The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-10-20
WATERED RAILROAD
INQUIRY IS.URGED
Investigation Would Be Help
full to Roads, Says the
"Railway Age"
WOULD SET PUBLIC RIGHT
DISQUALIFICATION Reports Are
Declared to Be Without
Sound Basis.

The Rau,ooy Age in an editorial in its
current Emergency Bulletin joins with
heads of the railroad brotherhoods and
Glenn e. Plumb in urging an investisa-
ton by Congress of charges made by
Mr.. Plumb in advocating the Plumb
plan to the effect that the capitalization
and property investment OF the railroads
have been enormously "watered."
"An investigation would be beneficial
to all concerned and especially the rail-
way companies" the Rdascdy Age as
serts. THE principal charge the spokes-
men Of the brotherhoods are now making
is that the railroads are grossly over
capitalized and that their book cost OF
road and equipment account Is padded
to the extent of eight or ten billion
dollars. One OF the most remarkable
Authorizations about business which
ever diseased the minds OF any intelli-
gent people is the hallucination of prob
ably a majority OF the people OF the
United States that the railroads are
enormously overcapitalized. The book
cost of road and equipment Is larger
than the net capitalization and there
fore we will examine this charge as
applied to 1t.
I'm the year 1915, the latest for which
total book cost OF road and equipment
as reported by the railroads to the
Interstate Commerce Commission was
s17,525,576,90s. Prior to 1907 this ac-
count on many roads undoubtedly was
made higher or lower than the actual
investment, since the companies up to
that time kept their accounts as each
thought best.
From 1907 to 1910.
Since 1907, however. the companies
have kept their accounts as required by
the Interstate Commerce Commission
and therefore II must be assumed that
all additions made to the book cost of
road and equipment since 1907 repre-
cent actual investment The Increase in
book cost of road and equipment be-
tween 1907 and 1915 was $4,4s5,232,5s0
Meantime the increase in the railroad
mileage OF the country was 1929
miles
Let US nov go back to 1907. We find
that at that time the total book cost Of
road and equipment was reported as
S13,030,344,S23 The number of miles OF
railroad in the country was 2zs.s51. If.
as Is alleged. the book cost has been
padded to TIL. extent OF 5000, 900. 900 to
SIC. 200, 900 900, all ~ this padding was
done prior to the end OF the fiscal year
1907. II we assume hat the PADDING up
to 1907 was. as alleged, SS,000,000. 900
to $40, 900 900. 900 taeD we must conclude
that Up TO that time the railway COM
panies had built approximately 230, 900
miles Of railroad tor from 81. 600, 900. 600
to $4,000. 100000. II we assume that the
watering amounted 10 only $4,000, 000,-
900, we are obliged . conclude that the
companies had built 100000 miles of
railroads for $780, 600, 900. or an aver
age Of less than So 900 per mile.
THE railroads OF the United States in
1907 were good railroads. many of them
with double or more tracks Never In
any country in the world was a good
| single railroad track built and equipped
for $4,000 a milo or any amount ap-
preaching this sum. In 1907 the cost of
construction If tho Government owned
and operated railways Of New South
Wales, Australia. was reported as $780,
| 600 a mile ;ne cost of construction of
| the Government owned 1rtercolonial
Railway of Canada was officially given
as se0,1e3 a mile. and the cost of con-
| struction of the Government owned rail-
ways OF Germany, where the wages paid
were half those paid in this country. was
Il