El Paso herald. (El Paso, Tex.) 1901-1931, 1914-04-02
RAILROADS tell
Of INCREASES IN
OPERATING COSTS
Expenses Leap $5,OOO,OOO In
Three Years, Pennsylva-
MIA Official States.

Washington, D. c., April 2.-Presi-
dent Rea of the Pennsylvania system
was the last witness to be heard today
before the interstate commerce COM
mission on behalf of the eastern rail-
roads asking for an increase in freight
rates.
Chairman Harlan and commissioners
Clark and Meyer were on the bench.
J. T. Wallis, general superintendent OF
motive power for the Pennsylvania,
questioned by Clifford Thorne, ex-
planned that the steel cars and heavy
locomotives had induced an increase in
repair cost.
J. S. Rodgers, general superintendent
of the Pennsylvania, testified that
Charges to operating expenses on the
Pennsylvania system east of PittSburS
were S24,S55,62 in 1910 and $29, Al, 2lO
in 1913, an increase Of 1873 percent"
Railroad Situation Serious, Says Rea.
President Rea said that not only the
Pennsylvania, but all American rail-
roads were confronted with the neces-
sity of retrenchment, which might
prove serious unless they were per-
mitted to increase their earnings. he
said:
Unless the gap between receipts and
expenses can be Widened. we must be-
gin to retrench and retrenchment must
begin on betterments and improve
mentS not directly necessary to the
movement of trains. We should be
very reluctant to do this as 1t would
be to run counter to our traditions and
practice of half a century, and we are
sure that it would not be in the pub
lie interests and we don't believe the
public desires it.
Now we have as much public sup
port as can possibly be given to plea
almost national in its scope and we
firmly believe our application for a
very moderate freight rate increase IS
in accordance with the best public in
terest."
Declares Earnings Small.
While he did not assert that the ad
vance was contrary to maintenance
of the Pennsylvania Railroad cOmpa-
ny's dividends in the immediate ~
ture," Mr. Rea declared that any gen
eral idea that Pennsylvania position
is so strong as not to need any add
added that the Pennsylvania had earned
4.S4 percent during the fiscal year OF
1913.
Discussing the des:-a5ility or the ne
cessity to provide for future traffic
demands, Mr. Rea said;
We also know that it is unwise to
limit facilities.
Necessarily that involves a large
expenditure Of money thZt only grad
ually becomes available we know
that, judging from our past experience
many millions could be advantageously
expended on our system in the next few
years. We have confronting US pro-
gram of expenditures which we believe
to be essential, some OF them mainly
for the benefit of the public, but all
of them necessary to properly accom-
mOdate the present and future traffic.
Sums Up Situation.
Mr.. Rea's conclusions which ne m
dicated applied conceTtly to the Penn
sylvania and generally to all other
roads. we're these
The margin of surplus is steadily
diminishing and the company is not
receiving any return either from the
additional capital invested or for value
Of the esrvice rendered and the facill-
ties provided for pebble use.
Had there been no surplus in
earlier years. and had the whole Of the
improvements been paid for out of the
capital. the margin would now have
reached the vanishing point
3-If surplus steadily decreases, inn
provements, if made at all, viii more
and more need to be made out Of new
capital.
But if the margin of safety de-
creases, new capital viii only be raised
with greater difficulty and on more
OnerOus terms.
5-Indeed, it is questionable whether,
il new capital is to continue to earn
no earnings, the directors will be JUS
titled in attempting to raise more
than modicum of what they believe
necessary