The Colorado statesman., 1910-07-02
THE RELATION OF RAILROAD
RATES TO GENERAL
BUSINESS.

To the Business Man: No mat
ter how Objectionable an advance in
freight rates may be to us personally.
we must recognize that an improve
ment in general business is dependent
on a betterment of operating and
financial conditions of the railroads.
That the operating results are most
unsatisfactory is readily seen by
the latest INTER-STAT COMMERCE
COMMISSION reports, which show
that for the nine months ended April
1st, 1910, eleven railroad systems, all
West and North of a line drawn from
Chicago to st. Louis, compared with
the same roads for the same period In
the previous year, had their gross
earnings increased about $50. .000. 100000,
while their net earnings showed de-
crease Of $3,500 100000. and for the
month of March, on the same compari-
son. they show an increase OF $1,000
10000 in gross and a decrease OF
1865, ,000.0 90 in net earnings.
Attention is called to the fact that
the wage increases, Except a small
amount,) we're not in force during this
period, and from now on these will
greatly increase the operating cost.
These same railroads had their taxes
Increased over the previous year
$500, 100000. or 149o and have to pay
higher rates of interest on their loans.
These roads covering the most pros
porous part of the country may be con-
sidered representative of general rail-
road conditions.
During the past three years OF poor
business, railroad expenditures for
maintenance were necessarily at the
lowest point, and in consequence their
motive power equipment and tracks
now demand a greater proportion OF
operating expense. No provision has
been or Is being made for the growing
demands of the country. and as trans
portation is the backbone of business,
its weakness or inefficiency cripples
every other condition; because all prod
ucts are valuable in the ratio with
which their accessibility to the con-
Stunning market.
1t is most important to the shipper,
that railroads at all times are fully
equipped to take care of an increase of
his business. The first eight months of
1907 demonstrated that the railroads
could not handle the business then Of
fered with any degree of satisfaction.
The financial conditions since have not
permitted them to even maintain their
then position. If the then volume OF
business were to come back supple
mented by the three years growth of
the country in the interval, transporta-
ton would be paralyzed; and what
would that cost the shipper compared
with a reasonable advance in freight
rates now? Such an advance would
provide the means for avoiding this
impending disaster. The iron horse
needs to be kept in good condition for
the same reason as the living horse
used for transportation. The team
ster knows that If his horse is not
we'll shod, well groomed and well fed,
and his harness and wagon kept in
good repair, that all he will save on
such economy will be many times
wasted in the efficiency of his trans
portation, and also add great expense
to the shipper. 1t is exactly the same
with the railroads: the shipper has a
right to demand that transportation
be ample and efficient; the success of
his business and the development of
the country are dependent on it.
The Investor: To do this, the rail-
road must show adequate returns to
maintain proper borrowing credit and
present a promising source of invest
ment to procure the necessary funds
to improve and develop the property
as needed. 1t is neither the railroad
president nor the shipper that controls
the situation; it is the investor alone
who holds the key; without his un-
invested dollar the railroad cannot ex-
tend or improve, no matter how great
the needs of the shipper or the country
may be.
With all the increasing cost of op-
Grafton. supplemented by ever in
creasing and burdensome legislative
restrictions concerning their earnings.
| in face of the fact that the average
dividend rate on railroads was less
than 3h per cent for the past six
years, and the United States Supreme
| Court in the case of the Consolidated
| Gas Company stated that &c per cent
was a fair return on money invested
in public utilities" with the average
freight rate in 1909 of three-quarteTs of
cent per ton per mile. the lowest in
nine years, the average passenger rate
per mile, one and nine-tenths cents,
the lowest ever reached is it any Won
| der that the investor holds back and
the Bankers demand high interest
rates from the railroads? The railroads
need 50 900 900 100000 to put their lines
in proper condition, and to increase
their terminal facilities at all points
that are even now a necessity. and
81, 900, 900, 100000 more for modern new