Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1914-10-29
CLIFFORD THoRNE BRINGS OUT
NEW THOUGHT IN HEARING
BEFORE COMMISSION.
SURPLUS SUFFICIENT
TO WEATHER THE STORM
on June 80 Aggregated
$2e5, 900 = Purpose Of Allowing
This Sum to Develop Has Been TO
Meet Such Situation as Roads Are
Now Facing.
Special to Times Republican.

=
Des Moines, Oct. 29-Chairman
Thorne, in presenting to the interstate
commerce commission the matter OF
the demand of the railroad financiers
for larger net revenues to tide the rail-
roads over the stringency. presented
one entirely new thought not brought
out in the previous hearing. He stated
that the railroads might meet the
present emergency. which is not pc
culiar to railroad financing, for ono
thing, by use OF their accumulated
surplus.
1t has not been generally known. but
Mr.. Thorne brought out that the &C
cumulated surplus of the eastern car
riers was on June 30 last 265,00O, 600.
THE very purpose of allowing this
surplus to develop" said Mr.. Thorne,
has been to meet just such situa-
tion as now confronts U.s."
He contended that the railroads must
stand the losses incident to the pres
cnt depression the same as other lines
of business. and that this surplus they
have should be used for the purpose
Tor which intended.
The company that has wisely hus-
banded a substantial surplus during
the past ten years." said Mr.. Thorne.
"of unprecedented prosperity, can now
meet the situation easily by a resort to
/ its accumulated surplus. A conn any
that has not exercised this precaution
can reduce Its dividend rate"
Suggests Dividend Reduction.
Regarding this latter suggestion Mr..
Thorne presents to the commission
these views:
I'VE are concerned primarily with
the notes or funded debt maturing. The
carriers say this will amount to about
ssOOoO0,oo0 during the next year. An
increase Of Ia per cent In the interest
rate on this sum equals s4.500.o0o. An
average reduction OF one-half Of l per
cent ii the dividend rate Of these Same
carriers would equal S12.5o0.000, which
is moro than double the amount nee
essary. II would not be asking much
TO have these carriers share the bur-
den Of the present emergency to that
extent. Many in other lines of indus
try will make much greater reductions
and some will earn no profits. But sucn
reductions are only necessary for the
weaker lines, those that have failed to
make wise preparations for such a sit
nations as exist now.
The purpose Of q surplus during
ordinary years Is to take care of the
railroad during lean years. They have
had this surplus in the past. This
should tide them over the present
period Of depression. These carriers
earned enough In 1913 to pay all oper-
ating expenses. all taxes. maintain their
properties better than ever before in
their history. pay all interest on their
bonds and debts, and had enough left
over to make q clean net profit OF a
little over 8 per cent on all the capital
stock outstanding In the hands Of the
public.
During the depression OF last Year
this fell to 4.16 per cent. Fifteen years
ago this amounted to 3.SS per cent.
During the five-year period ending in
1902 this averaged $50 per cent. A
remarkable change occurred after 1902.
During the past ten years from 1903
10 1918, the lowest point 1t reached was
$40 per cent and the highest 81 per
cent. being 3.07 per cent for 1918. as
above stated, on all capital stock held
by the public. Such large return
on capital over a long period OF years
has never existed before in all the his
tory of American railroading."
Surplus Aggregates $265, 100000.
Mr. Thorne then called attention to
the fact of surplus on hand last June
OF SECS, 900, 900. He also showed that
government regulation has not been
hard on the railroads but there has
been an enormous development of their
properties and Increases In earnings
The decision Of the commission shows
that the carriers in official classified
lion territory, as whole, had a net
operating income in 1913 Of $751; 00,-