The daily banner. (Cambridge, Md.) 1897-2008, 1917-05-10
INCREASED RATES DO
NOT MEAN MORE PROFIT
Pennsylvania Railroad Says Present
Advance Was Not For More Divi-
dendS.

Washington D. c., May 10.-Sup,
plementing his formal statement tC
the Interstate Commerce Commits.
sion, today, in the advance rate case
Mr.. Samuel Rea, President of the
Pennsylvania Railroad System. re-
piled to the suggestion made to the
1 railroads by the Commission, on May
H 1st, that Carriers should indicate
the extent to which they are willing
! to limit the rate of dividends to be
paid during the continuance of the
war
Mr.. Rea said:
1t would be impossible and un-
wise to suggest any dividend limita-
! tion during the war without any
knowledge of the extent of the war
/ or of the increased cost of capital,
labor, materials or taxes.
1t is impossible to state what
may or may not be fair dividends
/ under war conditions. The course
| of events must decide that question,
4 but certain it is that the present ap-
| plication for increased rates waS> not
/ made with any desire for increased
| dividends and does not bear any re-
lation thereto"
Nh Rea declared that the increas-
/ ed revenue from the proposed rate
| advance would not cover the increaS-
ed expenses of operation which he
had previously outlined to the Com
! mission.
Stating that the Pennsylvania
System paid only moderate dividends
/ Mr. Rea continued:
z mo ra6uctjop pan he made below
! per cent. without weakening the
credit of the Company and increasing
! the cost of raising new capital. Its
| financial condition must be kept
| strong, and the stock and security
holders should not be discouraged.
! The Pennsylvania Railroad Com
! pany has over 10000 stockholders,
! averaging about 10 shares each, and
| two-thirds of its entire stock of
! 100000 is held by those having
/ less than 5000 each. There has
been no increase in their dividends,
! although the cost of living, wages
and taxes have materially advanced
| In reply to the Commission's ques-
tions, also submitted May 1st, as to
whether an emergency in the affairs
of the carriers exists, whether all
carriers require the same relief, and
why the relief should take the form
of a fiat increase of 5 per cent. in
freight rates, Mr.. Rea said:
''An emergency exists, not tempo
rary, but continuing, which affects
transportation in such way as to
require prompt relief through in
creased net earnings.
THE same relief is necessary for
all becauSe il is a minimum relief
as illustrated by the Pennsylvania
System when l show that the increas-
ed rate will not offset our increased
expenses and taxes. But roads which
derive the greater portion of their
revenues from passenger traffic will
require special consideration, be-
snot be adequate.
. : The neEeentag method was
adopted as affording the most eqdIls,
able and equal distribution OF the,
increased expenses, which are gem
eral in character and affect all traffic,
and was the only method by which
increases could be secured in a rea-1
sonable time. -
The percentage was made D per
cent. because the figures before the
carriers as to increased costs indicat-
ed that while a greater percentage
might be needed, that was the low
est amount to cover the necessities
of the situation 1t develops. how
ever, citing the case of the Pennsyl-
vania System alone, that the increas-
ed expenses will be considerably
above those originally estimated, as
| have previously indicated