Los Angeles herald., 1910-08-08
RAILROAD LIARS

IN HE next California legislature will
be asked to appropriate $250,00
II for the employment of a board of
experts to assist the state board of
equalization in determining the assess
ment of railroads by extended study of
the methods used elsewhere in this
country and abroad. Thomas Mellersh,
comptroller of the Northwestern Pacific
railroad, makes the suggestion. He
advocates the New Zealand system of
valuation affidavits to be made out by
property owners, the actual inspection
of railroad books by experts and, in
general, deeper study of the problem.
The legislature might make this ap-
preparation, large as the amount is,
and save money for the people of the
state, if it viii further provide for a
physical valuation of the railroads so
that it can be determined with truth
and without prejudice just what rate of
interest they are paying on real capi-
talization and how far the shippers
and passengers of the state are being
bled to make profit on waterlogged
capital Charles Edward Russell, in
his article on the Southern Pacific, has
shown that that system has consistent
ly padded it's capital, falsified its true
condition, and made the people pay
enormous and outrageous profits on
the fictitious values.
It is a matter that so vitality con-
Germs every home in the state, through
its influence on the high cost of liv-
ing, that some action of this kind ought
to be taken by the legislature. Physi-
cal valuation is coming through fed
eral action as surely as the reaction
aries, who have prevented it thus far,
are doomed. California might lead the
way, and in doing so bring speedy re-
lief to her own residents.
1t is plain talking but It is indubit-
able that the railroad financiers have
become the greatest liars of the In
dustrial world. In order to conceal or
make plausible their frenzied finance
ard keep off the laws hand they have
long falsifed their figures without
turning a hair. Their officers have
gambled in Wall street in the unstable
securities of their own creation and
made immense personal fortunes by
e., ecking the fortunes of the confiding
lambs of the street. From the time
that Jay Gould and Jim Fiske showed
now to grow rich by wrecking the
Erie railroad there have been few hon
est railroad boards.
A recent case in point is the Lacka-
wanna road. In common with others
it raised Communication rates out of
New York on it's Morris &; Essex di-
vision, giving as a reason that the
road loses a million dollars a year on
the division, which is a leased road.
Tile fact turns out to be that the loss
of 81 900, 900 year by the Lackawanna
in operating the Morris & Essex is
calculated after including among the
expenses the per cent dividends and
interest guaranteed by the former COM
pany on the stock and bonds of the
latter. In other words in the operation
of the Morris &, Essex line there were
the Lackawanna for its own purposes
had years ago guaranteed dividends
and interest amounting to about $2,
2vO, 900, it lost million on the leased
property.
The statement is therefore true ex-
cept for the lie that is concealed in it.
There was a real profit and the false
deficit was due to high fixed charges.
Railway Age Gazette is notorious
Iy railroad corporation organ, but it
couldn't stomach this lie and exposed
it, Who now doubts that in the state
ments of most of the roads in this
country are concealed vast false
hoods? And is it not plain why the
systems that have been reveling as
rioutously as a drunken sailor in fren-
zied finance for two decades past will
fight to the last ditch the physical val
uation Of their lines and the throwing
of a calcium light on their books?
The Long Beach postoffiCe clerk who