The sun., 1916-12-02
SENATOR CUMMINS
HITS AT RAILROADS
Iowan Cross-E Examines A.. p.
Thorn at Joint Congress
sional Inquiry.
ALL CONGRATULATED"
1ntimates Roads Are Getting
Fair Return on Actual
Investment.

WASHINGTON. Dec. 1.-Senator Albert
p. Cummins was the principal cross-ex-
sminer to-day at the Investigation In the
abroad problem by the Joint Congress.
sIonal committee. i~nterrosating Alfred
P. Thorn. appearing as the representa-
tive Of the railway executives advisory
committee.
The Senator from Iowa intimated by
4 line OF questioning that the roads are
now getting a fair return on their actual
capital. He suggested they were over
capitalized. When Mr.. Thorn took issue
with this statement Senator Cummins In
quQired whether Mr.. Thorn had any
knowledge OF what the Interstate Com
neyce Commission had found as to the
physical valuation under the La Toilette
act
"res. and they are not accepted by
the roads" replied Mr.. Thorn with en-
phasis. There will he "a serious con-
tention that great elements of value were
omitted In this valuation work."
Two Rcceiverships Are Cited.
do you think hat the Missouri Pa.
-ifc and the Rock Island are worth their
present valuation ?" asked Senator Cum
Minis.
y don't know: I was never on either
lire OF railroad. What do you or I know
about the value Of these properties ?" de-
manded MIR. Thorn.
Both roads show big earnings" re-
piled the Senator.
"Yes. and both are In the hands OF re.
c~eivers." replied Mr.. Thorn. 1T Is my
opinion that the railroads Of the
generally speaking. are not now overcap-
italized when you take into considera.
ton all the elements OF value"
Mr.. Thorn went into an explanation
that the actual value of the roads had
gradually grown until It had o~ver.akcn
the capitalization and cured the evil OF
"watered stock on which Mr.. CummIns
was laying much stress. Mr.. Thorn
made the declaration that there was no
water in railroad capital.
In beginning his examination Senator
Cummins said he was In favor of a sub
stantill enlargement of the powers OF
the Interstate Commerce Commission.
He at once launched into n line of uucs-
t'oning which was plainly directed to the
purpose Of putting on the roads the re-
sponsiblllty for failure to make extern
stons.
Mr.. Thorn Makes AdmiaslOns.
"We will nave to rely on extensions
o. present systems" admitted Mr.. Thorn.
There is no inducement for new COM
panies TO build"
Mr.. Cummins asked II when railroads
wished capital for extension they con-
suited the investors. Mr.. Thorn said
they always consulted representatives OF
he Observation-Disclosures bankers and
frntaYS hA gall 49,. A. r.--
transportation facilities to measure up to
needs was due to abnormal conditions
brought on by war.
How much In the new investment in
railroads within the last few wears; was
Il not six hundred or seven hundred
millions"' Mr.. Cummins asked.
Mr. Thorn admitted that these figures
were probably correct and then Mr..
Cummin asked how much had been
paid out in betterments.
Mr.. Thorn took figures from the ra.
ports made by the railroads to the Inter-
state Commerce Commission to show
that the earnings In 1915 were s6ss, a53.-
~ and revenues from securities sl29.-
S7lOiI. making a total Of $SlS.327.ca
The roads paid out of this sum $685.
W.ss6 for inter est and $2O9. 5000 in
dividends which. he said. left n balance
~ Si5,esG,209. which probably repre-
sented the amount expended for Better
ments.'
IN this connection. Mr.. Thorn said,
this was sufficient reply to Representa-
tive Cullop's statement or Wednesday
that the railroads had paid "a billion
dollars in dividends last year"
Roads Paid . r.. G.. on Capital stock
Senator Cummins declared that the
roads had paid : per cent. the last year
on their capital stock.
Admitting that to bc trne. II has no
hearing On the present situation re-
piled Mr.. Thorn. who then explained that
the European war had given an in.
!etus to transportation needs and that
conditions were abnormal and not a fair
standard for measuring the future.
isn't II true that the roads have re-
turned 6 per cent. or their capitalization
on an average for the past five years."
y doubt that. Senator"
The early part Of the hearing to-day
was taken up by Representative Cullop.
who insisted among other things that the
cfncers Of the roads drew too high
~salaries. Mr.. Cullop said he had learned
mat 200 railroad presidents In the
United States drew as high as SIS 900 a
year salary.
He insisted that they obtained their
"Hces by favoritism. Mr.. Thorn dis
sen'ed. saying most OF them rose from