The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1910-09-23
COMMISSIONER
LANE HITS REAL
RATE TROUBLE
Roads Cannot Adjust Econom.
ical Conditions by Increas-
ing the Freights
PROFIT OF 100000 ANNUALLY
ON Investment OF ;l0o,oo0,ooo


Dollar Until Higher Rates Are the
Only Means of Dividend Earning.
Chicago, Sept. 23-Railroads must
adjust their economical difficulties by
some other means than by asking
shippers to contribute the funds
therefore. in the opinion of Interstate
Commerce Commissioner Franklin K.
Lane, as expressed at the hearing to-
day of the western railroads who
seek to obtain general raise in the
rates over their lines.
AS railroad officers in testifying
had declared there were the amount
OF rates charged, and the method of
Capitalization and financing - the
elimination Of the rate question by
the commissioner aroused consider
able interest among the railroad men
and attorneys preselt. They sought
to learn II the commissioner there
by implied there must be readjust-
ment of the method of financing big
carrier systems, but Mr.. Lane ignored
the efforts and continued to ask the
witness to whom he had directed his
startling remarks. pointed questions
on the amount and disposition of earn
ings of the railroad in question. the
Chicago, Milwaukee & st. Paul.
The witness, whose testimony evok-
ed this display of the commissioners
judgment of the merits of the rail-
roads present plea for higher rates,
was William Ellis, commerce counsel
for the St. Paul.
Mr.. Ellis had testified his company
was suffering from too much business.
/ that the increase meant an increase
in the unit of cost which grew faster
than the unit of income. thereby
threatening the yearly surplus Of
earnings above payment of dividends.
cost Of operation and the mainte-
nance. 7-7---y,', ,.At
Commissioner Lane then said:
AS the country develops there will
he more and more freight delivered
to you and as conditions are now. the
rates constantly must be increased.
according to the argument Of railroad
officials
| II regard it as serious menace to
the western country if the rates con-
stantly are to be increased. We must
work out this problem on lines 9TH
er than the proposed method Of rails
! ing the tariffs. If not. there is no
time when we can say the maximum
has been reached"
This unexpected development in the
rate hearing came as result of the
| inquiry into the St Paul's profits,
particularly from the Puget Sound
extension acquired in recent years.
Mr.. Ellis denied the commissioners
suggestion that the roads optimism
when it built the transcontinental ex-
tension had turned to pessimism now.
"Tf it had not been for that roal,"
I'VE would have had nothing from
operation to add to our surplus last
year. That extension added about
$2,500.O00 to the surplus in addition
to $2.5S9.573 from other sources. Our
total surplus is about S.o.00O,0O0."
He then told the commissioners
| that expense cost was overtaking
earnings and would continue so long
as more traffic was handled, as might
be expected.
Novel Reasoning
| In answer to questions put to him.
Mr.. Ellis said that if the gross in
come next year went to $4,000. 900
; from this years figure of $64.000.00O
, the percentage of profit would be less.
| DO you mean to say the cost of
doing the additional $15,000.000 in
business would be equal to that sum-"
was asked.
II mean the percentage of profit
would not be SO great" said Ellis.
! Attorney H. o. Lust. representing
the Illinois Manufacturers association
asked:
MIR. Ellis, you say your gross in
come last year from other sources
than operation was $9,OOO,000. What
are those sources?"
Chiefly the Puget Sound DIVISION"
he answered THE st. Paul owns all
the stock and in 1910 received $6,0O0.-
900 interest on the bonds"
What" interrupted Commissioner
Lane again. do you mean to say
the Puget Sound branch paid all its
operating expenses the first year and
in addition $4,000, 900 interest on its
capitalization?
well, that was interest for a year
and half. However" continued Mr.
Ellis, ut also earned a surplus of
nearly $3,000,010."
How was the Puget Sound division
paid for?" asked MIR. Lane.
by bond issue of $100,000,00O
sold to stockholders"
"And in addition to the surplus a
seven per cent dividend was paid on
that issue last year?"
yes"
about $13,OOO,OOo profit all told,
that is, for each $7.00O.OO0 or so
you paid out you received in this
space of time $1.00O,O0O?"
THAT is not quite correct You see
the st. Paul owns the surplus of $2,-
100000 of the Puget Sound line in
addition"