The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1910-07-31

your friends.
/ You say that the railroads of thu
4 United States are capitalized at seven
teen billions and that you have moi
heard 1t claimed that they represent
| an actual investment of over eigh1
billions: that the remaining nine
| billions represents money earned by
the railroads ("extorted from the PEG
plep is your way of expressing III
and invested in the properties. Also
that in ten years (you do not say what
ten years. the railroads issued securi
ties of the face value of three and q
/ half billions, without the Investment
of a single penny Of original capital
Figures are Disputed.
If you had cared to make fail
statement instead of an infamma-
| tory and partisan speech you would
have stated that of the seventeen
billions of nominal capitalization only
thirteen and a half billions is in the
hands of the public; you would have
stated that substantially 20 per cent
of this capitalization paid no return
and that the entire return on out
standing capital was 5-35-100 per cent.
These figures were just as readily
obtainable from the report of the In
terstate commerce commission as
those you selected for your purposes
If you had cared to tell the whole
truth. l do not think it would be pos
sible to ascertain at this date just
how much "original investment has
gone into our railroads. Millions on
millions have been lost sight of; mil
lions wiped out by foreclosure. Yet
I am willing to venture my opinion
against you- that this "origiNel in
vestment'' far exceeds the eight bill
lions YOU allow, but even if we admit
this distorted view the earnings were
less than 10 per cent on this eight
billions
We know (and you know, because
you have admitted it) that the exist
ing capital probably does not exceed
the cost of reproduction. Your IDEA
therefore seems to be that the rail-
roads alone of all the industries OF
the country are not to be permitted
to share in the countrys prosperity
and growth, though they have been
the chief means of creating it; that
those who risked their money in rail-
road securities in the early days are
entitled to no profits beyond simple
interest; that although the Kansas
farmer has seen his land advance in
value four or FIVE hundred per cent,
due to the building of the railroad,
he should contribute to its support
nothing more than an interest on the
Original investment regardless OF
the risk the investor took and OF the
years when his return was nothing.
Permit me to ask you how you recon
cile this position with the statement
that you are mot opposed to the rail-
roads,
What is Fair Return?
Permit me to ask also (again as
Stunning the correctness of your theory
as to the amount of original invest
ment) what you would consider fair
return on this eight billions of dol
lars? We have seen that at present
the return is less than 10 per cent
on this amount Manifestly, you be-
lieve everything that is earned should
be paid out in interest and dividends
because any earnings that are put in
W Tie DIOpclty " yum
theory, not to be reckoned with as
giving additional value.
| All the moneys heretofore earned
| have been earned in accordance with
/ the laws of the land--the money clear
/ ly belongs to the owners of the prop
erty: they could have paid 1t to them
selves in dividends had they so de
sired. If. instead of so doing, they
decided to re-invest it in the property
/ taking securities in return, you pro
pose to confiscate it. Yet you are
mot opposed to the railroads.
+ | should like your authority for the
i statement that In any ten years o
4 the life of this country the railroad.
have issued $4,000 100000 Of secur
tiles for betterments and extensions
representing no actual cash outlay
The yagueness of the statement makes
it impossible to refute it by actua
figures, though know it is untrue /
very little study of the facts woult
satisfy you that there are few indus
tries in the United States that hav'
, as small returns in the last twent,
years as the railroads. whether fig,u1
/ ed on present value or on your allege
\ actual cost, 4 mere are lew COT
i spicuous examples of prosperity du
to favorable locations and rapid de
i velopment. just as such cases Will b
!. found in all kinds of business, but 20
! cannot legislate for these alone
> For Fair Regulation.
j 1t is truism that the country cal
Y not prosper unless the railroads ar
e prosperous, yet it seems necessar
r to remind you of it. Not day passe
d that we are not called on lin Kansa
!. for instance) to spend money for whic
l. we know We shall get no return. w
J are asked to pave streets, to elevat
e tracks, to build new stations and
i thousand and one other things tn;
q add nothing to our revenue, but whic
I: are demanded by the public safei
s and convenience. Most of thes
J. things should be paid for out
e earnings, but what if the earnings {
d, not permit?
A I am no foe to railway regulation
ID on the contrary, I have always favo
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