The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-08-02
NO CAUSE FOR ALARM.
Commission Points Out Reasons for
Recent Depression.


Tho commission. IN considering the
question whether there Is any cause for
alarm In the present railroad situation.
says:
1T was insisted during the hearings
that the carriers are facing n crisis and
that the need OF relief is so urgent rs
not to permit OF the orderly investiga-
tion Of the possible sources Of additional
revenue other than by the proposed freight
rate incrS,se The executives admitted
tho propriety and need OF n general re-
adjustment Of many OF their present rates
and practices. and the possibility OF fur
their economies and OF increased eff
cheney; but they insisted that grave and
serious responsibilities would he incurred
II we failed TO relieve the situation by
at once approving the proposed pei
cent. increase In rates.
THE principal danger suggested was
that the carriers would encounter great
difficulty in renewing their maturing
short term notes and other Obligations
unless investors We're assured that the
carriers revenues would be Increased Inn
mediately.
No Foundation for Fears.
SUBSEQUENT developments have shown
that there was little foundation for any
such view. During the worldwide imam
clal stringency prevailing In 1913 the
RAILROADS., III fpUlltlbn Win wa IT. 'itiNe
and the Industries, found Il difficult e
secure loans, however good In security
but with the growing ease In the money
markets this difficulty has largely dis
appeared.
According to the standard fnancia
journals, nearly s5O0,0o0.000 Of bonds anC
notes have been disposed of by the rail
roads since January !, 1914. Recently
s25 900 600 OF Baltimore and Ohio Rail
rpaH tor taken at pa
in an afternoon. The interest rates eN
acted were undoubtedly high as compared
. with those prevailing generally during TN
fourteen years preceding, but the burdc'
OF high interest rates IL not confined u
/ railroad securities.
THE credit of our railroads has un
doubtedly suffered in recent years, bu
largely from causes that were Independent
! OF their rates Their borrowing powe
has suffered relatively. because OF tn
great competition for money by Govern
ments States. municipalities. public ser
vice corporations and industries IL ma
suffered actually because of the mis-
MANAGEMENT of great railroad systems
international repute.
Confidence Impaired.
The conspicuous decline in the securi
ties of certain roads and the circum
stances leading up to the appointment
receivers for others have impaired IN
confidence OF the public in the stabilit!
I of railroad securities. This feeling o
| insecurity has been increased, first. b.
Z the fact that recklessly miscarriage
roads have been largely under the con
troll of powerful banking houses there
tofore considered conservative, and. sec
ondiy. by tho fact that the great road
have become interlocked with weak lines
either directly through stock OWNERSHIP
or by common directorships or otherwise
THE credit OF some OF our leadin
railroads has also been strained by tn
too free use OF II in urwise and some
times disastrous extensions of thei
lines. and even more seriously by the &C
qusltion OF properties not forming
part Of their railroad system or used a
all in transportation service The cam
paign OF publicity hereinafter referre
, to has also increased the strain on IN
credit OF tho railroads. But the earnn
capacity OF our railroads Ii so great tina
their credit will soon be restored II thei
revenues are conserved. The crop est
mates give promise OF greatly increase
gross revenues for the current fisos
year.
THE New York Central. the Pennsy
varia and the Baltimore and Ohi'
which. through their extensions and III
acquisition OF other lines reach prn'
tically all parts OF official classificatio
territory, have been properly presente
\ by the carriers in this case rs typical {
( the general situation. except rs TO II
Central Freight Association territor
Surely none OF these three lines is fa'
! ing a crisis.
: I'm determining whether there Is eau,
for alarm the amount OF corporate II
/, come enjoyed is important. Testifyir
| for the system the president OF the Penn
e sylvanla road admitted that for the'
lines, which earned in 1913 9,64 per cen
0 upon their capital stock there was 7
D immediate cause for concern In the pre-
Q ent situation, although they were in nee
= OF additional revenue. Its many line
8 with some exceptions in Central Freig
n Association territory, are earning net Il
l. comes which. when considered In reli
h ton TO the prevailing condition. Dug
= to dispel apprehension.
: THE president of tho New York Ce
: trail made a similar admission concernii
d his system. which earned in 1913 as
n system ii.os per cent. ~ net corpora