The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1910-06-21
Railroads Not Over
Capitalized as a Whole
w w. Baldwin, of Burlington, Answers Clifford Thorn
and Gives Information to Railroad Capt.
talzation and Earnings.

attention is again called to your re-
cent issue containing statements OF
Mr.. Clifford Thorne.
| When | exposed tie deception at
tempted by him in stating that rail-
road net earnings increased S315,000,-
| 600 between 1900 and 1907, that asser-
ton was promptly dropped, and effort
made to divert attention to the subject
of "watered stock"
| referred to this constant err to
the public about railroad watered
stock as "a stale falsehood"
1t is falsehood, and it is stale.
Taking the railroads of this country
as whole, there is no watered stock:
and the figures given by Mr.. Thorne
upon that subject are concocteo fig
ures.
Upon the general subject of watered
stock of railroad companies, the public
may properly note the views of two
eminent anti-railroad authorities, Hon.
Martin l. Knapp and Col Theodore
Roosevelt
Mr., Knapp has been for many years
Chairman of the Interstate Commerce
commission. He said recently:
i regard the common talk about
the Observation-Disclosures of railroads as
wholly ignorant and mistaken. / be-
lieve that in far more instance than
the people suppose fair valuation at
TINS time would give figures exceeding
the Dresenf estimate
Colonel Roosevelt said, in a speech
at Indianapolis:
There has been much wild talk
as TO the extent of the oyer-capitaliza.
ton of our railroads. The census re-
ports on the commercial value of the
railroads OF the country, together with
tne reports made to the Interstate
commerce Commission by the rail.
roads On their cost OF construction
tend to show that as a whole tbe rail.
road property of the country is worth
as much as the securities represent
ing IL, and that in the concensus OF
OPINION OF investors the total value of
STOCKS and bonds is greater than their
lotal lace value, Notwithstanding tho
water that has been injected In mar.
tlcular places. The huge value of FOR.
mlpais, the immense expenditures in
recent years in double tracking and
improving grades, roadbeds and str,c.
lures, have brought the total invast-
hents to a point where the oninion
that the real value is greater than
the race value is probably true
VINO is 1ndulging in the wild talk"
ABOUT the railroads being over-capital-
lzed? Such men as Mr. Clifford
Ihorne, who seek public office BY such
means.
Mr.. Knapp says this common talk
about railroad watered stock is Who'll
~ ignorant and mistaken"
In the case of Mr.. Thorne. If is
neither Ignorance nor mistake.
He states that the average capital
per mile of the railroads of the cou1-
try is s73,265.
That is untrue.
quote the following from the Tween
ty'Ihlrd Annual Report of the Inter.
state Commerce Commission:
The amount of railway capital in
Guiding stocks and bonds outstanding
IN the hands of the public on June 40
lsOS, was S12,840,091 1852, which, If as.
signed on mileage basis. shows a
capitalization of $57,2S0, per mile Of
line
Mr.. Thorne stated the capitalization
TO be almost one-third larger than it is.
on this authority.
On page rs of the Statistics Of
Railways" issued by the Commission
for the year 1907, appears the follow.
ing:
Inc net amount outstanding in the
hands of the public on June 80, 1907. if
assigned on mileage basis, shows a
capitalization of S5S,29S per mile Of
line. This figure represents correctly
the average capitalization of the rail.
ways In the United States, meaning
by that phrase the amount of active
capital to be supported by freight and
passenger rates.
4 This shows a reduction Of Al osq in
a year.
With these official figures before
MN, why should Mr.. Thorne state the
average capitalization as being s73.
265? s 9'o'
In fact, the figure s57,28o is very
much larger than the facts warrant
For the year ending June go 1908
more than one-third of the stock did
not pay a dollar of dividend. That
amounted to over $4,000 per mile for
the 2S3,617 miles of road.
This is purely nominal capital n
Ils issued, but is held for purposes of
control. No rates are charged nor
money collected from the public 10 on.
able a return to be paid on a dollar
OF TINS capital 1t is not active cant
tai to be supported by freight and
passenger rates" as defined above nv
the Commission. If that s10.0oo nor
mile Is disregarded, the active ont.
standing capital is only $47.2So ner
mile. compared with $73,255. stated Inv
MI Thorne. that is, he overstated # =
per cent.
IN the same way, considerable mart
OF the bonded and other indehtedness