Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1917-03-06
PRESIDENT REA
FOR RATE BOOST
In His Annual Report Shows
Large Earnings; Cash Needed
For Improvements

In his annual report, made public
to-day, President Samuel Rea, of the |
Pennsylvania Railroad, makes no ref |
erence to improvements in and about |
Harrisburg. lie urges higher rates |
and refers to a successful year. Pres |
ident Rea touches on q number of |
vital subjects, including the eight |
hour law, purchase of the Harris |
burg. Mt. Joy and Lancaster Railroad, |
and to the improvements contemplat- |
ed, electriflcation, purchase of new
locomotives and other equipment.
The report, which is the SEVENTEEN
annual statement of the Pennsylvania |
railroad Company, sets forth that
the net income from it's directly op-
Grated lines east of Pittsburgh, and
from the return on investments in
other properties aggregated S52,276,-
5O4, which amount, after applying
S2,13S,959 to sinking and other reserve
FUNDS, was equal to 10.47 per cent.
earned on the capital stock. After
making allowances for dividends, i'm
provements and meeting the profit
and loss charges. the balance for the
year was s5,522,7O7.
reviewing year which was mark
ed by the greatest business activity
ever experienced in the history of the
country, President Rea devotes much
OF his report to the matter of rates
In Substantiation of his statement that
permission must be granted to exact
higher tariffs, he points out that the
pennsylvania Company and the lines
operated east of Pittsburgh earned
only 5.4 per cent. on the actual cash
investment in road and equipment de-
voted to public use. The earnings of
the entire system. including lines east
ana west, on total property invest
ment of $1,743. 3.308,737, are shown to
have yielded a return of only 5.79 per
cent. for the year.
Necessity For Higher Rates
The necessity for higher rates is
daily becoming more evident" Presi-
dent Rea declares, for while the re-
suits for the first eight months of 1916
showed a satisfactory increase, yet
since then the net returns have shown
marked reduction due to higher
costs.
Your company, to avoid conges-
tion and to handle the traffic econom-
tcally and promptly, has expended,
and is now eXpending, large amounts
OF capital upon which a return must
be earned; ii has made adjustments in
employees wages to retain them in the
service and enable them to meet the
higher living costs; and is paying eX-
traordinary increases in the prices of
materials and supplies, and in taxes;
in addition to which it is burdened
with conflicting and wasteful regula-
ton and laws. These increased costs
have made heavy inroads into your
profits during the past few months,
and it is expected that their effect will
be even more acute in 1917.
with such a widespread and press
ing demand for larger terminals,
greater facilities and more equipment,
1t is essential (if they are to be pro-
vided) to grant the railroads the high
er rates necessary to place them in q
position to meet such rising costs. and
give them the earning basis to attract
new capital for the additional trans
portation facilities and service so ur-
gently required. The lack of sufficient
surplus for many years past has pre-
vented the railroads from providing
such additions and betterments in adj
vance of traffic demands, and while
labor and material costs were reason
able.
Eight-Hour Controversy
Mr.. Rea, in discussing the threat
ened strike of railroad train service
employees, which preceded the passage
by Congress of the so-called Eight
Hour law" says:
THE transportation service of the
country was threatened with stoppage
at a time when industries in general
had reached their greatest production
and the food supply and other neces-
saries of life. especially in the larger
cities, were absolutely dependent on
the continued operation of the steam
railroad systems. 1t is questionable
whether many of the men, especially
those in your service who have faith
fully served the company for many
years, would finally have deserted
their positions, yet the untold suffer-
ing and disruption of business that
would have resulted from the execu-
tion of this threat, made by the train
men through their leaders, were so
evident that the Eight Hour law was
enacted by Congress in the brief pc
riod of few days.
''The threatened strike was averted,
but in the hasty proceedings leading
to its enactment, the principle of ar
bitration, as the paramount and equi-
table method of settling labor dis
putes. was sacrificed, not in the public
interest, nor for the benefit of a ma
jority of railroad employees, but for a
group of men constituting only small
percentage OF the total number. and