The Detroit times., 1915-03-04
Hemans Makes This
Claim In Railroad
Hearing
NOTHING AT ALL
FOR DIVIDENDS
Michigan Central Pays
Dividend Out of
Surplus

LANSING. Mich. March 3.-tspe.
ciaD--Passenger business done by
the railroads OF Michigan yields ap-
proximately $3.0oo.00O less than the
amount necessary 70 meet the inter
est on the funded debts OF the 50
roads IN the state.
An Increase OF one.half cent per
mile In passenger fares will net
Michigan railroads, figuring on the
basis OF last years business, ,ap-
proximateiy $500. 900. or only $780,
900 more than enough 10 meet the
present six per cent interest
charges.
These we're the figures presented
by Lawton T.. Hemans. chairman OF
the Michigan railroad commission.
speaking before the Joint railroad
committees of the house and senate
IN the final series OF public hearings
on the rate question. in response 10
a request that he present the infor.
'mation In the hands OF the body OF
which he is the head.
Theeeffect OF Mr.. Hemans' figures
we're nullined somewhat when. in
reply to question from Rep. Her
bert II. HOFFMAN. OF Sandusky. he
admitted that the railroad commits.
, sion had no figures other than those
furnished by the railroads them
selves. and could not. on the appro-
priation furnished for that depart.
ment by the state. conduct an indie
pendent accounting 10 determine
whether or not they were correct.
81 conducted a careful analysis OF
the figures In possession OF the state
railroad commission" said Mr.. He
mans. "and was surprised to nnd
that. out OF the Sc railroads doing
business In the state. 33 were not
earning enough 10 pay the interest
on their funded debts, laying aside
entirely the possibility OF paying one
cent OF dividends. In this 80 were
included the Michigan Central. the
Grand Trunk. the Pere Marquette
and. ! think. the G. r. & J. The
Michigan Central paid a small divi.
dent. but this was met out OF sur
plus and not out OF earnings My
/, investigation showed that the roads.
as q whole, lacked approximately
100000 OF having enough to meet
the interest on the funded debts.
"In view OF this condition OF af.
fairs, the commission Is bound to
say that the railroads OF Michigan
are not earning enough property 10
discharge the functions for which
they were constructed
Analyzing the relation OF passen-
ger revenues TO total receipts OF
aiichigan railroads, Mr.. emans
said that the cost OF operating
Michigan railroads amount approx.
mately 20 $4,000. 900.
From this expense a revenue of
Si,000.000 was returned and of this
amount passenger trafic returned
s2l.O00.000. The commission had
figured, he said. that passenger oper.
alton amounted 10 80 per cent OF the
entire operating cost and that. on
the basis OF this percentage. pas
senger business was yielding about
three million less than It's share. Of
revenue.
Mr. Hemans spoke at length on
the decisions OF the interstate com
merce commission In the freight
rate cases and laid great stress
upon the fact that, under |. G.. e.
rulings the roads are permitted TO
charge a two and one-half cent rate
on interstate passenger traffic.
while labor cost has increased
from an average or VIC a day TO
s2.46 a day. and while practically
every other Item OF operating ex.
pense has increased I'm the same
proportion. freight and passenger
revenues have been decreased ma
terially. The present condition of
railroads. not only in Michigan. but
throughout the entire central freight
association territory. Is charged Bile
directly 10 C lowering OF revenue,
per unit. and corresponding In
crease in the operating cost per
unit" said Mr.. Hemans.
/. II. G.. Beach. Of Detroit. who owns
n large lake near Ann Arbor on the
route OF the Ann Arbor railroad,
opened the case for the opponents
of increased rates. Mr. Beach re-
cited AZ length his particular griev.
ance against the Ann Arbor system.
declaring that he was In the ice bus
mess In direct competition with the
Ann Arbor railroad for several
years. Not satisfied with compet-
ing with him In business. the road
Insisted that he make an outright
/. Gift 10 u OF one acre OF land. from
which they proposed 10 get sand and
gravel. Upon his refusal to make
the gift. he declared. the Ann Arbor
road oficials ordered that the side
tracks to his lake. upon which he
had always paid a suficient rental
in addition TO regular freight rate
for Transporting his Ice, be torn up.