The Montgomery advertiser., 1908-08-10
RAILROADS AND PRosPERITY.
Carriers the Most Important Factor in the Turning Tide of Industrial Ad-
 

| Ifkens president of Pettibone. Mullt- I ken q Co. has made the following statement in regard to the present po- 1 sition of the railroads of the country. l especially with reference to their irn- I portance as factors in the return of l prosperity. and the question of freight | rate increases. l Acritic of the railroads and an opponent of increased freight rates says: Our recent diversity came when the prosperity of the railroads | was most pronounced; 1t was augment ed when 1t was discovered that there l was not sufficient money in the world | to keep up with the Imitation of values | incident to the manipulation of rail- | road stocks"
 The facts are that, although the re- | cent diversity came when the pros perity of the railroads was most pro- nounced, it was due to the attacks up- on railroad credit by the administra- tion. by national and State Legislatures. and by railway commissions. which l compelled the roads to stop all ex- | penditures for Improvement. as this | attack upon their credit made 1t ini- | possible for them to sell bonds or ob- tain money. The panic of 1907 was | caused by the attack upon railway credit, which created a fear in the minds of the people which led them I to distrust ali securities.
 The Carriers as Consumers. The railroads consume 50 per cent. | of the iron and steel manufactured | in this country, and the moment rail- road buying ceased activity In the steel mills diminished and business generally was Impaired.
 The railways are the second largest purchasers of everything in the United States. Seventy per cent. of their earnings are immediately dis tributed for labor and material. With in the last twelve months they have increased their payments to their ern- ployes over $100,0oo. 900. Does anyone think that this s1o0.0oo.o0o is not . benefit to the people?
 Dividends paid by all the railroads in the United States in 1907 the most prosperous year, was 3.73 per cent. The average dividend per annum paid by all railroads in the past thirteen years was less than Ia per cent. per year.
 Our Roads Charge Lowest Rates.
 Freight rates are lower in this coun- try than in any otner and the service here is much better than in any other region on earth.
 The capitalization of the railroads in the United States is lower than fin any ether country. The average is about S67,000 per mile in stocks and bonds.
 
 GOO; in Germany. about $110.000; Tn England, about s273.000 per mile, and one English road is capitalized at $500, ,000 per mile, on which 1t pays 4 per cent. dividends
 On these high values the French railways pay 4.S per cent.s the Eng fish per cent. and the German 6.1 per cent.
 A reduction in freight rates below a fair return to the railroads does rot help any one. None are benefited by low prices. but all are helped by fair prices which yield profit to ev- cry one. This is true of general husi- Less. and 1t is certainly true of the is ilroad business.
 All roads have in the last ten years. end for many years previous, spent millions of dollars from earnings to improve their properties and to main- tain them in good condition. These expenditures in many instances have not been capitalized. but have been charged of.
 But, aside from the history of the railroads, we are faced by a condition and not by the past. We want facts, not words. This country grows con- tinuaily. It is constantly expanding in all directions. This expansion is diminished or increased, but it moves and 1t never stops.
 what we dll OSSlEe l5 REO6Y6Tllys N0 cannot be prosperous if any large in- tcrest among our people Is suffering end depressed.
 The proposed increase in freight rates will not change any distributing center will make no difference in any line of business to the people engaged in 1t. It practically makes no difference whether the freight rate on steel from Pittsburg to Chicago is IS cents per 100 pounds or 25 cents per 100 pounds, provided every user pays the same rate. But 1t makes an enormous difference, not only to the steel interest, but to business gem erally, If there is only a demand for 50 per cent. of the steel producing capacity of the country.
 To meet the growth of the country 1t is necessary for the railways not only to maintain their properties as they are, but to improve them.
 Alternatives That Face the Roads.
 The credit of an individual or of corporation, Is only improved by an in- crease in their net earnings. The rall- read expenses have increased in the one item of labor alone S100,0 900 in the last twelve months. They face this situation: Either reduce wages. increase freight rates, OF go. into the hands of receivers and stop all pay ments for Interest and dividends. The roads have been forced by public opinion, and by the administration, to advance wages, and by the same are unable to reduce them. They are, therefore. compelled to face the other two alternatives.
 We know what would be the effect of many roads going into the hands of receivers. The only alternative, therefore, Is to advance freight rates throughout the country.
 This advance will eventually fall up- on the consumer, but 1t will be so small that he will not notice It. For instance: A 10 per cent horizontal in- crease in freight rates would hardly be known by any consumer. This in- crease on a suit of clothes from New York to Chicago would be less than 1 cent per suit, on a pair of shoes from Boston to Chicago less than 1-2 cent per pair, on a derby hat from New York 10 Chicago less than 1-3 cent per hat To the railroads 1t would mean an increase of S140,000,0O0 to S15O. 900, 900 in earning per year.
 Prosperity For Carriers Helps All.
 It Is absolutely true that the rail- roads cannot prosper without helping the people. They do not hoard their earnings. As stated above. TO per cent Of their gross earnings are spent immediately for labor and ma terials.
 Every man in this country Is in or indirectly.
 If this advance in freight rates takes place it will improve the credit of the railroads, it will enable them to sell long time bonds at a fair rate 'of interest and to obtain money to