Arizona republican., 1910-09-21
Continue to Engage the Commissions Attention ENDLESS CHAIN DESCRIBED
Capitalization on Better
 ments Which Are Further
 Capitalized to Produce Surplus for Betterments
 to Be Capitalized Again.

Chicago. Sept 2d-The alleged manipulation of the railroads income to cover up earnings to compound it's income were inquired into today by the attorneys for the interstate com merce commission and the western shippers. of the officers of the Illinois Central in the hearing of the rate case, now in progress. Interesting opinions upon the propriety and dis position of earnings was given by general Manager Parks.
 Parks had told the commission that he thought a proper freight rate was one that rendered fair return for service to shippers and which. after paying a reasonable dividend on cap ital stock, paid fixed charges and operating and maintenance expenses, and would also give the company d yearly surplus of six or seven mil lions. ito make the investment at tractive to people with money. and to give the company credit"
 What would you do with this sur plus, just hold it?" inquired Attorney John H. Atwood of Kansas City, rep resenting the general shippers com mittee.
 No" was the reply T would use it for bettering the road. For in stance. I would devote a part to new depots. etc"
 But" asked Atwood, when that depot was built you would consider it part of the actual property of the company, and a proper subject for additional capitalization, wouldn't you?"
 of course" was the answer.
 Then when you later had capital ized it you would say you ought to be entitled to a reasonable dividend upon that capitalization"
 Yes"
 Then the simple fact is. you ought to be entitled to charge shippers enough to bring in sufficient earn ings, so that you can devote part to new capitalization and then get big return on it in the shape of div idends. do you? Is that your idea of what constitutes a fair tariff for the shippers?"
 The witness did not answer.
 Attorney w H Horton of the Hi nois Central sprang a surprise on Att tOrney IT. c. Lust of the Illinois Man ufacturers' Association. He asked: "Mr Lust, will you give me the names of four or five of your largest shippers?"
 Why do you want them?" return ed Lust in surprise. We represent shippers who pay S15O.OOO,OOO annual ly in railroad freight rates
 T want them" retOrted Horton. ito produce statements similar to ours, in which we will show that our returns on the investment are only 4.6 per cent. and see what their returns are Do I get the names?"
 "We will have a consultation" an swered Lust.
 Manager Parks introduced a new term in railroad nomenclature-"rai road intuition" He had been asked | by Commissioner Clements on what he based his opinion that the present physical valuation of the road is far in excess of its S2S5, ,0O0. 900 capital | iZation.
 Why, I haven't any exact data by which to determine the physical val uation," said Parks. T depend upon what I might call railroad intuition | yes, that is it--railroad intuition. You see a man can't do nothing for thir- | ty-five years but ride over railroads. campare property values and buy | new lines without gaining an intuitive appreciation of it's value I couldn't name any definite figures but they are much higher than the capitaliza- ton"
 | Chief Engineer A. s. Baldwin, who | followed Vice President Parks, said that because of the sO-called panic in 1907. millions of dollars worth of work was deferred and now demand ed attention. He said: Tn ten years we have raised certain wOrkmen's pay twenty five cents a day and as result we are getting less return for our money"
 The Illinois Central announced at the close of the session that it had put in it's case. It is understood that the next railroad will be the Chicago, Milwaukee and St Paul. tomorrow.