The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1913-08-21

"Interurban lines don't pay. That is
under the present conditions. Their
earnings are scarcely equal to their OPP
Grating expenses and depreciation. That
is the showing made By reports to the
railroad commission of Wisconsin"
This is the statement made by Presi-
dent Mortimer of the Milwaukee Elec-
trictric Railway and Light Company.
He continued:
"This decrease in development Of in
terurban electric railway systems dur
ing the last few years, as shown by
statistical reports of growth Of cleo
trio railway mileage, has caused inquir-
les in various quarters as to the rea-
sons for this lack Of development.
Relatively little new interurban rail
way mileage has been constructed in
the state Of Wisconsin in the last three
years. There has likewise been rela-
lively little increase during recent
years in the states of Ohio, Indiana,
Iowa and Michigan. Inquiry at the of
fee of the railroad commission of Wis
consin tends to show that none Of the
interurban lines in the state of Wiscon-
sin are what might be called paying
investments.
sit is true that very few interurban
electric railways have ever proved
either paying or profitable invest
ments. Such money as has been made
out of them has come through the sale
of the securities rather than from the
operation of the utility. Disappoint-
ments in the development of earnings
have been numerous and keen. These
facts are getting to be pretty generally
known by investors and those who have
capital for the development of such en-
terprises, and it is becoming correspond
ngly hard to obtain money with which
to carry on such work. Very few peo-
pie appreciate the low rate of return
which most interurban railways are
showing. A recent analysis of the in
terurban lines operated by The Milwau-
kee Electric Railway and Light Com
pany and Milwaukee Light, Heat and
Traction Company indicates startling
figures. After providing fair allow
ance for operating expenses and depre-
citation, the earnings of the Milwaukee,
Watertown line are about 3.6 per cent
return on the tangible property, exclud-
ing any allowances for the develop
ment OF the business or accrued deficits
in operation, and using the valuation
of the physical property as determined
by the engineering staff of the railroad
commission. Under the same conditions
the earnings of the Milwaukee Racine
Kenosha line have not exceeded 3 per
cent upon construction cost. The earn
ings of the Milwaukee-St. Martins East
Troy line have not shown operating ex-
penses and depreciation. These condi-
tions are typical of many others
throughout the country. They show
clearly why it is most difficult to obtain
the capital required for the construc-
ton of interurban railways when there
are so many other investments yielding
very much higher rates of return and
not possessing the hazard that is inner
ent in this business. Few men would
embark in an industrial enterprise ex-
pecting to make much less than 10 per
cent per annum on their money. With
many opportunities for such invest
ments it is not unnatural that capital
does not flow into the electric railway
business.
'For our own part we are not plan
ming to make any extensions to our in
terurban lines unless conditions change
so as to allow the capital which we have
already invested to earn something
more than government bond interest.
F'This situation is brought about by
the insuffciency of patronage and fares.
The expenses of such lines are fixed to
large degree. Under state and local
laws taxes and other obligations are set
and must be met, and under franchise
conditions and decisions interpreting
them other items of expense are impos-
ed, and labor and material follow the
market which has steadily climbed up
ward for many years. That fixes the
expenses. They can be met only by
earnings.
"In.order to bring the properties into
the earning class there must be more
condition of affairs. This con-