The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1910-10-31

more than per cent upon their value
and the supporters of this claim gen
orally cite the supreme courts decision
In the New York Gas case. Perhaps
you will be surprised when I tell you
that neither in this case nor in any
other case has the supreme court ever
decided any such thing. On the con-
trary, all that the court suggested in
| that case was that the legislature could
not constitutionally reduce the rates
of the Gas company so as to produce
less earnings than s per cent upon the
value OF the Gas company's property.
Now, there is all the difference in
the world between saying that the
rates must not be forced by law to less
than per cent (Which is what the
supreme court did suggest) and saying
that rates can not lawfully be more
than per cent, (Which the supreme
court has never suggested in that or
any other case).
Regarding Per Cent Earnings.
I can say to you, without any quail
f1cation, that there is no law and no
decision of the supreme court of the
United States that declares or suggests
that it is unlawful for railroad COM
panies to earn more than per cent
upon the value of their property, and
it is of the highest importance that
this fact should be recognized and that
the erroneous assertion to the con-
trary should be denied and rejected.
Moreover, as a practical proposition,
it must be plain upon consideration
that no such principle would be just
or feasible. For the government to say
that persons investing money in rail-
road must never earn more than per
cent would be wholly unreasonable in
view of the fact that the government
does not guarantee that they shall
earn per cent. Such a one-sided rule
would limit railroad investors to
a return of 6 per cent in good years
and would leave them to get along
with a much less return, or with no
return in bad years. Clearly, the gen.
ton of any such one-sided rule would
be materially less than 6 per cent.
1t would not be so unreasonable II
the government should limit the return
to per cent and, at the same time,
should guarantee a return of that
amount. But the government has no
idea of making such guaranty, and
therefore it must be evident that the
people on full consideration would not
be so unfair as to make the one-sided
rule which has been suggested.
Welfare of Public and Roads.
The truth is that when the commits
sion comes to decide upon reasonable
rates it must take into consideration
all the conditions and must consider
the welfare of the general public and
the welfare of the railroad, and what
| is fair and reasonable under all cir
cumstances. And the commission is
not bound and can not be bound by any
| such one-sided unreasonable principle
| as that earnings must not exceed per
cent upon value.
The next point to which I wish to
| call your attention is that the public
| can not afford to overlook the fact
| that a railroad company has an i'm
portant work to do besides using its
property for the public benefit and
paying a proper return upon its exist
| ing capital. This additional work
which the railroad company must do
| is the work of continually charging
| and improving its property so as to
meet the needs and requirements of
| the public and promote the public
| convenience and safety. This work
demands the expenditure of enormous
sums of new money on the property
| and this new money can not be raised
unless the law will give opportunity
to enjoy liberal returns if business
conditions will permit such returns
| If, when Mr.. Ripley took charge of
the Santa Fe fifteen years ago, it had
! been possible and proper for him to
continue the property just as it was at
| that time without extending it or i'm
| proving it, without doing anything
more for the convenience or safety of
| the public than was done at that time,
| 1t would doubtless have been sufficient
| for the company to earn just barely
| enough to paw a proper dividend on
| us 6AlSl1HS SUCK anu " IS
| just enough surplus to maintain its
dividend in years of depression. But
such q condition was wholly out of
the question. 1t would be difficult to
| imagine the Santa F'e as operating to-
day with the same character of track,
| equipment, buildings, ETC., as 1t had
| fifteen years ago.
$50, 900, 900 Annually in Improvements
| Needed.
The Santa Fe has had to keep
abreast of the times and in doing so
has had to spend about two hundred
millions in extensions and improve
mentS of its system, and it ought to
spend in the future from twenty-five
to thirty millions year for these pur-
poses. Now, the entire amount which
| the Santa Fee is paying out in diVi-
dends on all its stock both preferred
and common, is about fifteen millions
a year. so that what it ought to spend
upon its property every year is about
twice what it pays out in dividends.
| The Santa Fe has no way to raise
this money except by the use of its
surplus earnings and by inducing the
people to invest their money in new
issues of stock or bonds. The Santa
Fe can not compel anybody to invest
in its securities; the government does
not compel anybody to invest in Santa
Fe securities; and the government it.
self does not invest in those securi-
ties.
Every such investment is a purely
voluntary act upon the part of the in
weston and he will not invest unless he
feels reasonably sure of a proper re-
turn upon his money
Now, experience has convinced all
persons familiar with financial affairs
that investors are not willing to in
vest their money in an enterprise
which makes just barely enough earn
ings to pay dividends on it's existing
stock and has no surplus to spend in
the improvement of its property. II
is the conclusion of the directors OF