The Detroit times., 1914-12-18
FIVE PER CENT
INCREASE GRANTED
TO RAILROADS
tContinued from Page on.,.

u
than for higher rates." he said.
Generally the commission held:
Joint rates between Official classi
ncation territory (tbe east on the
one hand and southeastern territory
the southwest and points on or east
OF the Missouri river on the other,
may be Increased not to exceed five
per cent OF the division Of the rate
accruing to the carriers In official
classification territory. II these In
creases involve change In the rela.
uonship under the long and short
haul rule between intermediate points
and more distant points outside Of OF.
fetal classification territory. relief
from the fourth section OF the act
must first be secured on regular ap-
plication."
Effect Of War.
THE conflict In Europe" said the
commission. will doubtless create un-
usual demand upon the worlds loan
fund OF free capital and may be ex-
pected TO check the flow OF foreign
Investment funds to American rail-
roads. II appears that our railroads
represent the bulk Of European in
yestment in this country. The rate
OF interest-the hire of capital-has
risen during the last decade and may
rise still further. II Is computed that
in the years 1915 to 1917 the carriers
must arrange for the payment or re-
funding of securities aggregating over
$500, 100000.
while we differ as to the relative
importance To be attached to the va
rious considerations presented, We
agree in the conclusion that ny virtue
OF the conditions obtaining at present
Il Is necessary that the carriers rev.
enues be supplemented by increases
throughout Official classification ter
ritory. Whatever the consequences
of the war may prove to be. We must
recognize the fact that II exists, the
fact that II Is a calamity without pre-
cedent, and the fact that by 1t the
commerce OF the world has been disar-
ranged and thrown into confusion"
"F'or the fiscal year just ended"
the commission continued, "the net
operating revenues as shown by the
carriers are lower than was estimated
or anticipated when the original re-
port was Issued. Not since 1908 have
the net operating revenues been 80
low as In the fiscal year ending June
last, From whatever comparative
standpoint used, the net operating rev.
enues of the last fiscal year must be
regarded as unduly low.
Revenues Low.
while the gross revenue In that
year declined only about "a per cent
the net revenue shrank approximately
IT. per cent!
"The fact remains that II the In
crease In depreciation and better
ments accounts In the last fiscal year
over the average for five years were
added TO their net operating income
for the last year, the results or OPP
GRAFTON would still fall far below a
fair return upon the amounts carried
,,pon the books as an investment In
property. -.
recent enlargement in expenditure on
roadway, newer type steel cars ana
locomotives.
"The testimony shows that while
some maintenance Is being deferred,
other maintenance deferred during
the last fiscal year Is now being made
and that the expenditures therefor
during the months OF July and Au-
gust measured up to the level OF re-
cent years. The testimony also shows
that transportation Is being reduced
through the laying of of employees
and cancellation of train service.
at was urged upon behalf OF the
carriers and investment bankers that
the war in Europe has created con-
dition which renders the diminution
OF the carriers net income menace
TO the prosperity of the country; that
the war has placed an added strain
mpon the credit OF carriers; that rates
lof interest will rise; that large vol
hme of railroad securities Is held
abroad and would be dumped upon
the American markets which would
mot be able TO absorb them without
great fall In price.
"With some OF these considerations
I'VE have, as commission, nothing
to do.
"We do not doubt that the finan-
cial problems of the carriers have
heen made much more acute by rea-
aon OF the war and IL we are to set
rates that will afford reasonable re-
Enumeration we must give considera-
finn TO the increased hire OF capital
"A well as to other increased costs.
IT Revenue Increase Impractical.
~The suggestions made in our orig
tnal report, OF methods whereby 10
increase net revenues. were not sus-
ceptible OF being put into immediate
oneration OF calculated to produce I'm
mediate financial results. The period
which has since elapsed has been en-.
tireiy too short for either purpose
Some testimony was offered on what
had been done OF undertaken In line
with these suggestions and estimates
were made by traffic officials as 10
the annual yield to be expected. These
estimates were not, based upon any
Accounting computation and can af
ford little guide as 10 what the re
suits will prove to be.
"The original report, besides the
Approving of q rate increase, sug
rested no sources OF additional rev