Los Angeles herald., 1909-11-28
LEMoN RATE ROBBERY

TTy HE apparent necessity for the pro-
lection of the shipper, of having
II laws fully authorizing both state
and national railroad commissions to
regulate the charges of common car
riers, so that they shall not make more
than a reasonable income upon the
amount invested in their properties,
has never been more clearly demon
strated than by the recent efforts on
the part of the railroad companies to
divide with the lemon growers the pro-
lection to their business which con-
gress gave them in the form OF an
added duty upon lemons.
The financial statements of both the
great railroad companies serving
Southern California show that this
increase in rate was not in any sense
necessary in order to enable these
companies to make more than a good
showing in the way of earnings. The
last financial report Of the Santa Fe
for the year ending June 80, 1909, shows
that for the year then ended that road
earned 1884, 300, 900, as against S9O,6OO,OOo
for the year 1908. The same reports
show that the operating expenses for
the year 1908 Of $50, 100000 had been re-
duced for the year 1909 to $57,5oO,OOo.
The year 1909 also showed a revenue
per ton mile Of freight hauled of 1.O26
cents, while the previous year showed
a revenue per ton mile for freight
hauled of 0.9S7 cents. thus showing
very marked increase in the average
rate per ton mile for the last year. 1t
will thus be seen that the Santa Fe's
report shows a net earning over and
above It's operating expenses for Its
last financial year of $36,S0O,0 OO This
enormous net earning was sufficient TO
pay interest on all the bonds Of that
company, as great dividend on Its
issued and outstanding stock as its
holders are equitably and justly en-
titled to, and have a considerable sum
left over for surplus.
A recent press dispatch from New
York shows an equally good condition
in the financial affairs of the Southern
Pacific company. Its net earnings In
creased S6,273, sos over the preceding
year. 1t earned 1923 per cent on the
common stock, as compared with 7.99
per cent in the year 1908. This earn
ing of over 10 per cent on its stock
is more than the stockholders of any
common carrier are equitably entitled
to receive upon their common stock.
And it must be remembered that in its
original form Southern Pacific common
stock represented no investment what
ever on the part of its holders, and at
the present time it represents to its
principal holders less than 90 cents on
the dollar of its par value. After deduct
ing all operating expenses, interest on
bonds and dividends to stockholders,
there remained in the treasury of the
Southern Pacific company a surplus
Of the years earnings of $9,543424, as
compared with the surplus Of S2,765,042
earned the previous year. 1t will thus
be seen by the latest financial state
ments of these two great companies
that they were, at the time that the
grab was made for a part of the tariff
protection granted by the government
to the lemon growers in the form of
an increased duty on imported lemons,
earning more than they were justly en-
titled to earn under an equitable ad-
justment of rates.
In place of raising the freight rates
charged by these companies. they
should be lowered until they produced
only enough to pay operating expenses,
interest on outstanding bonds, neces-
sary betterment charges, and a fair
income of not over per cent on out
standing stock.
There has never been In this country
less justification for the increase of
freight rates than there was for the
increase of the rate on lemons. In
fact, this increase was made not be-
cause it was necessary in order to per-
nit the companies making 1t to make
fair earnings for their stockholders,
but upon the principle on which so
many of our railroads operate, and the
Southern Pacific has always operated,
of arbitrarily grabbing a share of any
prosperity that comes to its customers.
This same principle has been applied
by the Southern Pacific throughout the
west in increasing the rate on ore
shipped by miners. when the ore hap
pened to increase in richness, and in
many other ways. 1t Is not based
upon fair treatment of the shipper, but
is a pure and simple robbery perpe-
trated by the might of the strongest.
And from this kind Of robbery the
people will never be adequately de-
Tended until the national and state
legislatures have enacted carefully pre-
pared and complete laws vesting in
the various railroad commissions the
power to adjust the rates of all COM
mon carriers as above suggested.
BUILDING RECORD