New-York tribune., 1910-09-23
ABSOLVES THE SHIPPERS
Mr.. Lane Apparently Thinks
Railroads Impose Upon Them.
ODD FINANCIAL METHODS
Counsel for St. Paul Road Tells
of Factors In Railroad
Management.

Chicago Sept z2-Raflroads must ADJUST
their economic difficulties by some other
means than by asking shippers to con-
tribute the funds therefor, in the opinion
Of Interstate Commerce Commissioner
Franklin k Lane, expressed during the
hearing to-day OF the Western railroads
which seek 10 obtain a general increase in
freight rates.
Railroad officers had declared that there
were only two factors in economically per-
feet railroad management, namely. the
amount Of rates charged and tho method
oe Capitalization and financing. The e!irnl-
nation of the rate question by the COM
missioner aroused considerable interest,"
among the railroad men and the attorneys
present They sought 10 learn II me Nohi-
missioner thereby implied there must oe
readiustment Of the method OF financing
big carrier svsterss but Mt Lane ignored
5ba EFFORTS and continued to ask the wit
ness TO whom he had directed ms reillaThs
,,o,n.ed questions on the amount and dis
-,,s;.,o, of earnings of tho railroad in ques-
tiop. the ChscaeN Milwaukee e. St Paul,
The witness was William Ellis. commerce
counsel for the ST Paul
F-Ilis had testified that his company was
suffering from too much business; that the
increase had meant an increase in the unit
of cost which grew faster than the unit
of income. thereby threatening the yearly
surrlus of earnings above payment Of divi-
5ends. cost Of operation and maintenance.
Commissioner Lane then said;
Rates Increase with Business.
As the country develops there will be
more and more freight delivered 10 you'
and as conditions are now The rates con-
rtsntlv must be increased, according to the
argument Of railroad officials ] regard
II rs q serious menace 20 the Western
country II the rates constantly are 10 be
Increased. We must work out this problem
,r lines other than by the proposed rasthoo
IF raising the ta-its- II not. there is no
s,r-e when we can say the maximum he's
been reached"
This development came as a result Of the
inquiry into the 81. Paui's profits par
t,c.,srlv from the Puget Sound extension.
Mr. Ellis denied the Commissioner sus
rss-ion that the roads optimism when II
built the extension had turned 10 pessl-
Tnism.
- - had no, been for that road he
said we would have had nothing from
ooeration TO add 20 cur surplus last year
That extension added about S2,59aee to the
.,,rnl,,s. IN addition TO s2.5S9,575 from otner
.ources our total surplus is about $5t'-
oooeeo.'
He then told the commissioners that eN-
r,ense r,oSt was overtaking earnings ana
would continue to do so as long as more
traffic was handled. as might be expected
Mr.. Ellis said that il the gross income
next wear went 20 S7sOso,oeo from this year
figure Of Ss4.ooOOOO The percentage OF proht
would be less next year.
A5r Lust. renresentinE the ILLINOIS Manu-
facturers' Association, asked: MI Ellis,
YOU say your gross income last year from
other sources than operation was ss'VVo'"o-
What are those sourcesE
Chiefly the Puget Sound division ne
answered 'The st. Paul owns all the
stock. and in 1910 received ss."eaee Interest
on the bonds
Commissioner Lane Surprised
..xbatr' interrupted Commissioner Lane
do YOU mean TO say The PuGet 0ouIiu
branch paid all Its operating expenses the
first year and In addition sh'"1VV ihteieS'
on its capitalization
..yYau thai WAS interest for a year and
= halt However" continued MIR. Ellis, 1T
also earned a surplus OF nearly S.oeo,Ooo
HON was the Puget Sound division paid
for?' asked Mr. Lane
BY bond issue Of Sloo0eo,oeo sold TO
stockholders
And in addition 10 the surplus a : per
cent dividend was paid on that issue last
vesr7''
Yes
About Sl2aosOoe profit ali told that is
for each 5000 .0to or so you paid out you
received in this space of time si.eo,Ooo?''
n -"That's not quite correct. You see the
u St Paul owns the surplus Of s2,2ga,eoO of
the Puget Sound line in addition
Frank Lyon, for the commission, inter
ruptcd 10 ask: IF that surplus were added
- the earnings Of the ST Paul it would
more than make up for the added cost of
labarg"
1t would
Then would like 10 call the attention
of the commission 10 the absolute failure
Of this company 10 include that sum in
the surplus given in their latest report TO
the commission"
Now" said Commissioner Lane. re-
suming, we come TO what I am beginning
to call the mysterious cause Of the ap-
parently increased cost OF operation. What
is ft?'
I'm tell you" was the reply. Every
session Of Congress or Legislature has de-
creased the earning efficiency OF the dollar
expended upon labor Eight-hour days.
sixteen-hour telegraphers' limitations. re-
striotions I'm regard to rest hours-au these
have cut down dollars efficiency. still
ray that labor is the big factor in in
creased cost.