The Washington herald., 1910-10-13
MCCREA SAYS new
RATES ARE NEEDED
Explains Increases Before
Interstate Commission.
OPERATING EXPENSES REASON
Accompanied by Heads OF Other
Roads, Pennsylvania President
Tells of Proposed Increase In the
Freight Tariffs, and the Causes
for Raise-Denies Big Dividends.

Increased freight rates by the rail-
roads OF the United States are warranted
BY the increase IN the cost OF operation
and supplies. according to a statement
made at a hearing before the Interstate
Commerce Commission yesterday by
James McCrea, president Pennsylvania
system. President McCrea, accompanied
by other railroad men. appeared to make
a statement OF the financial condition OF
the various roads in Eastern territory
that have given notice of an intention 10
increase freight charges These in
creases were 10 have become effective
November L They have been further
suspended by the roads. the effective date
having been pushed forward 70 Febru-
airy J.
Yesterdays hearing was held by the com
mission as an Incident OF its inquiry into
the reasonableness OF the proposed ad-
vanced rates President McCrea and
General Counsel Gowan. OF the Pennsyl-
vania, were the only railroad officials who
testified yesterday President Willard
Of the Baltimore and Ohio: President
Brown. OF the New York Central presi-
dent Ripley. OF sHe Atchis6n. ana Pest
dent Mellen. Of the New Haven, are ex-
pected 10 go on the stand to-day. At
toney Louis r. Brandeis is appearing as
counsel for shippers in Eastern cities.
who are opposing the proposed increased
freight rates.
McCrea Tells OF Earnings
President McCrea and General Counsel
Gowan made an elaborate statement rel
ative TO the finances OF the Pennsylvania.
Their testimony disclosed that, according
10 railroad estimates. the increased rates
would yield approximately 24,O0o000 addi-
tional 10 the carriers. instead Of more
than ElCoooOoO0, as has been alleged by
some Of the shippers.
II was brought out that the new Penn
sylvania terminal at New York would
cost the road ultimately Si07. .O0o .000 and
the project would not pay as an invest
ment. In reply to a question, Mr.. Nc
Crea denied that Communication had been
raised at New York as a result OF the
new building operations there He de-
clined 10 admit that the expedition of the
road for terminal az New York was a
part of a plan OF the Pennsylvania 10
extend its lines into the New England
States
In discussing the cost Of operation,
President McCrea said that wages had
been increased 80 per cent since 1902. In
the past five months, since the last raise
in wages, a decrease OF more than s.. 7.00o.-
600 was shown in net revenue.
Mr.. McCTea was frank witness. read
ing all questions put 10 him by counsel
for the shippers and by members Of the
commission.
Denies Big Dividends.
us II not a fact that during the twelve
months past the stockholders of the
company have received in cash, or its
equivalent, p per cent upon their stock?"
asked Attorney Brandeis.
1T is not" replied Mr.. McCrea.
Have they not received a regular dlvi-
dend at the rate OF per cent and rights
to additional stock which were sold upon
the market and could have been sold by
the stockholders at an average price Of
$ a share. which added to the per cent
dividend makes S14 share? Is not that
a fact?' continued Mr.. Brandels.
Tt may be fact" said Mr.. McCrea,
but that fact is not based as you put H.
The facts, as 1 have previously said,
have been that in ten years there was
yll6, 900 which could legitimately have
gone to the stockholders. This was taken
away from them and put into the prop
erty."
rs it not a fact that during this same
period of twelve months there have ac-
cumulated surplus profits which would I
apply in the way of betterments, sink 7
ing fund, &c, to an amount aggregating 7.
about Sl2O0O,Oo0. which sum Is equivalent I
to 21z per cent on the capital stock?"