The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1907-06-25

hundred per cent lower than the the
ory would justify upon the basis OF the
securities
What this means, tersely Is this:
That, accepting all the water In the
stocks and bonds Of North Carolina
railroads sworth par on the market
and applying thereto the rule OF as
sessment prescribed by law. the assess
ments could be increased by $4,000
600 OF dollars and still leave in net
revenues to the railroads six per cent
in dividends upon their capitalization
water and all,
How Capital Is Estimated.
this estimate Of capitalization is not
only made UP of par values but is
based upon the capitalization Of the
entire system making the North Car
olina proportion dependent upon its
proportionate mileage, it will be seen
that the disparity between revenue
and assessment is even greater than is
shown by these enormous figures. For
instance. in estimating the capital for
the State of North Carolina the single
tracked and poorly graded country
lines in this State are considered
the equal Of line of double tracked
railroad near the cities in the thickly
populated States to the North and the
costly terminals that are necessary in
such localities. In this capitalization,
also, is figured the promoters profits
ID
vile reorganization and the stockhold-
ers' profits in the way of stock divi-
dends to the extent OF 1000 per cent
in the case of the Atlantic Coast Line.
Yet, making no allowance or deduc-
lion for the self evident facts, the
present assessment is placed at a fig
ure to which the present net earnings
represent proportion of profit in ex-
cess Of l 2 per cent on such assessment
Real estate and certain classes of
personal property such as mortgages
and Industrial stocks, bonds, etc, are
ordinarily taxed at rate that returns
to the owner net upon his investment
rarely more than 4 per cent and fire.
quently less; yet the railroads are per-
mitted to earn over IL per cent upon
property over which the State should
reasonably exert a stronger control
and from which logically it should re-
ceive a greater proportionate return.
It is in this fact that best appears
the true condition of difference in
treatment between the corporation and
the individual, in spite of the studious
attempt Of the railroads to pose in the
light of regulating statutes as martyrs
at the stake of popular prejudice.
Net Earnings the Real Basis.
In making the new assessment.
which must stand for four years, the
Corporation Commission owes itself
and the people--and in the long run
the railroads. also--the duty of max
ing a more thorough investigation
than heretofore into the bases upon
which the assessment is predicated.
AS, in the last analysis, the net earn
ings are the controlling factors, the
point of vital importance is that the
net earnings shown by the reports
should speak the whole truth for the
purpose for which the reports are
called for. There is a we'll founded
an inevita able-suspicion that they have
not and do not speak that character
of truth. Against the earnings in
gross the charge of operating expenses
is susceptible of much ingenious pad
ding. For instance, there is not an
intelligent North CaroIinian who does
not know that the operating expenses
of S2,601,052 charged up against the
gross receipts of practically s4,0O9,O0O
from the operation of the North Car
olina r Railroad last year do rot repre-
sent money either actually expended
upon that railroad in operating n
equipment or otherwise. If this re-
markable Item is not put into the re-
ports upon some disengenuous basis of
calculation whereby the North Caro-
lima road is loaded With expenses else
where incurred in the operation of the
system for the purpose of keeping the
showing of the roads net earnings
somewhere within the bounds of busi-
ness 'decency' for the purpose of con-
trolling the coming asseSsme ent the his
tory of railroad reports is worthless as
pointing an example. Taking the North
Carolina road and the report of its
operating expenses as itemized num-
ber of charges strike the eye that bad
ly need explanation? For instance
how did repairs and renewals of To-
comotives'' on the North Carolina road
during the year reach the sum of
s200.2S3? Who has seen such locomo-
tiyes or heard of Them From what
part of the system and with what
legerdemain is this item floated into
the expense of the North Carolina road
to cut down it's net? Again, on the
whole system in the State there is
charged for repairs and renewals of
locomotives the sum $3,54S.345 which
goes into operating expenses" These
are the same engines that are returned
upon the reports of physical property
at the years end as worth anywhere