Los Angeles herald., 1910-10-13
McCREA SAYS EXPENSES
CAUSE RAISE IN RATES
President of Pennsylvania Rail-
road Before Commission

WASHINGTON, Oct. 12.-President
James McCrea of the Pennsylvania
Railroad company was a witness at to-
days hearing before the interstate
commerce commission on the proposed
advances in freight rates by railroads
east of Chicago.
Mr.. McCrea urged the necessity OF
the proposed increases on account or
the increased expenses in wages in
Cured by roads during the last ten
years, aggregating SO per cent In the
case of the Pennsylvania, and the IN
creased cost of maintenance OF service
The witness said the results Of the
constant increases in the business or
the Pennsylvania, through a long
period of years, had been distributed
either through reduction in rates, IN
creases in wages and amounts PAID FOR
material, or by reinYestments IN prop
erty not capitalized.
He expressed the belief that a prop
erty of the magnitude of the Pennsyl-
vania railroad rendered service salts
factory to its patrons and deriving,
as it did derive in 1909, net earnings
to the amount of only Sol per cent or
the amount actually invested In the
property" was entitled to fair consid-
Grafton by the people, and he could
not understand how rates that secured
such results could be regarded as too
high.
INCREASE IN ROAD EXPENSES
At the opening of the hearing Francis
I. Goaten, general counsel of the Penn
syIyania railroad, said the expenses or
the eastern lines, through increases in
wages and cost of supplies, recently
had been increased approximately
S34 900. 900 a year. Under proposed adj
vances in rates, earnings would have
increased about $27.000,000 year.
President McCrea testified that in the
last ten or twelve years the company $
lines east of Pittsburg had expended
S262, 100000 on improvements.
Notwithstanding the increased cost
of living, said Mr.. McCrea, the $1,000
stockholders of the Pennsylvania rail-
road-one-half of whom were women
and chlldren-were receiving the same
amount in dividends now as they had
received during the last ten years, al
though their expenses had increased
proportionately with those of employees:
Mr.. McCrea testified the Increased
inroads on the income made necessary
the advance in rates. He asserted the
Pennsylvania never had been operated
with greater economy, efficiency ana
skill than now, and he believed that
the operation was honest.
GRAFT CHARGE Is DENIED
"How do you know?" inquired Louis
D. Brandeis of Boston, representing
Atlantic coast shippers, that such
things as have been developed in the
Illinois Central graft are not occur
ring in the Pennsylvania system p
81 don't believe such a condition
could exist because of our system or
reports and checking" said Mr., NC
Crea. ST know, too, through my 1aith
in the organization and in my. conf
dence of the human agencies involved :
Mr.. McCrea then declared:
'eWhat this country needs and what
has done so much to develop it are
TRANSFORMATION facilities. At this time
I feel that improvements are very bad
ly needed. Any scheme of rates that
does not provide for that, treating the
railroads as a broad proposition, viii
fall short of what the country abso-
lutely requires"
Mr.. McCrea expressed the opinion
that any properly capitalized company
economically managed, should earn
minimum of per cent, particularly on
account of the increased cost of living
He said it formerly was the Penn
sylvania's policy to put in dollar OF
Improvement for every dollar paid in
dividends, "but unfortunately we nave
not been able to continue that policy. :"
In conclusion Mr.. McCrea declared
the present situation could be met in
no other way than by an advance In
freight rates.
Asked by Commissioner Prouty as to
future railroad developments in new
territory, Mr.. McCrea said he believed
no money would be available for new
railroad enterprises.
"It is not possible" he asserted.
eve cannot get the money anywhere
for that sort of exploitation"
The Interstate commerce commission
has decided to suspend the effective
operation of the proposed rate in
creases on eastern lines until Feb
t.t1aru