Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1910-08-19

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but it never has, and I venture to pre-
| dict that 1t never will make those
books the subject of public investiga-
| ton"
$4,000 Mile is High.
| The senator shows that the estimate
he allows of sS,000,000. 900 OF independ-
ent capital invested in railroads, with
the addition of the investment known
to have beep made from earnings,
makes an average of more than $4,000
per mile of single track thruout the
whole country. II do not believe" he
says, that there is student of this
subject anywhere who will not agree
that $4,000 per mile exceeds the out
side capital put into our railways"
Profits Under Increased Value.
Regarding the other question raised,
that OF return upon. the cost of re-
production of the railroads, Senator
Cummins says: Whether you have
right to return upon In
creased value brought about by
general growth and development
is a disputed proposition, but
that you should exercise the right Of
determining for yourselves the extent
| of such increase and capitalize it, and
then insist upon rates being fixed ac-
| cordingly, Is not only absurd but wick
| ed. The government has a right to
know how much money has been put
into your enterprises, not put in thru
your earnings, but put in thru the
voluntary act of those who have taken
your stocks and bonds, but you have
so far persistently and successfully
concealed that knowledge"
Reasonable Compensation Defined.
AS to the correct method of getting
at the subject Senator Cummins says:
From my point Of view the govern
ment ought first TO ascertain the
amount of money which has voluntar-
/ lily been invested in the property Of
common carriers: and second It should
lvalue the physical property OF such
I carriers When ii has done these two
things we will be in position to deal
fairly, not only with the carriers but
with the public. While my speech at
Peabody was not directed to the de-
gree of return that should be permitted
on the one basis or the other 1 hold
positive convictions upon the subject
and l DO not hesitate to express them.
| Reasonable compensation for capital
employed in public utilities means just
what the word reasonable honestly
| implies A reasonable reward for cap
| ital invested in an unsafe or uncertain
| enterprise means a much larger per-
! centage than in a safe and certain en-
! terprise a reasonable reward in one
age Of the country may be exceedingly
unreasonable in another There is
| therefore no fixed standard. but 1t
| must be left TO the judgement OF the
! tribunals having jurisdiction over the
matter TO determine il. / do not be-
lieve that public utility corporations
| are entitled 10 a return upon the 'un-
earned increment altho they should
not be restricted 10 such intereS rates
as well-secured bonds command in the
market With the exception OF the
! right of way, railroad property Is
| pra cticaliy valueless unless used in the
business of transportation. and when
$50 used its value depends entirely upon
T, tn rates charged and collected. In
asmuch as the question always Is what
| rates are fair and compensatory. 1t
would be obviously illogical to ascer-
tain the value of the property by ref
erence 10 the earnings and then de-
terrnine the validity of the rates by
reference 10 the value of the property.
This process may therefore be dis
missed as not only unfair but I'M
sound"
Proper Basis for Rates
The senator rejects the theory adj
vanced by Mr.. Ripley of the cost of re-
production of railways as the proper
basis for the rates, but says that the
actual investment must be the general
guide. In conclusion he says
Il must not be understood as claim
I ing that earnings put into railway
property should not in any case be
considered in fixing rates. My conten-
ton Is that they should not be repre-
scented by additional stocks and bonds;
and If there are earnings which remain
after the payment of interest on bonds
and fair dividends upon stock, they
should not be considered as added cap
ital. for no matter whether the rates
under which such earnings are ac-
cumulated be technically lawful or I'M
lawful the people should not be COM
PEELED to pay unreasonable rates and
then be forever charged with the bur-
den of supplying a reward for the
capital made up of such unjust exac-
tions.
capitalization is Boosted.
This letter is already SO voluminous
that l Will not at present enter upon
verification of my statement that dur
ing one decade three and one-haf bill
lions OF dollars were added to railway
capitalization in excess of any invest
ment in railway properties. I will
little later give you my proof upon that
subject. I assure. however that the
proof is abundant and conclusive, and
the only error in my statement Is that
in my desire to be conservative I put
the amount about s500,o00,00o less than
1t actually is.
The real trouble with the railway
owners and railway managers is that
instead of Loyalty and finally accepting
the supervising and regulating power
of the government, and helping to
make the exercise fair and effective