The Detroit times., 1913-03-15
STOCK-WATERING is DE-
Tended BY F. w. STEVENS


their roads were needed for the sys-
tenn they would be fools TO do So
consider 1t perfectly proper 10 issue
securities In excess or cost, providing
at the time of the purchase the prop
critics for which the securities are
issued are worth what they cost TO the
* buying company. Ii is certainly to
f the advantage Of the people of the
\ state to have one system instead OF
\ being forced to change cars every 40
miles. This Is a big subject and
( there is diversity OF opinion upon it,,
and | have not studied into all of It's
\ phases but l believe that a railroad
4 company has the same lawful and
i moral right to be credited with the in
crease in value of its property as any
4 other owner"
You have suggested that the legis.
lature OF Michigan has not dealt fairly
with the railroads." said the senator.
That is my feeling said Mr..
Stevens.
Don't you think said Senator
Smith, that this has been due TO the
public feeling that railroad companies
have Issued securities which are water
Cd and are seeking TO get an income
on . sum much greater than their
actual investment"
If that is the attitude OF the people
It n hopeless for the railroads" said
Stevens. Most railroads were built
under the laws then existing, and were
desired by the people In the commun-
tiles which they touched. Investors
put their money into them in hope OF
return out OF future growth, otherwise
there would have been no money to
build them. / remember one Michigan
road which was built over a right-of-
way that was largely donated. 1t ran
Tor years through practically unin-
hAbited country. 1t Is inconceivable
that any one should now propose to
limit its earning power to q percentage
upon the amount 1t cost to build it
them
The profits of the Pere Marquette
s Tor the vcor 1903, which amounted TO
e1,616,0o0. were then taken up, and
Mr.. Stevens was asked how the profit
happened TO be SO large that year. He
said that 1t probably would not be that
large II the present system OF account
Ing were In use.
Il do not mean that any money was
improperly expended" he explained.
mean that sums which should have |
gone into operating expense account
\ were put into capital account to make
y the profit appear larger"
The purchase of the Frederick NJ.
Steel properties was taken up. These
u were three small roads aggregating
- 81 miles In bad condition, and ii
Is was suggested that they we're pur-
h chased to allow the road TO issue more
Y bonds under the mileage limitation.
II - cntd ha.
a brought In connection with a plan to
& shorten the road to Chicago and that
y the bonding proposition might have
had something though not much to do
with the purchase.
The examination then went into the
\ Consolidated Coal deal by which the
pere Marquette Is said to have lost
& considerable money. The road got its
\ interest In that property through its
uurchase Of the Huron 4 Western. In
4 Guiding q half interest In the Wolver-
NE Coal Co, operated by the Consoli-
% dated company, for S325.000. and the
r. assumption OF debt OF 100000. Only
o18. 900 OF the purchase price went for
y railroad. sp -,
81 was that good transactir. FOR
DfAe Pere Marquettee" asked Sen.
i< n thought 30 at the time replied
n ~. Stevens. but | am not 80 sure OF
Il now" ESQ. 's.,.
The hearing was adjourned Satur-
~ noon until next Wednesday. when
I. Crnmer, controller of the Pere
(nan0otte. will be examined Mr..
Y hg6os will be recalled March "a, to
$500 further questions. The com.
|1hno haa requested him to lok up
n1 things with relation to the
tn &C the road and the value OF
1Dortjoe ct that time.
ss1u,s $500; No fus: and