Omaha daily bee., 1911-02-20

NAhANAN NFNemMeas
CHICAGO Feb. Ito the Editor Of
The Bee: ! beg 70 call your attention to
certain statements In the editorial entitled
How Business Holds Tn" published IN
your issue OF February rs. 1911. which are
apt to mislead the very large constituency
which reads your excellent paper You
state that the earnings Of the railways Of
the United states In the year 1909 showed
vast Increase over those Of the pre-
cedlng year I assume that you refer to
the fiscal year, as complete figures for
calendar years are not obtainable Il Is
not true that the earnings OF the fiscal
year showed vast increase" over those
OF 1908 Gross earnings were a little
larger, but meantime there were some in
creases in mileage and the result was that
gross earnings per mile in 1909 were actu-
ally smaller than they were in 1905. being
NOS56 in 1909, as compared with SO 49i in
1905
You state that gross earnings in 1910
were larger than In 1909. This ia true
But the gross earnings per mile in 1910
were only little more than in 1907, being
sll,Ss in 1907 and 81 $50 In 1910 You fur
Their state that earnings thus far in 1911
are sim showing Increases and II they hold
up for the rest OF the year proportlonately
viii outstrip the records OF 1910" This
statement, II Il refers TO gross earnings,
Is correct. But gross earnings considered
alone are unimportant II IL the amount
OF net earnings that determines how large
return shall be received by the capital
invested In railways and how much money
the railways will have with which to make
permanent improvements. Now, Il is not
true that net earnings are increasing
Net earnings in 1907 were s. 696 per mile
I In h.as
1903 they were 1856. The increase in 1909
over 1908 was entirely due to enormous re-
auctions in operating expenses. The extent
of these reductions Is indicated by the
fact that In 1907 operating expenses were
T'6S per mile, in 1908 1890 and in 1909 only
t6'SSl The reductions In operating ex-
penses during these years were made
necessary by the hard times They repre-
scented the. Withholding Of expenditures
which we're needful to keep the properties
up to the physical condition that they
were in when the panic Of 1907 came. The
large Increase in gross earnings in the
fiscal year 1910 prompted the railway man
agements to begin making the expendi-
lures necessary to restore the roads TO
the physical condition that they were in
IN lSOh The result was a rise in operating
expenses to S7727 per mile In spite Of this
-'ANA NNN'N III NhNl dNilH expenses. net earn
ings in 1910 were 1898 per mile. Unfor-
tunately for the railways late in the fiscal
year ending June 30, 1910, and during the
succeeding months up to the present time
many Increases in operating expenses have
taken place these consisting principally of
advances in wages, which have been
causing heavy reductions in net earnings
In the four months ending October 81
lelO-these being the latest months for
which official figures for all the railways
of the country are available-gross earn
ings Increased S44,O47. $50 while operating
expenses increased $6s55l .27s. which caused
decrease in net earnings as compared
with the same months Of last year OF sIq. -
Oo5'N9 Meantime taxes increased 81. 7ss. sis
causing a reduction in the net income NJ
the railways OF $22242622.
You say in your editorial .~rbere are
systems OF bookkeeping. Of course. thar
'''ay effect appearances, but swollen traffic.
enlarged earnings and shrewd management
ought to produce a healthy condition and
satisfactory profits" You are incorrect
IN your statement that there are SYSTEMS
OF bookkeeping" There is only one system
OF bookkeeping In use on railways engaged
IN Interstate commerce. and that is the
system prescribed by the Interstate Com
merce commission. 1t was repeatedly i'm
piled in the recent hearings involving
advances in freight rates that the roads
had juggled their accounts but when the
lawyers and other representatives OF the
railways challenged those who made such
limitations to Introduce facts to sub
stantiate them no facts of that sort were
forthcoming. The managers OF the rail
ways are charged with the duty OF raising
capital for the development OF these prop
critics, and for them to so juggle the ac
counts as to make the properties appear
less prosperous than they actually were
would tend to drive capital away. The
Arrangements have a stronger reason than
anyone else for trying to make II appear
that the properties are prosperous, and
every imputation that they have or may
so juggle the accounts as to make It ap-
pear that they are unprosperous is base
less.
hope you will give as wide publicity 10
the foregoing as was given to the state
ments in the editorial in question
ID. MILLER. President