Omaha daily bee., 1910-06-05
Railroad Rates and Profits.


crease in railroad rates, which has
been cleverly forestalled by the iniunc-
ton suit brought by the federal gov
eminent, is that the increased cost of
operation. due to higher wages and
higher prices for materials and equip
ment, make necessary an increased
revenue to meet the outlay. "If the la
borer, the manufacturer and the mer-
chant are charging us more for what
we buy of them" declares the railroad
spokesman, then our only escape must
be to charge the shipper and passenger
more for transportation, which is what
we sell to them"
The trouble with this sort of argu-
ment is that IL does not take into &C
count all the factors nor rest upon a
sound basis of fact. Conceding the in
creased expense of operation, the Of
fetal figures still show that the rail-
roads of the country are reaping stead
lily increasing profits, and that the net
earnings on current business is greater
in comparison than it has ever been
before-this in spite of the palpable
padding of expense accounts for the
express purpose of making a bad show
ing. Figures compiled by the New
York Journal of Commerce show that
thirty-two important railroads report
ing a gain of $23,01S,S23 in gross
earnings had so inordinately expanded
their expenses as to white the fig
ures of net earnings down to $685.
019. One or two railroads, whose &C.
counting departments must be more
skillful than the others, had succeeded
in proving most gratifying increases in
gross revenues, and at the same time
that they were actually travelling in
the direction of bankruptcy by dis
| closing alarming decreases in net rev.
enues.
Just how these wonderful transfor-
nations were brought about is not
wholly apparent on the surface, but
some things are known which may
for example, that Immediately after
the 1907 panic every proposed expendi
ture for repairs, Improvements oil
equipment that could possibly wal
was turned down; orders previously
placed were countermanded, and the
railroads did nothing beyond absolute
requirements for operation. A lot o.
the expenditures under these headings
therefore, that are now being made
are merely deferred OUTLAWS tina
should properly have been charged
against traffic earnings of last yea
and the year before, the transpositioI
exerting a double influence to weigl
down the showing of net earnings TO
this year and to expand that of tn,
year before, and then comparison o
these two resultant exhibits is all tn
more subversive of railroad prosperity
which is just what the railroads wan
to show.
1t is known further that some con
struction work, which in other day
/ would have been charged to capita
account, has been put into current ex
penses by railroads not thousan,
miles from hereof course, with n
Interior purpose. But If new construC
ton were to come in the same class a
wage increases, the railroads woul
never have any difficulty making ou
a case for raising rates at will, no mat
ter how high they might already be
We have seen so much of railroa
bookkeeping jugglery in various con
nections-proofs of dire poverty whe
the tax boards are equalizing assess
ments and inflated valuations whe
railroad commissions are discussin
lower rates-that noticeable discrep
ancies in reports of earnings natural
arouse suspicion and make them fai
to pass muster without verification.