast, North Carolina and its re-
lations to the railroad problem"
After discussing the interest Of North
Carolina IN improved railway transpor-
tation and pointing out the need of addi-
tionai railroad construction In the State,
Mr.. Finley spoke Of the identity of the
interests OF the public and the railways.
and showed what would be the effects
upon both Of some Of the proposed Iegfs-
lation. He said:
The interests of a railway and of the
people dependent upon it for transporta-
tion are so completely Identical that I
have no hesitation in saying that every
legislative proposition that is inimicaI 10
the railroads will be found. on careful
examination, to be equally inimicaI in its
ultimate effects to the interests Of the
people Of the territories served by their
lines"
Roads Not Overcapitauzed.
Discussing the influence which railway
capitalization is, in some quarters.
thought to have on railroad rates, Mr.
Finley said that. while the capitalization
Of each railroad must be considered on
its merits, he was convinced that there
was serious popular error in supposlng
-hat there is any considerable overcapi-
taiization of railroads tn the United
States, In support of this opinion he
quoted Chairman Knapp. Of the Inter
state Commerce Commission. as saying:
Il regard the common talk about over
capitalization Of railroads as wholly ig-
norant and mistaken 1 believe that. in
far more instances than the people sup
pose, fair valuation at this time would
give figures exceeding the present esti-
mate"
Continuing, Mr. Finley said: But.
leaving aside the question as to whether
the railroads OF this country are over
capitalized. I wish TO say TO YOU that
the idea that rates are controlled By can
ttalization is entirely without Justification.
capitalization may affect the intrinsic
value Of a company's securities, and thus
affect the investing public. II cannot con-
troll carriers rates. and hence cannot
affect the shipping public.
cannot Fix Own Rates.
I'm broad sense, the management Of /
railway is powerless TO fix it's rates II !
must accept the rates that are resultant
Of economic and commercial forces which /
are as absolutely beyond the control Of its 1
managers as are the tides Of the ocean /
That this is true is further shown by the 4
fact that many railroads have never been 4
able to pay dividends on all " their capt. /
tai stock, while others are unable to pay
any dividends AT ALL and still others are 4
not able TO pay interest on their bonded 4
Indebtedness. II railway could adjust
rs rates 10 its capitalization there would .
be no reason why any road should not
sarn dividends on It's capitalization. and /
thus forever abolish receiverships and /
bankruptcy"
Referring 10 the argument that rates 1
are kept in order to pay dividends on
watered stock. and that II these payments
are not made. earnings could go 10 I'm
provefnents and betterments Mr. Finley
said thar this was an entire mIscOncep-
ton OF the financial situation OF the rail
roads and he greatly feared that an ex-
iggerated idea of the earnings and wealth
Of the carriers was at the bottom OF much
Of the exasperated public sentiment and
hostile legislation.
Opposes Wrong Idea.
He said: u shall content myself with
opposing 10 this erroneous conception one
concrete example and the statement that
what IS true of the Southern Railway
about TO be mentioned is true
% greater or lesser degree of every rail-
road carrier in the country. The example
refer 10 is this, that the Southern Rail-
way Company. since its organization
welve years ago. spent or contracted to
spend, and is in the act of spending more
han S26 10000 for its additions TO it's IA
,ilities and for capitalized betterments
and improvements. This means that on
Is present mileage tt has spent. or con-
racted to spend. within a fraction of
1900 per mile. whereas If every cent of
Is net earnings. after the payment of in
crest and without paying one penny of
dividends or carrying one penny TO sur
plus, had been expended for these pur-
)oses, il would have amounted 10 only