The San Francisco call., 1910-09-23
HEAVY BUSINESS
CUTS PROFIT OF
RAILROAD Line
Milwaukee Official Says That
Expenses Grow Faster
Than Income
Commissioner Declares That
Shippers Must Not Be Asked
TO Cure Trouble

CHICAGO. Sept. 22-Railroads must
adjust their economical difficulties by
some other means than by asking ship
sDe~s TO contribute the funds therefor.
in the opinion Of Interstate Commerce
Commissioner Lane. as expressed dur
ing the hearing today.
Railroad officers and attorneys
sought to learn il the commissioner
implied that there must be readjust-
nent Of the method Of financing the
big carrier systems. but Lane ignored
their efforts.
William n Ellis commerce counsel
for the Chicago Milwaukee and st. Paul
railroad. testified that his company was
suffering from too much business. that
the increase had meant an increase in
The unit Of cost. which grew faster than
the unit Of income. thereby threaten
ing the yearly surplus of earnings
above payment OF dividends and cost
Of operation and Of maintenance.
MENACE TO THE COUNTRY
Commissioner Lane then said:
AS the country develops there
viii be more and more freight de-
iNered TO YOU. and as conditions
are now the rates constantly must
be Increased according TO officials.
I argue IL as menace to the coun-
try u the rates constantly are to
be increased. We must work out
this problem on lines other than by
the proposed method of raising the
tarlfs- If not there is no time
when we can say the maximum has
been reached.
This unexpected development in the
rate hearing came as a result of the
inquiry into the st. Paul's profits. par
ucuiarly from the public lands ac-
Quired in recent years. Ellis denied
the commissioners suggestion that the
road optimism when it built the trans
continental extension had turned to
pessimism now. He said:
If it had not been for that road
we would have had nothing from
9perauon to add to our surplus
l5st year That extension added
ABOUT $2.500.000 to the surplus in
addition to the S2,5S9.573 from other
sources. our total surplus is about
If the gross income next wear
vent 70 $4,000. 600 from this years
figures Of $4,000. 600 the percent
age OF profit would be less
PROFIT on COAST DIVISION
Attorney H. c. Lust, representing the
Illinois manufacturers, asked: Mr.
Ellis. YOU say your gross income last
year from other sources was So ooO,-
ooo What are those sources?'
Chiefly the Puget sound division"
he answered
The st. Paul owns all the stock,
and in 1910 received $4,000 OOo in the
bonds" Interrupted Commissioner Lane
again. DO you mean to say the
Puget sound branch paid all its oper-s
sting expenses for 10 years and In ad-
dition S6,00o,000 interest on its capi-
talization?
We'll. that was interest for year
and q half. However, it also earned
a surplus Of nearly $4,000. 900"
Ellis said that the Puget sound di-
vision was paid for by a bond issue
Of sl0o.000.O00 sold to stock holders
and that in addition to the surplus a
per cent dividend was paid on that
issue last year. He then admitted
that II the surplus were added to the
earnings of the st. Paul il would more
than make up for the added cost of
labor
SURPLUS NOT REPORTED
Then" said Lyon. Il would like to
call the attention Of the commission to
the absolute failure Of this company
to include that sum in the surplus
given in their latest report to the
commission
Asked by Commissioner Lane wha.
was the mysterious cause" of the ap-
parent increased cost Of operation,
Ellis said:
I'll tell YOU. Every session of
congress has decreased the earn
ing efficiency Of the dollar eXpend-
"a upon labor Eight hour days,
IS hour telegraphers' limitings
restrictions in regard to the rest
hour, all these have cut down
dollars efficiency. still say
labor is the big factor in increased
cost.
Previously Ellis had admitted that
his company in the last 10 years had
sold several million dollars worth
Of stock 10 stock holders at par when
il was quoted in open market at from
S240 down to $3.50. and the stock had
paid per cent dividends