Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-01-10
Clyde Brown, Counsel for New
York Central, Starts Today.
COMMISSION IS INQUISlTIvE
Operation of Lines He Represents
Show Decrease in Surplus.
DROP OF $s,7oo,ooo in 1910
Representative of Meat Producers
Says cliepts' Protest Rates
Are High.

Clyde Brown, counsel of the New York
Central lines. greeted him when he
opened his argument today before the
interstate commerce commission, which
has under consideration the proposed
advances in freight rates by the roads
In official classification territory
Mr.. Brown said that the operations of
the lines he represented showed sur
plus OF 100000 in 1870 as against
a surplus in 1909 of s4.7OO.OOO Some
changes in the capitalization. corporate
income and in other ways had occurred
in the two years, he said.
DO you show" inquired Commits
sioner Prouty. IAN increase in operat-
ing expenses due to other reasons than
the increase of wages in 1902
Yes. some" replied Mr. Brown.
There has been a considerable increase
in the cost Of fuel, in addition to an
increase in the cost of other materials
and supplies used. There would have
been an increase in our operating ex-
penses during 1909 if the same wage
scale had been in operation as in the
year 191O.'
Mr.. Brown explained that the neces-
sity for great improvements and bet
terments had ipcreased the capital of
the lines more than 1 per cent, or a
total of 500. OOO,O in the year 1909.
Interest on Improvements.
In response to questions by Commits
sioner Prouty, Mr.. Brown said that the
New York Central had laid out great i'm
provements, which would cost $4,000. OCO
ION thata investment" said he. 1--WE are
required to make an interest return.
He said the railroad had in view the
construction of freight terminals on the
west side Of New York city which would
be enormously expensive. He said that
these improvements practically would be
for perpetuity. 1.-THE lands required in
this work are very valuable, and. OF
course, will be OF continued value" he
said.
Have you determined inquired Mr.
Prouty. "how You will take care of this
proposed $42.0O0O00 to be expended in
betterments?"
NO" he replied. Il understand tina,
had not yet been determined
Mr.. Brown explained that II the inter.
est charged had to be paid on the pro-
posed $42.00O.OOO for betterments there
necessarily would be a reduction of ap
proximately 81, 100000 in the amount PAID
to investors In New York Central securi
ties. The total capital Of all the owned
and leased lines operated by the New
York Central was stated to be 1858 600. OO0
on which the New York Central was
RESPONSIBLE for an interest and dividend
return.
1.-THE total amount paid in interest and
dividends to investors, said Mr.. Brown
lis about "A per cent of the total cap
italization."
Leased Lines Increase Capital.
In response to inquiries by Commits
sioner Lane as to the capitalization OF
the New York Central lines and why ii
should be 100000 a mile, while the CAPT
talization of the Pennsylvania railroad
was only 100000 mile, he explained that
it was due apparently to the large mile
age of leased lines controlled by the
New York Central on which it had to pay
certain absolute returns.
Clifford Thorne OF Iowa, representing
live stock and meat producers of the
middle west, declared that the shipping
interests which he represented were
not ready to concede that existing
freight rates were even reasonable
That was a question which yet had not
been determined. The principle in
VOWED in the pending investigation
was more important to the commerce
of this country. in his opinion, than in
any case since the famous Dred-Scott
decision.
He pointed out that the principal off,
Gals of the railways had maintained in
their testimony that they were entitled
to per cent for dividends and + per cent
for surplus, from which Improvements
and betterments should be made.
This would aggregate" declared Mr..
Thorne. twelve per cent. and would
amount to $4OO.OOO.OOO annually to the
shipping interests Of the country
Basis of Rate Making.
Mr.. Thorne urged that no fair basis OF
rate making could be obtained without
having first fair value Of the railroad
properties, and he insisted that such q
valuation should be obtained before the
roads were afforded an opportunity to
advance their rates. He admitted i'm re-
Spouse to inquiries by Commissioners
Prouty apd Lane that such a valuation
would beodifficult to get, but he believed
that 1t could be obtained If proper effort
were made.
THE point in this question is to get =
fair view of the operations of representa-
tive railroads for a REPRESENTATIVE period
of time" urged Mr.. Thorne.
My belief Is, from a careful study OF
ZIG rate SitudtIOH. tHaC the railroads O
this country are getting a constantly in
creasing income, and that the year 1910
was the best in the history Of American
railroads.
The need Of increased revenues to meet
increases In wages, in costs OF supplies
and materials, expenses OF proposed bet
terments and maintenance of credit were
arguments. all based on the present high
standard of railway operation and equip
ment, advanced by advocates Of the rail-
road interests at yesterdays hearing.
Arrayed against these contentious were
figures, presented by the commission. in
dicating q reduction in present prices OF
supplies over the prices of the preceding
decide. and increases in the income OF
railroads for the same period.
Many Representatives Present
Approximately $50 representatives OF
railroads and shippers were present. Com
missioser Clements, as acting chairman
presided.
J. J. Claire. J. A. Nee. w. J. Burke
H. F. Smith and Byron Robinson, en-
ployes Of the Baltimore and Ohio railroad