The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-04-02
NORFOLK WESTERN
NET SHOWS A DROP
Income Figured on Full Rental
Compensation, but Only %
Per Cent. Received.
PROFIT AND LOSS GAINS
Returns Under Federal Control
$8,428,302 Less Than Under
Private Operation.

The Norfolk and Western Railways
annual report for 1918 issued to-day
discloses the receipt OF only about rs
per cent. of the annual rental compensa-
ton for that year. The compensation
accrued in 1918 under Federal control
Nas s20.634.142 and the amount actually
paid to the corporation was $3.50. 900.
The company. however cast up its in
come account on the basis of the full
rental accrued, showing surplus available
for the common stock of $14,SS4,S34.
which was equal TO 1913 per cent on the
s12o,576,000 common, against s1S,o2e,-
$50, or 100 per cent, in 1917.
OF the credit balance Of s14,sS4,S34
available for dividends on the common
the company paid out only ss,437,410.
increasing final profit and loss surplus
from s19.73S,317 at the beginning of
1918 to s26.676,332 at it's close. The
compensation under Federal control
was s3,42S,302 less than the showing in
1917 under private operation.
L. f. Johnson. president of the road.
IN remarks to stockholders accompany
ing the report said in part: 1.-The gross
railway operating revenues of the system
under Federal management were $751;
oet,o34. an increase over 1917 of
s16.0e3.7s2. or 244 per cent. The in
crease in operating expenses, which ag-
gregated SCI .57s.297, was much greater,
being $20.417,794. or 49.6 per cent. more
than in 1917. The net revenue from rail-
way operations was s20,424.736, a de-
crease OF s4.324.001. or IFS per cent.
from that of 1917. The tonnage'and tom
mage mileage OF revenue freight de-
creased slightly, but owing to a much
auA frnt evlat aotn tNv.
mile the freight revenue largely in
creased. The number of revenue pas
sengers carried decreased, but the
mileage of revenue passengers largely
increased, and an increase also in the
average revenue per passenger per mile
resulted in n large increase OF passenger
revenues. The increase In wages and
the greater cost of fuel and materials
and supplies more than offset the larger
operating revenues.
Did Not Affect Income.
THE reduced operating revenues in
1913 did not affect your company's in
come for that year. Out Of its guaran-
iced annual compensation. S20.634,142,
increased by net income from all other
sources, have been paid railway war tax
accruals. interest on funded debt and
cost of maintaining corporate organiza-
ton and after payment OF the dividend
on adjustment preferred stock $1l,SS4.-
Ss4 was transferred to profit ard loss.
the amount being $3,14l,625 less than
tho corresponding item In 1917.
IAN adjustment of the company's an
nual compensation for 1918. by reason
OF additions and betterments to road and
equipment completed in that year at the
company's cost, will add TO its income
and a further credit 10 expected to re-
suit from the interest on deferred set
Elements Of accounts between the COM
pany and the Railroad Administration.
some of which accounts are unsettled.
The net changes in the revenues result
ing from these considerations and from
any increase In war taxes will not be
definitely known for some time and will
be entered in the accounts for 1919.
While your company has at all times
aimed to protect the interests of its Sc
curity holders. the great emergencies
created by the declaration of war with
Germany have made cooperation with
the Government Its paramount duty. In
fulfilling this duty your board has APP
proved recommendations of tho Federal
management for heavy expenditures
upon road and equipment. of which $13.-
b16,117 was charged to property invest
ment accounts in 1918, leaving to be ex-
pended and charged thereafter a sum
approximating s23.b0o.o0o, OF which
more than $13.0oo.o0o Is for equipment.
Your company has subscribed for Issues
Of Liberty bonds and owned on Decem-
Der 81, 1918. an aggregate OF ss,41s.-
$50 OF these bonds
TN operating the transportation sys-
TENS Of the country the administration
soon discovered the restrictive nature OF
the regulations to which those systems
had long been subjected through a null
tiplicity Of State and Federal govern
mental bodies and that the practical
problems of transportation could not In
the existing emergency be satisfactorily
solved without setting aside many theo-
ries on which previous railway regula-
ton was based. II found that increasing
costs of operation must be met by in
creased revenues which could be had
only by advancing passenger and freight
rates.
Increased Costs Not Covered.
This remedy has been applied under
Federal control though not 20 an ex-
tent sufficient to cover the greater OPP
Grating costs. The grave situation,
which has been created and was ag-
gravated by abrupt cessation of hos
Titles has an important bearing on the
question OF conditions under which trans
portation systems shall in due course be
returned TO their owners. Thi6 question
Is receiving widespread attention from
railroad executives and others and
various methods have been suggested
covering such notifications of existing
regulatory laws and practices and the
adoption OF such policy as will promote
sound and progressive transportation de-
velopment, yield suitable returns on
capital invested, reestablish credit OF
railway companies and enable them to
provide Increased facilities that must
constantly be furnished to serve the
rapidly enlarging transportation require
ments OF this country.
ITO these ends your management has
actively devoted its energies. II partici-
pated in the preparation OF suggestions
for a plan providing for Government reg
uiation OF carriers engaged in interstate
commerce and II fully concurs In the
specific plan presented and recommended
20 the Senate Committee on Interstate
Commerce early in Janutry. 1919. by
the Association of Railway Executives
representing % per cent. OF the railroad
mileage OF the country. The fundamental
and essential purpose OF that plan Is
10 furnish TO the public safe, efficient
and adequate transportation at the low
est cost consistent with proper service,
with due regard to the just interests