The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-08-09
MINI. & ST. LOUIS
EARNS CHARGES
On Basis of Standard Return
Of $2,639,857, Has Sur
plus of S210,829.
NEED RETIREMENT FUND
Federal Compensation Is Not
Considered Sufficient by
Directors.
NEED RETIREMENT FUND

The Minneapolis and st. Louis Rail-
way on the basis of the standard return
Of s2.ss9.s57. according to its annual
report issued yesterday, earned In 1918
It's charges with q surplus of s21o,s2s.
In 1917 the surplus after charges was
Charles Hayden, chairman Of the
board Of directors says in the report In
parti THE Federal control act au-
thorizes the Director General to enter
into q contract to pay as annual COM
pensation to q company whose property
mas been taken over. Its average net
railway income for the three year period
ended June 80, 1917. which in the case
Of the Minneapolis and St Louis Rail-
road Company Is s2.63s,S57.25. This is
sufncient to pay the fixed charges, the
maturing installments of equipment
trusts, interest on the unfunded debt,
the expenses of the corporate organiza-
ton ana leave margin of $40, 000 but
does not provide for making the neces-
sary additions and betterments.
Your directors have not signed the
contract with the Government because
they believe that the standard return
Goes not adequately compensate the COM
pany Tor the use OF its property. Under
the readjustment plan Of January 81,
1915, the stockholders by q contribution
OF s2o share on their stock provided
the company with $t.5o0.ooo for its cor
porate purposes The standard return,
as liked In the Federal control act, does
not allow US return on this money.
In addition we put into service between
July l, 1917, and December 81, 1917,
Following the close OF the test period.
,:eOo freight cars at a total cost Of
$2,O4s,o7oss. for which the standard re-
turn gives US absolutely nothing. Dur
ing the test period we bought thirty
locomotives costing s615,95136. Our DO
sition Is that when the Government took
this road It took this equipment, whose
earning power was not fully reflected In
the standard return, and therefore the
Government should compensate US for Il.
I'VE embodied these claims and other
items into claim for additional COM
pensation and have presented IL to the
Director-GeneraL So far II has been
declined. We do not expect to abandon
the claim unless developments in the
general situation convince US that II Is
wise to do so. Not having executed a
contract with the Government, the Dr.
ector-General can advance US only 90
per cent. of the standard return. Dur
ing 1913 he advanced $4,000. but from
time to time loaned us sufficient funds
on demand notes at 6 per cent to meet
necessary cash requirements
The Railroad Administration placed
a contract early In 1918 for the pur-
chase Of 100000 freight train cars to be
purchased by the Government and used
generally on the roads under Federal
control. Later the Director-General or
dered that these cars be allocated to
the various railroads and that the re-
cnaNtiya ah tbsa
cars allocated to them and finance the
cost. Three hundred Of the box cars
were allocated to your company at a
total cost Of $S75.70O. or an average
cost of S2,919. In view of the fact that
during 1915 the company purchased
500 forty-ton steel underframe box cars
at an average cost OF $947.61 each, and
in 1917 1000 new forty-ton box cars
at an average cost of S1,349.34, and
500 new ffty-ton gondola cars at an
average cost Of $1,416.B6, your directors
were OF the opinion that the purchase of
additional cars at this high price is not
necessary.
They are strengthened in this opinion
by the hire of equipment accounts,
which during the test period showed a
debit balance against the company OF
approximately s3000 and during the
first six months of 1918 showed a credit
balance Of $260.45s. which demonstrated
that your company had more than
enough cars for handling its traffic, and
that If additional cars were purchased
they would be used on other roads :;
which In effect means that your COM
pany would be providing funds to pur-
chase cars for such other roads Your
directors protested against this alloca-
ton of equipment, but this protest has
not been allowed, the Director General
having take the position that the COM
pany should finance this new equipment
and that no negotiations will be entered
into looking toward the making of a
co tract until the company has agreed
to finance the same"