Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-09-25
STORY OF AN AGREEMENT
Case Declared to Have Been Pre-
judged by Commission.
FOR PHYSICAL VALUATION
Regarded by Many as Only Solution
of Railroad Rate Problem.
Morgan in Control.

Morgan in Control.
By W. g. Nicholas.
Special Correspondence Of The Star.
NEW YORK. September "a. 1910.
In the Wall street background and on
the ground floor there exists strange
confidence that the interstate commerce
commission is going to decide in favor
Of the railroads in the matter of freight
rates, and that soon after the November
elections the roads will be given permits
sion to mark up charges about as asked
for. There is nothing in the published
accounts Of the hearings before the COM
mission to Justify any such conclusion
On the contrary, the railroads have not
made a good impression and have made
numberless admissions under the cross
fire Of examination by attorneys for the
shipping interests. which suggest the ur-
gent need of a downward readjustment
OF freight rates in many directions. and
especially in the field covered by the
''short haul"
In spite of this, however, keen-scented
reporters and scouts who have been at
all the hearings and who have followed
every development closely rather lean
to the view taken by the banking in
terests and their devoted followers in
the street. The whispered theory in ex-
PLANTATION of this feeling is that the COM
mission will carry out in good faith the
alleged understanding that If the rail-
roads granted the demands of their
workmen for increased wages they would
be allowed to make up the amount by
taxing the public through the medium
Of a general raise in freight charges.
That the commission should have been
q party to any such contract carries
with 1t the imputation that the investi-
cation and inquiry now going on Is q
dummy affair intended to deceive the
public suggestion Of venality too in
people. None the less the impression
prevails in banking and high-up railroad
circles that the case has been prejudged
and that the verdict will be against the
public and in favor Of the Transports
ton companies. 1t is this feeling which
10 In large measure responsible for
the underlying strength Of the stock mar
ket.
Finding Is Not New.
The finding by Judge Otis of Minnesota
overturning the law of the state giving
It the right to Cypress railroads was
seized upon as a basis for a general hur-
fah In the stock market. There is moth
ing particularly new in the finding by
Judge Otis. Other states have been turned
down for passing laws under which,
their oficials tried to cinch the railroads
unJustly. The burden Of rulings under
such circumstances has been that it Is
illegal to place burdens upon the rail-
roads which are confiscatory and which
deprive them Of just and reasonable in
come on capital invested.
Judicial
just and reasonable return on money va
ries somewhat. being per cent in some
cases and Z per cent in others. Judge
Otis seems to think they ought to be a.
discussion Of that point made the range
B per cent to per cent 1t is certain
that there is no disposition anywhere out
side OF the extreme radical element to un-
Justly burden the railroads. At the same
time, the impression grows that in the
fnal adjustment of this rate question
every railroad will be a case by itself
and that its treatment by the interstate
commerce commission will depend largely
on the amount Of water or absence of wa
ter In the capitalization. From every
direction comes the cry for ply steal valu-
alton. which is believed to be. vitality nee
essary to complete and working under
standing of the question.
Discount Steel Statement.
accept Judge Gary's optimistic state
ments about the steel and iron trade at
face value. The Judge appears to have
been het up by reports that the steel
trust was going to oficially announce an
who knows anything about the steel and
iron trade knows that the great bulk of
new business during the last month or
two has been taken on at reduced prices
HhoS
est ebb In three years. Such being the
case, the indignant denials by Judge Gary
Of intention to make announcement of
further cut is not taken seriously. 1t is
good deal like the desperately wounded
man who was taken into the hospital and
who revived long enough to pronounce re-
ports Of his death as greatly exaggerat-
Meantime buyers OF iron and steel prod
ucts are ordering from hand to mouth
and refusing to enter into long time con-
tracts even at cut prices. This condition
hardly supports the public attitude taken
by Judge Gary. although 1t excuses his
very evident irritation. Talks like that
handed out by Gary are made use of by
the alert professionals for stock market
turns. The uninitiated and unsephisticat-
ed SPECTATORS on the outside take the
statements as being good dope and get
while these optimistic utterances are be-
ing issued from headquarters, brokerage
houses credited with intimate affiliations
with insiders were freely distributing
steel stocks One block of 1900 shares
vas sloped out through a single frn in
about q half an hour the other day and
the sale was openly referred to as being
for the account of very high-up insider
utterly discouraged at the trade outlook.
Value Of Pennsylvania.
Pennsylvania is one of the railroad
systems that would have nothing to fear
from physical valuation. unless it should
arouse the tax collectors along the line
70 increased activity. For long years
back IT has been the practice OF the
MANAGEMENT to put back into the prop
erty every year nearly as much a. was
paid directly to shareholders. The plant
has thus been fattened tremendously.
The case of the New York terminals
will serve as an illustration. These
terminals have cost the company about
SllO, 600 Coo of which about SJO0OO.OO0
was paid from current earnings, so that
the improvement stands on the books at
only s57.OoO.00o. The Pennsylvania cap
ftalization is about II per cent OF the
total railroad capitalization of the coun-
try. and it does about % per cent of
the freight tonnage recent publica-
ton shows that Pennsylvania gross
earnings per mile for the last ten-year
period averaged $4,000. as compared
with $4,000 for New York Central, and
$lS,S0O for Baltimore & Ohio. Present
figures are greatly in excess Of the ten
year average, but the relative proper
lions of the several systems remain about
the same. Judge Otis, by the way. ran
IN quite a good advertisement of the
hin railroad in his summary. He ap-