The Birmingham age-herald., 1914-10-24

fafced freight rates. sort of cure-ali or panacea
 If this commission wants 10 relieve the present emergency it better undertake to stop that little unpeasantness across the water. You can advance freight rates to your hearts content, t will still be hard to borrow money. That will probably continue until the war stops.
 Compel Higher Rate
 '.The carriers claim the present emer- gency will compel them to pay higher interest rate amounting to 1 or 15a per cent A substantial increase in interest charges occurred in 1885 19o4 and the lat ter part of 1907. On not one of these oc- casions did the carriers advance freight rates. They met the situation in another wiser manner A policy that decrees higher rates during periods of depression and lower rates during periods of pros perity would be intolerable. You would have fiuctuating scale of rates that would not be well for either the public or the railroads, Further than that. the advances would occur when the public could least afford them, and the reduc- tions would come when the public needed them the least
 The present emergency can be met in either one of two ways-first. by the use of accumulated surplus: or second by a slight reduction in dividend rates
 "The company that has wisely hus- banded substantial surplus during the past 10 years of unprecedented prosperity can now meet the situation easily by resort to it's accumulated surplus. company that has not ex- crciseo this precaution can reduce it's dividend rate
 We are concerned, primarily, with the notes or founded debt maturing The carriers say this will amount to about $500 900 000 during the next year. An increase of E per cent in tho in- terest rate on this sum equals $4,- a00.000. An average reduction of one half to one per cent in the dividend rate of these same carriers would equal SIP, ,5c0,00o. which is more than double the amount necessary.
 Take Care of Roads
 "The purpose of a surplus during or dinary years is to take care of rail road during lean years They have mad this surplus in the past. This should be used to tide them over the present pe- riod of depression. These carriers earned enough in 1913 to pay all oper- ating expenses. all taxes, maintain their properties better than eyer before in their history, pay all the interest on their bonds and debts and had enough left over to make a clean net profit of little over per cent on all the cap iLdl SiOck OutStdnuinb III the ndnQ5 ol the public. During the depression Of last year. this fell to 4.16 per rent. Fifteen years ago this amounted to 3.9S per cent. During the five-year pe- riod ending in 1902 this averaged 5.52 per cent A remarkable change cc cured after 1902. During the past 10 years, from 1903 to f9f3 the lowest point it reached was SOP per cent and the highest 97O per cent. Such large return on capital over long period of years has never existed before in all the history of American railroadipg.
 "On June 30, 1914 the accumulated surplus of these eastern carriers was S265, 0G0,000. The very purpose of al- lowing this large surplus to develop has been to meet just such situation as now confronts us.
 Tho average rate of dividends on all outstanding stock last year in the Cni- ted States as whole was more than double what it was 25 years ago. Dur ing this period the per cent of stock paying dividends on dividend paving stock has steadily increased. The aver age dividend rate in the United Ststes is more than one-third greater than 1t is in Great Britain, as given in the of- ficial reports to Parliament