The Birmingham age-herald., 1914-07-19

E-f1ERALD, SUNDAY, JULY roads carry the landowners corn and
 the iron fagnates metal at very low
 rates or even. as is suspected at a
 loss.
 The account books of the "Prussian
 Hessian Railroad company for the past
 30 years reveal how the state railroads
 have acted as milch COW for the state
 treasury. Between 1882 and 1912 over $1,250, 000, 900 has been taken out of the railroad profits and handed over to
 balance the state budget. This transac-
 ton is made possible by the fact that the s200,000,000 annual profit is far more than is needed to pay interest on and amortise the railroad debt The
 profits amount to about 7ss per cent on the railroad debt. But the railroad debt was borrowed at about 3B per lcent Of the original railroad debt of s2,S75 100000, $1,0S5, 100000 is in con lsols, of which nearly all bear 315 per Icent, but small portion 4 The state with its 7ss per cent from the rail- lroads makes on this money a clear profit of nearly per cent. The rest of the capital comes out of the railroad extraordinary fund" and the "disposi- toin fund" against which no interest bearing concols are issued; and on this lportion the state puts in it's pocket the
 whole of the 7ss per cent earned.
 In the matter of profits the states lapeptite grows. Twenty years ago it was content with 5h per cent, which lput clear 2 per cent in fits pocket. l When this coused objections the gov ernment pleaded that, owing to the bad condition of the state finances, it could
 not do without the per cent; but it promised faithfully that the milch COW 1 process should go no further. If profits.
 1t said, showed signs of rising still further. they would be cut down by means of a general rate reduction. De-
 spite this promise, profits were allowed to rise by yet another per cent on the capital invested; and the rates re-
 mained practically as before. This
 enormous profit did not result from
 management efficiency Judged by
 American standards the management Is lnot efficient The ratio of expenses to receipts has steadily risen The profit is due entirely to the vastly increased traffic, the carried freight being about two and half times greater than 1t was 20 years ago.
 In addition to substituting out of rail- roads the Unbalanced state finances Prus- l sia has created from the same source, vast state property. This is shown by l the railroad capital account. The rail- l fOdQ dulnlnlStraIlOn mas WrlIleu OH dn l excessive amount of the original small capital outlay of $2,S75, 5,000,00O. Altogether l SI50 100000 has been amortsed. So that l of the original railroad debt only $2, l25,- 600 remains outstanding. This judged l by European values is a ridiculously | small capitalization for 3S000 kilometres, nearly all double, treble, or even quad 1 ruple tracked, and splendidly equipped | As a fact the preesnt sale value of the state railroad system is appraised at $5,- 1 200,000000. The increase in value is due l to the putting back into .he roads of
 part of the profits; to extensions built out of profits, and to the natural rise in l land and other values. The difference
 between the outstanding capital debt of 1 two billion dollars odd and the present value of five billion dollars is the profit | and property of the state.
 l If the state were a private corporation
 it might point with pride to this result of l 30 years ownership, but the public would
 complain and threaten, and ask why a railroad earning 71s per cent and in addi- | ton creating out of profits capital values
 of three billion dollars did not reduce l its rates? That is the complaint in Prus- l sia. The state, say the comp1afnanrs,
 should cut rates heavily; it should be | content with the 31h per cent which it self must pay to borrow capital for railroad
 construction, and if it's finances suffer | then let it mend them by imposing prop l erty taxes. The high railroad rates tax l not property, but business, and they tax
 heaviest the business which can stand l it least
 charge that the roads are not efficiently | nanaged Reichstag member Gohre said | that the state might cut rates heavily
 and still pocket it's 7ss per cent if only | 1t economized in management. Herr l Gohre further showed that the roads lora ho1 offi afo1t To-, Cc lokne Chamber of Commerce it was | stated last year that counting passen- gers and train tons carried, the Prus-
 sian roads have 21s times as many of- ficials as the American roads, and that they have five times as many clerical l and other officials who do no physical work. 'The bureaucratic management l and the excessive staff would not" the | speaker said, "be tolerated by a private | corporation"
 Most persistent of complaints is that l the rates are fixed by bureaucrats who do not understand business, and are taught by their superi)rs that the rates
 should favor grain and iron exporters | at the expense of othe interests Bis marck had a plan for letting the diet
 fix the rates. This plan was not carried out. Rates are fixed by a nominated railroad council of state officials. This railroad council invites the cooperation
 of representatives of the business inter ests, but the representatives are only ad- visers, and have decisive vote. The interests, however. bring sufficient pres sure to push their points against non represei ted interests. The chief of the railroads, Minister of Public Works Brett erbach ascribes to this the high rates. He says that the interests themselves, in the zeal against competition have prevented reduction. Minister Thielan, l a predecessor, said the same thing. He described the roads as "a morse be- | tween contending logs for which there is no parallel even in America, where the trusts exploit the roads in their own interests"
 Critics emphasize this weak side of | railroad standardization. They say that where roads are privately owned the rates are invariably controlled by some public authority, and this public author .ty is in turn controlled by the egisa- ture, whereas in Germany the vital mat ter of rates is withdrawn from the legis- 1ature and handled by handful of un- l controlled bureaucrats.
 Many Like Him
 From Tid Bits
 Blanc sat disconsolately in the smok- s-..- Ixr Iz< T1l Al.< Al