The sun., 1919-03-04
PR. R. NET INCOME
$44,O7O,S99 IN 1918
Return in Year Under Contract
With Government Amounts
to S65,992,74O.
ANNUAL REPORT ISSUED
Rea Urges Adoption Of Plan Of
Railroad Heads to Settle
Road Problem.
ANNUAL REPORT ISSUED

report or the pennsylvania Railroad
Company for 1918, made public tonight,
shows that compensation accruing for
the year. under contract with the Gov
eminent for the owned, leased and d.
rectly operated lines east and west OF
Pittsburg. amounted to SS5.992,7to. OF
that amount. the report says. s31, 2e6. 900
had actually been paid over by the Gov
eminent APP to December 81, 1918.
Income from other sources, including
interest and dividends on securities
owned, aggregated s22.601,747, making
gross income accruing for the year $685.
5e4.+s7 Deductions. including war taxes,
which amounted to $3,s27.64e, rentals
for leased roads and interest on funded
and unfunded debt. aggregated s44.62s,-
6ss. leaving pet income Of s44,o70.S9s.
OF that sum s2,sl3,201 was applied to
sinking and reserve funds and $2s.s50,-
7o4 to payment of dividends, leaving a
balance of S1l,soe.ss3, which was car
ried TO profit and loss The expenditures
on road and equipment amounted to
S35,484,4I6.
Tho usual operating statistics" the
report says, ARE omitted, as they have
not been worked out fully by the Fed
eral Railroad Administration. The in
come statement is not based on actual
operating results, but upon compensa-
ton or rental due and accruing from the
Government"
Discusses Government Control.
In his general remarks to the stock
holders Of the company Samuel Rea,
president OF the road, says:
THE sudden cessation Of active war
fare brought about serious reconstruc-
ton questions, and none more important
than future relations and policy OF the
Government to the railroads which are
still under Federal control. While the
railroad companies have some protection
against war losses under the Federal
control contract, II should be remem-
bered that their earnings are limited to
the net railway operating income Of the
three year period ending June, 80, 1917,
and that they have derived no profits
from the war traffic to meet the prob
lens Of the reconstruction period. The
Senate Committee on Interstate Com
merce has been sitting for months in
Washington taking testimony bearing
upon the important question of a future
national railroad policy before formulat-
ing that policy and deciding the legisla-
ton required to make It effective.
Railroad executives recommended a
plan which. in their judgment. could be
made effective In the reconstruction
period. and would protect the interests
of the public. the railroad owners and
employees. Before the interests are re-
lea sed from Federal control suitable leg :
islative action must be taken, whereby
all interests will be adequately protected
and the country assured Of progressive
transportation system, and the railroad
owners fair return Neon their invest
ment. This is not only justiiable but
necessary to keep the railroad corpora =
tons credit In sound condition. and to
attract additional capital essential to en-
able companies to expand their lines and
facilities to meet requirements OF a still
rapidly growing country.
While these necessities have been
measurably recognized. the companies
have been unable to secure adequate
revenues to produce those results, and
the existing Federal and State laws and
conflicting regulation do not concen-
trate the responsibility upon any OF the
Federal or State regulatory authorities.
Under restrictive national and State
laws and regulation the companies have
not been able to ootnin. for the good
of the country. the dement's that reason
ably could have been secured from
closer cooperation and unification of
their service and facilities. the elimlna-
ton OF duplicate train service and facIli-
ties. and from other operating econ
omies. 1t Is hoped that these and other
deficiencies in our regulatory system
will be dealt with by both national and
State legislation in such effective fash
ion as to stabilize railroad credit on a
sound basis and maintain the conf
dence OF investors in railroad securities.
Warns Against Federal Ownership.
THE railroad stocks and bonds are
owned by many millions OF citizens, IN
dividually and through their savings.
insurance and other Institutions, and,
judged by past results on our railroads
compared with those OF o:ner countries,
II ought 10 % the national policy to
encourage such ownership. instead of
Government ownership which inevitably
means political orsratioiI. with all OF its
consequent civic dangers. increa sed
costs, and lack OF development. to meet
commercial demands. THIS ownership
and a sound national railroad policy, Il
Is believed. can be secured under the
plan submitted by railroad executives
without disturbance OF business or plac-
ing an additional financ!a. burden upon
the Government, and IN such way as
TO preserve private initiative and opera
ton OF railroads, under which the coun-
try has had such remarkable develop
ment
The main features recommended by
the railroad executives are. a Federal
statutory rule to insure rates that will
produce a return sufficient TO attract
new capital into the railroad business
and pay reasonable return on existing
investment; the concentration OF respon-
sibility ~ the Federal Government foe
the regulation OF rates, wages and
security Issues; relief from the restr.c-
tive Federal and State laws which pre-,
vent the further unincation OF existing
railroads and cooperation between them
as to the use OF their transportation
facilities
Under any policy OF fair regulation
and adequate rates. the railroads require
no financial assistance from the Gov
'ernment. and the country at large is
fully convinced that they are entitled to
n fair return upon the railroad invest
ment. and so long as public regulation
withholds that return, 1t creates a great
obstacle TO national prosperity and prog
ress"