New-York tribune., 1910-09-21
R. R. EARNINGS COVERED
How Illinois Central Compounded
It's Income.
CHICAGO RATE HEARING
Vice President Park Coins New
Phrase, Railroad In
tuition"

Chicago Sept 2G-AIIeged manipulation
ot the Illinois Central Railroads income
u cover up earnings and to compound its
income was inquired into to-day by at
tornevs for the Western shippers before
the Interstate Commerce Commission in
the hearing now in progress. Opinions on
the propriety Of disposition Of earnings
were given by W L. Park, e-president
and general manager.
Mr. Park had told the commission he
thought a proper rate 70 be charged for
freight transportation was one which rem
dered a fair return for service 70 the ship
per and which. after paying reasonable
dividend on the capital stock. paid fixed
charges and operating and maintenance
expenses. and would also give the company
yearly surplus Of ss0oo,eo9 or S-@'0'oH
to make the investment attractive to per
sons with money and 70 give the company
a credit"
And what would you DO with this sur
plus-just hold it, inquired John H At
wood. Of Kansas City, representing the
general shippers committee.
NO" was the reply. Il would use II
for bettering the road. For instance. I
would devote a part Of it TO new stations
etc"
stations were built. you would consider
them q part of the actual property of the
company and a proper subject for addl-
+foraI Capitalization, wouldn't you?"
.Of course was the answer.
..7-ban when YOU later had capitalized
vo,, yvouTd saw you ought TO be entitled to
a reasonable dividend upon that capitan-
zation?'
Yes sir
Then the simple fact is, you think you
ought 10 be entitled to charge shippers
enough to bring in sufficient earnings that
YOU can devote a part TO new capitaliza-
ton and then get a big return on it in the
shape Of dividends. do you? Is that your
idea Of what constitutes a fair tariff for
the shipper
The witness did not answer
". H Horton. Of the Illinois Central,
sprang surprise on H. c. Lust, of the
Illinois Manufacturers Association. The
railroads attorney asked;
Mr.. Lust, will you give me the names
Of four or Eve of your largest shippers?
Why do you want them" returned
Lust in surprise We represent shippers
who pay s15O.OOO.OOO annually in freight
rates"
y want them,' retorted Mr.. Horton, ito
produce statements similar TO ours in
which we show our return on the invest
mert is only as and see what their return
is. Do 7 get the names?"
We viii have a consultation answered
AIr Lust.
Mr.. Park introduced a new term in rail-
road nonenclature-''rai intuition" He
had been asked by Commissioner Clements
on what he based his opinion that the
present physical valuation Of the road was
far in excess Of its S2S5, ,G00,oo0 capitaliza-
ton
Why. haven't any exact data by which
TO determine the physical valuation" said
AIr. Park. I depend upon what I might
call railroad intuition-yes, that's it. rail
road intuition. You see. a man can't do
nothing for thirty-fve years but ride over
railroads. compare property values and
buy new lines without gaining an tntuitive
value appreciation. I couldn't name any
definite figure but il IS much higher than
the capitalization
Chief Engineer A. s Baldwin. who fol-
lowed Mr.. Park on the stand said that
because of the so-called panic of 1907
millions of dollars worth of repairs. new
buildings and many other expenditures
il would have been wise TO incur and
which it was false economy not TO" had
been deferred. and now demanded atten-
ton"
When I call your attention TO figures
showing your road had 81 100000 surplus in
1893 and $53S,OOO in 1909. viii you say it was
poor business poIicy?" inquired Mr.. At
wood
7 don't wish TO criticise its manage
r1ent. not knowing all their problems" re-
piled Baldwin
The fnterrogations Of Frank Lyon. at
torney for the Interstate Commerce Com
mission. brought ont mention Of the car
repair graft" for which three former
officials of the road are now on trial in
the Municipal Court. The lawyer referred
TO a statement that during the fiscal year
1910 % 900 cars of a total OF 81 000 were
repaired" &" and that the discovery of the
alleged swindle would take care of the
normal increase in wages during the pres
ent fiscal year.
DO you expect the cost of car repairs
TO be less this year?" inquired Mr. Lyon.
We certainly do, by about S1.eG0,O00 or
s. 500. .O00" replied the witness. That was
about the excess we paid last year by
reason Of deferred maintenance and-er-er
other reasons" he added, alluding to the
alleged graft and smiling grtnly.
The Illinois Central announced at the
close of the days session that it had put
in its case. It was understood the next
railroad to present testimony would be the
Chicago, Milwaukee & St. Paul This road
viii appear before the commission to-
morrow.