The Pulaskian., 1919-05-30
WHAT ROCK ISLAND DID.

about $15,000,00O and its expenses
and taxes increased $24,145, 900, so
that net income was almost $10,000,-
900 less than it was in 1917, and
$12,000,000 less than it was in 1916,
when gross earnings were only $751;
100000.
For six months it had increased
rates so that the rate per ton per
mile for the year was SO cents, COM
pared with 81 cents in 1917.
Because of the increased expenses,
the company did not earn its interest
and rentals into $1,185,791, but the
government compensation was $15,-
211, 456, and other income was $685.
032, so that the per cent dividend
on the preferred A stock and the 6
per cent on the B preferred stock
were earned, and nearly 100000 for
the common stock, or $2.55 per share,
whereas in 1917 the company earned
1888 on its common stock.
! Now the government paid to the
Rock Island company only $1,700,000
of that $16,000,000 compensation, but
it did help the company to get needed
cash from the War Finance Cor
poration through demand loans
secured by collateral and bearing 6
per cent interest. That is not a
pleasant thing to read, for those of US
who would like to see Uncle Sam meet
his obligations as business men meet
theirs.
That is about a fair sample of
what other big roads in the country
are showing. Stock and bondholders
are all right so long as the govern
ment guarantee lasts and is paid, but
here is one road actually $6,666,891
short of what the government paid it
as compensation. However, if in
creased rates had been in effect the
entire year, instead of for six months,
the company would have had $10,000,-
900 additional net, or 1888 900 more
than what the government agreed to
pay.
Stock and bondholders are not
worrying over interest and dividends,
so long as the government guarantee
holds, but they are worrying over
what will happen when the roads are
returned, and of course no one can
say under what conditions that return
will come, but this is a reasonable
supposition: Rates will be material
ly higher than they were before the
government took over control; per-
haps not as high as they are today,
but approximately so. The country
can stand that, because the burden is
distributed over more than 100000
900 consumers. Wages are not likely
to be materially reduced, unless the
cost of living declines more than the
experts believe it will. There will, of
course be more or less decline in the
price of the hundreds of millions
worth of materials used.
The people have learned the i'm
portance of an efficient transportation
system and are willing now, for the
first time, that owners of such sys-
tenn shall be paid reasonable compen-
sation, enough to stimulate the build
ing of new railroads and to perfect
those in operation. That is big
gain, for that spirit did not exist FIVE
years ago, quite the contrary.
A fair view of the railroad
'smuddle" appears to be along these
lines: Uncle Sam will pay to the
railroads what he owes them, prob
ably shortly after the extra session
of Congress convenes. There will be
worked out in Committee of House
and Senate a reasonable, even liberal
plan by which the railroads shall
come back to their owners and to
private but regulated arrangements,
and government supervision will be
provided which will insure high
enough freight and passenger rates to
keep the railroads at their best, and
to insure new ones.
1t would be grossly unfair and an
insult to the American people to
maintain that the roads will be hand
ed back to private management,
handicapped by expenses which eat up
practically all of the gross earnings,
leaving little or nothing for bond
holders, to say nothing of stock
holders.
Carrying the argument further
there is no reason to believe that the
railroad securities of this country,
which have been the staple invest
ments for years, the bonds at least,