The labor journal. [volume] (Everett, Wash.) 1909-1976, 1919-08-08

week what looked like just another
set of unimportant figures. The
Interstate Commerce Commission
had completed valuing five small
railroads. The results? Actual
value, that is, cost of reproduction
new, was just about half of the
property investment account.
Statistics and highly technical
names-a government report, in
other words. But this time the
figures and technical names mean
something quite important to every
person in America. They mean that
if the same ratio that value has to
property investment account holds
true with other roads, the American
people are paying just double the
railroad rates they need to pay.
Railroad wages could be increased
and the cost of living lowered.
The property investment account
of railroad is the sum upon which
the road claims the right to receive
returns. If the railroad says its
value is ten million dollars, natural
ly it gets twice the rate 1t would
be entitled to on five million. The
question is merely one of value.
Several years ago Congress ordered
= mi G
sion to value the railroads so the
public need pay only a just rate.
These figures announced this week
are the first results of the investi
cation.
The investment in road and
equipment as shown by the carriers
books of the five small lines totals
$177, The cost of re-
production new in 1914, according
to the Commissions engineers,
would be $S4,2SO,359. The pres
ent value of the land owned and
used for transportation purposes by
these companies, is $5,541 ,2SS.65.
In other words, this railroad
property, from which the corpora
tions claim the right to receive re-
turns on more than $177, 900, |
could be replaced with new equip |
ment throughout, from real estate
to the last switch block, for half
that amount.
The five companies are the Allan
ia, Birmingham and Atlanta; New |
Orleans, Texas & Mexico; Texas |
Midland; Winston Salem, and Kan
sas City Southern. They operate in
all less than 1000 miles of road. |
They are so small that unusual fl
nancial mismanagement would be
hard to conceal. They are typical
of the American railroad situation.
II must be assumed that the differ
ence between the actual value OF
the large railroad properties and
their property investment ac-
counts" is at least equal to that dis
closed by the Investigations OF the
Interstate Commerce Commission
in the case of these five small roads.
That Property Investment Account
Here are the main elements IN
the composition of a property IN
vestment account:
Cd All capital invested in con-
struction, from the time the road
was first built until the present.
In the case of the older companies,
the money which bought lotion To-
comotives and metal-covered wood
en- rails, in the scrap heap for dec
ades, is expected to bring a return
every year.
CD Capital invested in railroad
securities, which, maliciously or by
mistakes of management, was not
used efficiently.
CD Watered stock,
(D Surplus funds, used for
extensions, renewals or re-equlp-
ment. The surplus fund of rail-
road is composed of that part or
the profits which is left after divld-
ends-sometimes extremely high
have been paid to all investors. 1t
is secured by imposing rates higher
than are necessary to enable Just
returns to be paid to investors. Then
this tax on the consuming pubic
levied through the machinery OF
transportation charges, is invested
in railroad property, and the public
must thereafter pay tax on it, too.
through added transportation rates.
Let the system keep on operating,
year after year-high rates, surplus,
investment of surplus, rates increas-
ed to pay dividends on that surplus
and finally there comes a time
when the public cannot stand the
ever-compounding tax. There comes
a time when the cost of transporta-