Audubon Republican. [volume] (Audubon, Iowa) 1894-1925, 1911-02-09

freight rates, NO article prepared by
anyone high in authority in the rail-
way systems of the United States, no
speech in either House of Congress
and no argument before the Commits
sion has demanded such widespread
attention and caused so much gener'
al discussion as has the article in the
Atlantic Monthly for January by Ed
ward p. Ripley, president OF the At
Gibson, Topeka and Santa Fe Rail-
road company.
The Railroad Earnings
Forcefully and convincingly Mr..
Ripley explains the cause of the ap-
parent large railway earnings in the
United States and points out the dan
ger OF forcing the railroads to earn
but certain per cent on the invest
ment. His article is on the relation
of the railroads and the people. That
portion of his article attracting the
greatest attention is where he calls
attention to the fact that the capital
ization of the Railways of the United
States averages nfty-nine thousand
dollars a mile, or almost the lowest
capitalization anywhere in the world.
He also says the capitalization OF the
railways of Great Britain averages
approximately three hundred and fif-
ty thousand dollars a mile. This diff
ference he points out is due to the
fact that on Great Britain railroads
all Improvements are made from their
capital including improvements such
TO- In al that haUn
earning capacity. So great a capital
ization as this entails the utmost diff
ficulty on the part of English Rail-
way managers and the maintenance
of the highest possible rates in or
der to pay dividends. In America, he
points out, the improvements that do
not create earnings have been made
from earnings and the capitalization
thus kept down. The earnings ac-
cordipgly appear to be large on the
capitalization and the public fails to
take into account the millions of dol
lars spent from earnings that are
constantly depreciating and will in
the course of a few years be value,
less.
Capital and improvements.
On this point he concludes Now
II railway is allowed to earn moth
ing over a fair return 1t will have
no earnings to invest in improve
ments; in that event II will have tC
make from capital improvements that
do not increase earning capacity; and
that would result in a rapid and
heavy increase of capitalization
Would that be fair to posterity? That
the English roads have piled up q
capitalization of $4,000 a mile is
very largely because they have paid
for all improvements and betterments
out of capital whether they increas.
ed earning capacity or not. Unable
to raise their rates high enough to
earn a return on this enormous cap
italization without imposing an In
tolerable burden on commerce, they
are now threatened with general in
solvency. This is the situation Am
erican railways would be facing in a
comparatively few years II the poll.
cy of narrowly limiting their net earn
ings, and thus forcing them to make
all Improvements from capital were
adopted"
Greater Safety Demanded.
Another forceful argument by Mr.
Ripley is that the public Is constant.
ly demanding greater safety. The
retrenchment policy of railroads dur
ing the past three years in restrict.
ing expenditures on improvement has
had a tendency to make a showing
OF big earnings. But the money not
spent for improvements during that
time must eventually be put into the
property and large amounts in add
ton to maintain the value Of the
roads. Increased earnings he says
are necessary to permit railroads to
make such improvements for the safe.
ty of passengers as will cut down the
present alarming death and injured
rate from railroad accidents.
I'm order to make their service
SAFE he says, many roads will have
to do an amount of work for the
strengthening of their tracks which
will amount practically to reconstruc-
ton of large parts of them, or, in the
case OF not a few roads, OF all Of them.
In the course of time all grade-cross-
ings between railways and between
railways and the highways, ought to
be eliminated. Many other costly i'm.
provements ought to be made to rem
der transportation safe: and the roads
are not only willing, but anxious to
make them as fast as their resources
will permit"