The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1914-05-25

But II they are to furnish the neces-
sary additions and provide new
terminals, without which the trafiic OF
the country can no more continue to
move than derelict can voyage from
port to port, the money will not
come, as magician catches coin, out
of the air. It must be either earned
or borrowed. To anyone familiar with
the conditions and requirements 1t
seems clear that both resources must
be drawn upon.
First Capitalization must be ma
l.erially enlarged. But the railroads
must be able to show that they can
earn fair return before they can add
to the principal OF their debt. The
very fact of additional capitalization
involves additional fixed charges. The
investor mus. be assured that such
earnings will not be prohibited by
THE law before loan can be placed at
/ q bearable rate Of interest. And the
higher the rate the greater must be
the future charge on traffic 20 meet 1t.
The country comes to stop be-
fore a financial mo thoroughfare,
/ from which no exit can be found save
through relaxation OF the rigid and
hostile prohibition of all rate ad-
vances that now absolutely negatives
the proper and necessary expansion
| of traffic agencies In this country.
Transportation costs the public
from one-third to one-half as much
here as in Europe. This cheapness Is
not purchased at the cost of The work
ingman In 1910, the average daily
earnings OF railway employees in the
United States were more than twice
as great as in the United Kingdom
and two and threeQuarters Zines
as much as on the Prussfan-Hesse
system in Germany.
Practically all increase In revenue
derived from added volume Of bust
ness handled .on--the railroads of the
country is nowsSabsorbeA by increased
Expenditure made up chiefly of en-
HANGED cost Of material and additions
to the scale Of wages. Yet there IL no
Icomparison between either the actual
efficiency or the low capitalization OF
our railways and those of our COM
lpetitors. "a
These figures show in round num-
ibers the volume of freight handled by
1.-The railroads Of four great nations,
with their average capitalization:
| ~ Tons
]. Of freight
! Capitali- carried
| zation per mile
per mile. of road.
United Kingdom $275,0o0 529, 622
England alone $3.50. $4,000 1888.
Germany ......... 109,7sS S27, 400
France ........... 139,237 1866
United States (1910 $4,000 1,071 ,0S6
Our capitalization per mile is from
one-half to one-fifth that Of European
countries partly because the initial
but largely because Of fixed differ
ence in policy. The American railway
makes improvements so far as pos
sible out of earnings or surplus, leav-
ing capital account to carry only new
construction. The European road dis
tributes earnings among its stockhold-
ers and issues new capital to provide
necessary betterments. The differ
ence accounts for The sharp contrasts
of the figures presented above.
The American policy Is in the pub
/. lie interest, because It tends to keep
fixed charges down. A management
can now take its time about replacing
| a surplus used for improvements
When the money has been procured
by issuing new bonds, the interes. on
those is mandatory charge and must
he added to the total to be raised an
nually from rates.
So far as the public Is concerned,
the American Policy is far better. And
it should be remembered that /. be-
came the American policy by choice.
not OF legal compulsicn, at a time
when arrangements had a liberty Of
action denied to them now
Second-The railroads should be
permitted to earn and hold a surplus
equal to so per cent OF the amour.
they pay out in dividends, to be held
for emergencies and applied to i'm
proved facilities. There are many
expenses, and new ones constantly
arising, that must not be added to
capital charge unless rates are to be
made that the public cannot and ought
not-be asked to bear. In addition to
the heavy demands of the ordinary
growth of traffic there are many ex-
traordinary expenses
Steel cars are good illustration of
the kind OF expense. They are coming
into general use. and It has been pro.