The labor world. [volume] (Duluth, Minn.) 1896-current, 1916-05-27
ROADS CAN AFFORD
SHORTER WORK If; 81;
Railroad Brotherhoods Boldly
Challenge Statements Made
by Railway Officials.
REVENUES COULD BE
CONSERVED IN MANY WAYS
Millions In Dividends Are Freely
Given Away On Fictitious
Stock.

CLEVELAND, Ohio, May 27.-In a
statement issued today by the four
railroad brotherhood organizations
that are concertedly demanding a
shorter work day for freight train
crews, attention Is called to state
ments made by railroad officials, that
roads cannot afford any increase in
train operation.
The employees challenge the SINGER
ity of these statements and have
pointed out several ways in which
railway revenues could be conserved.
which are now wasted or given away.
Stockholders of railroads were
never better off than they are now,
and stockholders Of a good many
roads have participated IN the "cut-
ting of good many melons" in re-
cent years.
During the period of 1900-1910, ten
western railroads alone issued new
stock for $25O,5S4,961 less than it's
market value, or practically gave
away this enormous amount in bon
uses to stockholders.
Fictitious Stock Dividends.
In other words, in addition to cash
dividends, together with appropria-
tions to property and reserves for tho
benefit of stockholders, the stock
holders Of these the transportation
companies had conferred w on them
in the shape of rights to subscribe for
new stock issues at less than prevail
ing market prices, more than a quar-
ter of billion dollars.
From the standpoint of the finan-
cial administration of the railroads,
this method Of finance also had an
added significance. If the new stock
issues had been disposed Of at market
prices-the prices which could have
maintained in the open market by
these companies. if they had not
given these special bonuses to stock
holders-they could have secured the
same amount of cash by ain issue Of
$173,122,796 less capital stock. ~"~
The transportation companies,
therefore, lost the use of this much
capital which they could otherwise
have had, or considered from another
angle, they increased their capital
stock unnecessarily $173,122,796 with
out adding dollar to the earning ca
pacity of their properties.
The dividends paid on these ficti-
tious stock issues in 1913 alone
amounted to $11,276,495.
The increa sed productive efficiency
Of train crews, which largely was re-
sponsible for the big revenue gains,
was used to pay dividend charges
upon unnecessary stock issues, which
were arbitrarily created for the bene-
fit Of the stockholders; and did not
represent capital actually invested in
the railroads.
During this same period of ten
years; the same ten railroads gave
away in underwriting commissions,
s9,12O,l24. The total par value of
funded debt issued by them for cash
during these years was $885,O16,683.
The cash proceeds were only $S41,-
326,307; the market value of these
bonds, however, was ss5O,446,431;
and the excess Of market value of
these securities over the net proceeds
to the railroad companies was So
12O,124.
Loss To Railroads.
This amount represented an actual
loss to the railroads. These transac-
lions also represented an unnecessary
increase in the funded debt Of the ten
railroads of $9,455,952, for the reason
that If the bonds had been placed in
the open market at the prices obtain
Continued on Page