The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1907-07-07
CONGRESS WAY FIX
| REASONABLE RATE
Physical Valuation OF Railroads
to Be Finally Ad-
justed.
THE SITUATION IN VIRGINIA
Interstate Commerce Commission
Takes Up Question OF Limit
ing Finances.
ny MALTnN nnwAnD MARRls.

8
WASHINGTON, d c.. July 1.-Two
questions put by members Of the In
terstate Commerce Commission to at
sorneys for the railroads in the course
of a recent argument show that
new order of fluance wlll nave to
obtain II the views OF the commission
ers are carried out
In one case the statement was made
by q railroad attorney that MS line
was bonded at so much per mile. Asked
by Commissioners Prouty what the line
twas worth he replied giving the same
tdgure as that at which 1t was bonded.
NO this Commissioner Prouty asked:
4 do you mean to say that when a
srailroad is bonded up to its actual
| value 1t ought to pay more than oper-
! ating expenses over and above the IN
}terest on these bonds"
! Upon being assured by the attorney
1 that he thought the stockholders ought
20 have something, even under the
/: conditions laid down in the question,
iCommissoner Prouty remarked that
that would be a way for men to get
more than reasonable returns for their
! money.
Chairman Knapp. upon another oc-
fcasion, when the attorney"for a rail-
iroad was making a poor mouth to the
|
t1nake permanent Improvements out Of
operating expenses on the one hand,
and on the other We're forbidden by
the State of Texas to issue. any more
| bonds. asked him II he did not think
At about time that the stockholders
| were assessed a little for building
permanent improvements. -
Holding Railroads Down.
These two questions are Indicative
I of a disposition on the part Of the
l Interstate Commerce Conan ssiom,
(which is becoming more apparent
every day, of holding the railroads
down to legitimate financing There
us no doubt but that they are working
t.along lines looking to the making OF
\ the stocks and bonds Of railroads In
1.-The future conform with the actual
value Of the roads and equipment
Senator Tillman delivered a speech
two years ago in which he quoted
5extensively from one of the best enRi-
tneers in the United States, who had
...Sh cured the actual cost of a replacement
[Nof the properties of several 'rapr"sen.
tatlve railroads at prices then pre-.
| vailing, With the result that he found
that in no instance was the actual
value more than one-half what the
tstocks and bonds represented.
If bond and stock issues in the fu-
Sure are hold down to the actual cost
of the properties, 1t will inevitably
lead to a new system OF railroad
financing.
Trick Commonly Played.
u Many railroads to-day have trick
of building permanent improvements
md making permanent betterments
and charging 1t up to operating eX-
renses. 1t was brought out in a re-
cent hearing that one road had spent
s2,0o0.000 In permanent improvements,
charging the same to operating eX-
penses. Other roads have taken track
Age laid with sixtypound rails and
ION the ground, and have torn up the
track, laid new eighty pound rails, and
shave thoroughly rock ballasted the
swhole line, increasing its value to
: The extent of millions of dollars, anG
aSet every cent of it was charged to
separating expenses. IN this way they
ihsve been successful in covering up
TGet earnings greater than could be
gmade from reasonable" rates. 1t is
! this sort of thing that has led the
com1ni ssion to demand uniform sys-
tenn of accounting. so that it could
see Just what the railroads are doing.
1t is going to try to force the roads
: to do business on basis of fair earn.
Sings on actual values.
That there Will yet be an of1icia
.Sralue placed on all the railroads II
the Omitted States IS pretty generally
. conceded Experience has demonstrated