The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-10-31
Expert Railway Testimony.

To a stakeholder inquiring fror
the secretary of one of our railroads
the Baltimore and Ohio, as to II
financial condition the president him
self, Mr.. DANIEL WILLARD, has writ
ten reply which is sufficiently illu
as we see 1t, of the shadow
behind, around and before the Amerl
can railway system to merit its pub
location here:
''Your letter OF the 14th instant.
addressed to Mr.. c. w. wooLFoRD,
secretary of the Baltimore and Ohio
Company. has been handed by him
to me. and note what you say there
in with reference to the financial
management of the company.
Il can well understand your feel
ing Of disappointment because of the
suspension of dividends upon the
Baltimore and Ohio common stock.
think I ought. however. in fairness
to YOU as well as to the company. to
call attention to a few matters in that
connection. First perhaps. ought
to remind you that the fiscal year
ending June 30, 1915. was one Of
the most satisfactory In the entire
history Of the Baltimore and Ohio
Railroad Company. at least since the
receivership which terminated in
1899. An examination OF the annual
report for that wear will. think.
confirm this statement.
Further. the Baltimore and Ohio
property was never In better physi-
cal condition than when Il was turned
over to the Government late in 1917.
1t is a good property to-day; 1t is
capable of handling very large
volume OF business. and IL the COM
pany were operating Its own road on
fair basis Of rates and charges. such
basis, for instance. as is evidently
contemplated in the Cummins bill
now under consideration by the Sem
ate Committee on Interstate Com
merce, there is no reason to doubt
the ability of the Baltimore and Ohio
again to pay dividends upon its COM
mon shares.
During the last two years. how
ever. the property has been operated
by the Government. Its regular busi-
ness has been diverted to other lines
wherever 1t was thought to be in the
interest Of the Government to do SO.
the cost of operation has been very
largely increased. and the reports
(which have been submitted by the.
Federal Administration show that
under such conditions the company
has not earned its fixed charges;
but II would be a mistake to measure
. the value of the property by the OPP
Grating results under Federal control.
Besides. the compensation which
the company was able to obtain from
the Government for the use OF It's
property. as pointed out to the Bal
timore and Ohio stockholders on July
2, was much below what we
thought it fairly should be. but In
view of the long and difficult process
required to obtain better adjust
ment, with the uncertainty attending
claims OF that or any character be-
fore the United States Court Of
Claims. It was deemed best under all
the circumstances to make the con-
tract on the basis set forth In the
circular above referred to.
'The reasons why dividends on the
common stock were temporarily sus-
pended were fully explained in my
circular Of July 2. and will not
repeat them here. feel that ought
to say this. however. that the Balti-
more and Ohio under private manage
ment was able not only to maintain
and improve its property but at the
same time greatly to strengthen its
earning capacity. and this was done
at time when the rates were admit
tediy lower than they fairly should
have been. BY admittedly I refer
to the statement made by the Inter
state Commerce Commission In con-
nection with the 1914 rate case when
the commission said officially that Il
found that the net earnings OF the
railroads in the Eastern territory a,
that time were less than they ought
to be either In the interest OF thu
public or of the railroads themselves.
Even under such conditions thu
Baltimore and Ohio Company was able
to maintain dividends upon its com.
mon stock. and I have no doubt at al
Of its ability to do so in the future 1;
rates be adjusted SO as measarabiy
TO meet the increased costs Of opera
ton due to higher prices Of materia
and to higher scale Of wages paid al
employees. The Baltimore and Obi,
Company does not require any specia
favors or considerations. and rate
adjusted to meet fairly the require
ments Of all the roads will meet tn,
requirements Of the Baltimore an,
Ohio Company. d. WILLIAM.
president. the Baltimore and Obi,
Railroad Company.
"BALTIMoRE, Nd. October 60"