The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1914-04-03
PRESIDENT REA
CONCLUDES THE
RAILROAD SIDE
Lake.and-rail Shippers Will
Now Be Heard in Opposi-
ton to Rate Increase
Asked by Roads.

| WASHINGTON, April 2.-Testimony
| of the eastern railroads in support of
their application for per cent in,
| crease in freight rates virtually was
! concluded before the interstate COM
merce commission today by President
Samuel Rea of the Pennsylvania sys-
tenn Beginning tomorrow, the lake
and-rail shippers will be heard in oppo'
sltlon to the increase.
Presidents Willard of the Baltimore
d Ohio. De)ano of the Monon, Smith
of the New York Central and Rea of
the Pennsylvania will be recalled for
cross examination as soon as counsel
can digest their evidence.
Mr.. Rea was on the stand nearly all
day. His statement and discussion of
the financial condition of the eastern
railroads related concretely to the
Pennsylvania system but he Indicated
that his observations and conclusions
applied alike to all lines.
Rea's Contention.
Mr.. Rea said that present rates did
not yield fair return upon the capital
invested; that the return had been de-
creaslng continuously, and that unless
the downward trend were arrested it
would undermine railroad resources and
cripple their power satisfactorily to
serve the public. He insisted that un-
crease their net income, serious re-
trenchment in expenditures for labor,
improvements and extension would have
10 be made-a policy which he earnest
oly hoped it might not be necessary to
adopt, because he felt that the public
interest demanded that well-mansged
railroads should earn reasonable re-
turn upon their efforts and their prop
erty. Mr.. Rea said that only recently
the Pennsylvania and some other lines
bad been obliged to curtail their oper-
ating expenses by laying off employees
and reducing the number of trains op-
Grated because Of the falling off of
freight, tonnage and passenger traffic,
which had induced heavy decline in
revenues.
Conclusions Reached.
Mr.. Rea's s conclusions, which he in
dicated applied concretcly to the Penn,
sylvania and generally to all other
roads, were these:
"l-The margin of surplus is stead
lily diminishing and the company is not
receiving any return either on the ad.
ditional capital invested or for the
value of the service rendered and the
facilities provided for public use.
2-Hnd there been no surplus in
earlier years, and had the whole of the
Improvements been paid for out of the
capital, the margin would now have
reached the vanishing point.
"8-If surplus steadily decreases,
improvements, if made at all, will more
and more need to be made out Of new
capital
"4-,But if the margin of safety de-
creases, new capital will only be raised
with greater difficulty and on more
onerous terms,
"5-Indeed, 1t is questionable wheth
fn 4
earn no income, the directors will be
justified In attempting to raise more
than modicum of what thew behave
necessary, as the effect must be to re.
duce the percentage return on the share
holders capital already invested"
Comparisons Made.
President Rea concluded his direct
statement with the following compari-
son of the condition of the railroads
in 1898 and 1913:
In 1893 the company was emerging
from period Of prolonged and very Sc.
we're depression, whereas III 1913 il was
at the end of great period of growth.
1t would be natural under ordinary cir
cumstances that the owners of the prop
erty should find themselves very much
better off in 1913 than they were in
1898.
In the fifteen years between 1898
and 1913, the company had the benefit
of the following;
An advance in certain commodity
rates.
'lThe abolition Of rebates.
The expenditure Of hundreds of mil
lions of capital for improvement and en-
largement Of facili and equipment.
GA consequent great Improvement in
efficiency and use of plant.
Investment Increase.
''In the fifteen years, 1898 to 1913,
property investment increased from
about $732,00o,OO0 to almost $l,3S7,-
100000, or rs per cent; operating reve-
nues increased from a little less than
45,000,000 to over $3.50 100000, or 1853
per cent, operating revenue per mile of
track operated increased from $s17s to
Sl5,261, or 81 per cent--the company
thus had during these fifteen years all
the benefits arising from remarkable
growth of business, both in volume and
density, which ordinarily under the law