The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1913-04-15

In this number attention will be called (1 to the
conditions which produced the deficits OF the last two
fiscal years. such deficits being the principal cause OF
the present receivership and the facts having been
presented In detail to the Legislative Committee by
Mr.. Stevens; and GU to a topic which has been the
subject Of more less loose comment, viz the growth
Of the Marquette funded debt the facts concern
Ing which also presented Ill great detail 10 the
Legislative Committee
To that Committee it was shown that the organ
iEation Of the Company in 1900, it started out with
funded debt Of $2522 900, against the validity OF
which has raised any question and "a very
large part OF which exists today, unmatured that our
my the first three years, under the Crapo-H eald al
ministration, there a increase i'll the funded
debt Of about &6,14SOOO, growing out OF new lines
acquired, new equipment purchased and extensive al
ditons and improvements made; that in the period
ending about December L, 1903 when the hrH receiv
ershp began there a net increase in the funded
and other debt Of about $25.530O0O growing out OF
the purchase of the Canadian lines at total cost OF
$3.50, 00O-the purchase of other property and OF
other lines referred to in previous numbers hereof
the extension to Chicago large amount OF add
tons and improvements,-the acquisition OF very
large amount of equipment including three car
ferries etc; that since December l. 1905 the net in
crease has been about 3D. 592 0OO attributable largely
to expenditures for additions and improvements and
purchases Of equipment, and in part to the deficits OF
the last two fiscal years arising out Of conditions to
be referred TO- 1t appears by Mr. Stevens testimony
that the total of equipment, including ferries
purchased by the Pere Marquette Railroad Company
since January l. 1900, SIS, 1883, 900, and that
the cost Of miscellaneous additions and improve
nents to the system additional total or
es,323.0cO.
Now, railroad company operating in Michigan
during the last II years has been able out of it's
ings, to pay for any considerable part OF the
equipment the additions and improvements which
the progress of the time has demanded 1t follows
that they have been obliged to increase their funded
debt
Quoting from Mr. Stevens testimony:
There has been a good deal said about the in
of the funded debt of the Pere Marquette
during the last II years. And | get the impress
sion that of those who talking that
subject have understanding that it is
tOmary for companies to increase their indebted
and that the company that is in debt is
therefore IN bad condition That does fol-
low at all. Some of the strongest companies in
the United States very large borrowers Of
money. The ordinary development of business
necessarily results in increased capital require
lnents Not always, not often, is 1t practical to
meet those capital requirements by the sale Of
stocks; and it is common thing for industrial
companies in prosperous condition to borrow.
Indeed the banking business would be reduced very
materially if that were not the case. Nor is it
peculiar to the Pere Marquette among railroads
that its bonded debt has increased. | have fig
ures have not looked up any other companies;
but l apprehend that If you take any railroad
company either in the middle states the eastern
states or the western states you will find that
entirely aside from it's financial standing in the
community it has increased its funded debt every
year. 1t Is q necessary incident OF the develop
ment OF any large business that it provide itself
with more money for capital purposes either by
the sale OF stocks or through the increase of it's
Indebtedness"