Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1914-10-19
WILLARD ON STAND
ASKS RATE ADVANCE

standing obligations which will nat,
and must be met within the nov, =.
months alone. It was shown in the o.,l
inal record in this case that the r,S
roads in official classification terr,,os.
only had spent approximately 5000 nm n.
per annum upon their properties for =,
provements and extensions during .,
last 20-year period, and It will be poo,.
sary to continue such expenditures 4, n.
roads are to maintain their standard ~
service and provide for the growing neoS.
of the future.
VAST FOREIGN HOLDINGS
"Further, as. nearly as can be asco.
tained, there are more than $1,000, Ooo mn
par value of American railroad securi,,..
held abroad as investments The deno,a.
for cash in Europe, growing out OF ~.
present situation, will doubtless resuIt \.
large selling of such securities when ~.
markets or stock exchanges are aeoi.
opened, and the possible effect of suoh
selling upon railroad credit and rela,oa
subjects is causing much concern.
with all this in mind, 1t will roaan.
be seen that the available supplv =,
| and probable demand for new caut,ai
as well as the interest rates thereon
are matters of great importance, not onis
to the railroads, but also to those vbs
depend upon them for transportation"
DECLINE IN DIVIDENDS.
George NJ. Shriver, vice president of ths
Baltimore and Ohio Railroad, followed
! Mr.. Willard on the stand. Mr.. shriver I.
| , ,I,o 81.
I ing officers, appointed to compile data for
!. the railroads as n whole. His figures GOV.
cred period TO June 30, 1a14. The igures
! showed that the railroads in this territorv
| paid In 1914 average dividends of ASS per
| cent, but that they fell short by SS 1000
| of earning that dividend, the dividend he
| ing the lowest rate paid in ten years. 1Is
| figures showed that the year 1914 was the
! first year in Is years in which these rail-
roads earned no surplus over dividends
| paid
The surplus or margin after an average
dividend Of 553 per cent. of the pennsyl-
vania, New York Central and the Baltl-
more and Ohio in 1914 was si6l, ,235, while
in 1919 It was siG0S3.Ooo, and had averaged
| s2S T33. 900 for IL years.
Mr. Shriver went on to show that all
OF the railroads concerned in the petition
for higher rates during the last year had
invested S2i9 100000 additional in their
properties and that their net earnings
were S7O.50O,OOO less than in 1918 Oper-
atlng revenue in 1914 was Sl,375, 900 000 a
decrease of SIS, 0O0.0o0 from 1913 although
operating expenses were $22O0O,00O larger
than in the previous year. While the
business handled in 1914 with the excep-
ton of 1913. was the largest in 10 years
the net operating income was the smallest
in 10 years. Taxes paid increased S2,90000O
in 1914.
STATEMENT OF THE p. r. r.
Supplcmenting the statements of the
Baltimore and Ohio officials, the East.
ern railroads supported their contention
for the need of advanced rates upon
showing of the three principal railroad
systems in this territory, the Baltimore
and Ohio, Pennsylvania and New York
Central. Samuel Rea, president of the
Pennsylvania, did not address the COM
mission, although the financial statement
of his road was one of the most interest
ing presented to the body 1t declared:
Since 1905, the Pennsylvania Railroad
system has invested $512. .325, 900 in addi-
tional railroad facilities, yet in 1914 the
systems net income from operations was
$2,SiO5SS less than it was before the S5l2,-
525 900 had been spent
Hf ltlUSNlNatlh system earned last
yeat $40 per cent. on its capital obiga-
tions of 81, 263, ,3S5,S73 That was the lowest
ratio of earnings to total capital oblIga-
ticn for Is years. The amount of money
Invested in the railroad property of the
Pennsylvania Railroad system is now ST.
4iS,l65.22S. On this sum the system earned
last year 4.iS per cent, the lowest ratio
in Is years.
THE total property investment of the
Pennsylvania Railroad system exceeds its
total outstanding capital obligations in
the hands of the public by s1S4 4.779, $50.
After paying expenses, interest on
bonds and dividends. the PENNSYLVANIA
system had at the close of the fiscal year,
1914. a surplus of sl0,il7,53l, and out of
total operating revenue of 1869, ,925 303 a
surplus of less than per cent was car
rled forward out of the years earnings
This surplus was the lowest in Is
years, and was less than one-half of the
surplus realized in all but two of the Is
years"
GOVERNMENT HOSTILITY ALLEGED
Moritz Rosenthal. of New York, who
appeared in behalf OF and as a member
OF the Investment Bankers Association
OF America, said among other things:
Il am assured by some of the best
bond men in the country that many, il
not most of their clients, now have the
settled conviction that Government. both
Federal and State, Is antagonistic to the
railway systems.
There Is a real basis for this belief
There has been for some years past a
Nrulence of utterance in legislative halls
ana perhaps IN other quarters, a willing
ness to criticise indiscriminateIy, 10 inn
pute motives without evidence, TO assume
suit as charged, and to condemn with
out trial, that, to say the least, certainly
evidences hostility. do not think that
this Is a harsh criticism, particularly in
view of the fact that the Government has
failed I'm practically every one, II not
all of It's great criminal prosecutions in
stituted under the anti-trust acts since
1905. Many laws are enacted which, If not
born I'm hostility. have been passed in in
difference to railroad welfare Suits TO
dissolve consultations and Congressional
Investigations however justinaDle in some
instances, have all contributed with un-
ceasng frequency 10 the sentiment now
so general, that government is against the
RAILWAYS.
ITO practical bankers the immediate
thing is not whether this commission be-
lieyes that railroad earnings are sufficient
to show n proper margin of safety over
charges, but whether security purchases
think so; and that I contend is proper
factor for the commission TO take into