The Washington herald., 1914-04-28
RAILWAYS WORSE
OFF Than EVER
So Says G. S. Patterson. in
Plea for Freight Rate
Increase.
INCOME Is INADEQUATE
Brandeis Files Brief Attacking Pro-
posed Rise as Agent of Discrim-
nation and Injustice.

1T Is an absolutely new thing In thu
history Of American railroadins for {
year Ike 1913 or a period like 1910 tc
1913, when traffic wss the largest evel
recorded for a similar period Of time, Il
show the position OF the owners Of the
property 70 be verse OF than any pre-
vious years or periods" said George Pat
terson IN the course Of his argument yes
terday before the Interstate Commerce
Commission in the case of the Eastern
Carrie-s petitioning for an increase OF
6 per cent in freight rates.
The argument. begun by Mr.. Patter-
son. will continue until Wednesday. Ship
perS attorneys will be heard this after
noon and tomorrow. & Is expected, Louis
Z. B-andeis will close the case.
VIII Check Development.
Operating revenues are inadequate 10
keep pace with the expenses, and, &C
cordingly. the money expended in pro-
curing facilities has earned an inadequate
return since 1906, and no return since
$50 said Mr.. Patterson.
Tie effect of these things is that at
n time when the business Of the car
riers Is largest in volume, and when their
investments and capital obligations are
the largest, and their plant and equip
ment more complete and efficient, the
carriers find themselves face TO face with
a declining net operating income.
THE result of this tendency toward
diminishing net returns will be to check,
II not altogether stop, the normal de-
velopment of railroad facilities in this
territory. In the last ten years they
have been forced to spend S20e,GO0,OO0 a
year and an equal, il not a greater,
amount will be necessary for the future.
II the railroads are to properly handle
the business of the country"
Mr.. Patterson said that from 1893 to
1918 there has been a decline the ratio
of net operating income to property in
operating income to total capital obliga-
tions. and a decline in the ratio of sur
plus to total capital obligations. He
continued:
''Al of this shows decided weakening
in the position of carriers as regards
their return on investment, despite the
growth in the size of the plant, volume
facilities and improved methods of han
ding that business
Worse on Than Before.
Thus, during the last ten years the
carriers find themselves. after a period
of great growth and expenditure of new
capital, worse off than they were before
the growth and expenditure, though they /
should he materially better of"
O. z. Butterfeld, general solicitor of
the New York Central Lines. followed /
Mr.. Patterson. Mr.. Butterfield explained /
the propriety of certain OF the advances, /
and stated that they were absolutely
necessary. In brief. he said there has
been a decrease in the purchasing power
Of freight earnings.
If the railroads are not allowed to
charge such rates for their services as
will produce a proper return on their
capital asked Mr. Butterfield, then.
how long will those responsible for the
management of these properties be justi-
fed in continuing large expenditures Of
new capital for additional facilities and
equipment. even if such capital were
available at reasonable rates Of interest?
Have they not a duty to perform to
their shareholders and to those whom
they have induced to purchase their Sc
curities which must be considered. as
well as their desire to furnish better
transportation facilities for the use of
the public"
RraDdeis Files Brief.
Louis y, Brandeis. who was engaged
by IN" commission IN the present pro-
ceeding, filed a brief protesting against
The ; per cent increase. Among other
things the hrinf says:
Though a general need of greater
revenues be shown. IT seems clear that il
should be provided in ways other than
through the tariffs filed. The alleged
horizontal increase would intensity eX-
sting mj:sIice and discrimination in
rates. II would give additional revenues
where relief is not needed and would
Tail TO give adequate revenues to car
riers who are most in need OF relief. 1t
would burden some traffic already eH-
.rcmely remunerative to the carriers
and exempt from contribution another
which is unrCmuaerative. The prosper
Dus coal carrying roads would have their
revenue largely increased. Other roads, (
less prosperous. having n large passen- I
ger traffic. would get a much smaller ad-
iition to their revenues"
Clifford Thorn. representing Western
railroad commissions also filed brief ,
attacking the per cent increase.