Little Falls herald. [volume] (Little Falls, Morrison County, Minn.) 1889-1950, 1915-09-17
RECREATION DID NOT WRECK
ROAD

Washington, D. c., Aug. 16.-In
striking contrast to the explanation OF
the decrepit financial condition of the
Chicago, Rock Island and Pacific Rail
way company, offered by President H
U. Nudge Of that railroad to the stock.
holders in his 1914 report, is the re.
cent report Of The Rock Islands fnan-
cial transactions, history and operation
by the Interstate Commerce commits
sion. President Nudge blamed the
straits into which his road had fallen
chiefly upon legislation which increas.
ed expenses and reduced revenues, and
upon increases in wages. The Inter
months of careful investigation and ex-
animation, found that by reckless man.
agement total disregard of the rights
of the stockholders and "high fnanc-
ing,' the revenues of the road had
been dissipated and the profits mulcted
by a group of financial interests. Rare
ly has the commission expressed itself
so forciblv as upon the findings OF fact
in Il the Rock Island case, and rarely,
if ever before, has the financial press
been SO eager to condemn the sort of
management which wrecked this road.
Of particular interest in this con-
nection, which has been pointed out
here, that the commission 5 report is
an emphatic confederation of the an
alysis of the financial condition of the
Rock Island which was presented in the
recent western wage arbitration. The
representatives of the Brotherhoods of
Locomotive Eng ineers and Firemen, u.s.
ing official and other authoritative sta
tistics as the basis for their assertions,
made the claim that the employees had
not been given remuneration in &C.
cordance with their productive eff
cheney and that their just share Of the
revenue which was earned by their in
creased productive efficiency has been
wasted by those who were responsible
for the road 8 financial management.
President Nudge asserted in his last
annual report that "the conclusion is
indisputable that the primary and fun.
damental cause for the failure OF your
company to earn it's dividends' was
reduction of passenger, freight and ex-
press rates, inadequate mail pay for
added service, increased rates of wag.
es, increased expenses due to legisla-
tive enactments relating to hours of
labor, safety appliances, etc., increas-
ed taxes, and increased cost of capital
funds. He admitted that as the re-
suits of "vigorous efforts'' the operat.
ing efficiency has been greatly in
creased, the commercial train load of
freight being 3O6 tons in 1914 as com
pared with 1856 in 1902. Yet, as the
Interstate Commerce commission show
ed, in 1902 the stock of the roads was
selling at more than 5000 share,
while in 1914 the shares had fallen to
500, the road is in the hands of re.
ceivers, in spite of the fact that the
earnings Of the company had steadily
increased. and in 1914 were the larg-
est in its history.
The commission g report pointed to
fancy salaries, secret bonuses, out
right gifts Of hundred of thousands of
dollars to retiring officers, over TWEEN
ty million dollars in losses occasioned
by various financial transactions, the
misleading statements to stockholders,
and the handicap placed upon funda.
mentally sound earning railroad prop
erty by these methods. It was made
clear that, contrary to President
Mudge's explanation to the investors
in the stool of the road, the financial
ruin of this property was not due to
the cost of increased taxes or safety
laws, or to increased wages, but to
the dissipation Of the constantl-- in
creasing revenues which were made
possible by the industrial development
Of the territory which the road served,
and by the increased efficiency of its
employees.