Evening journal., 1919-10-23
ALLEGED ovER-capIraLrz,TIoN or RAILROADS.

4 eency Bulletin joins with heads Of the railroad
brohcrhoods and Glenn +. Plumb in urging nyesga-
ton by Congress Of charges made by Mr. Plumb in advo-
eating The Plumb plan the effect that the capitalization
and the property Investment Of the railroads have been
enormously "watercd"
An Investigation would be beneficial all concerned
and especially the railway companies" the Railway Age
asserts THE principal charge the spokesmen Of the
brotherhoods making is that the railroads are
grossly oyercapalzed and that their book cost Of road
and equipment is padded the extent Of eight
ten billion dollars One OF the most remarkable hal
ucnaons about business which obsessed the minds
OF any intelligent people is the haucnation Of probably
majority Of the people Of the United states that the
railroads enormously oyercapltalzed The book cost
OF road and equipment larger than the capitalization
and therefore will examine this charge applied
to it,
In the year 1916, the latest for which complete sta
tistics available, the total book cost OF road and
equipment reported by the railroads 90 The Interstate
Commerce Commission, Si7525569OS. Prior TO 1907
this account many roads undoubtedly made higher
lower than the actual investment since the companies
up TO that time kept their accounts each thought best
Since 1901 however the companies have kept their
counts required by the Interstate Commerce Com
mission and therefore it must be assumed that all addi
tions made the book Of road and equipment since
1907 represent actual investment The increase in book
cost of equipment between 1907 and 1916
si955sO Meantime the increase in the railroad mileage
Of the country 2i,299 miles.
Let now go back to 1907 We find that at that time
the total book cost Of road and equipment reported
si30302i,32S The number of miles of railroad in the
country was 22995 IT, is alleged, the book cost has
been padded TO the extent Of ssOOOOOOOOO to iO000O0O0
all this padding done prior to the end OF the fiscal
year 1901 II assume that the padding up TO 1907
alleged SsOO0OOOOO TO siOO0OOOOOOO then we must
conclude that mp that time the railway companies had
built approximately 100000 miles Of railroad for from
s3O0OOOQOOO 10 sjOOOOO0OO. II We assume that the
watering amounted to only ssOOQ0OQOO0 obliged
TO conclude That The companies had built 100000 miles
Of railroads ror s5O3O0OOOO0 average Of less than
$4,000 per mile
It is asserted by the Railway Age that the railroads Of
the United States in 9O5were good railroads many of
them with double tracks Never in any country
in the world a good single railroad track built and
equipped for $4,000 mile any amount approaching
this In 1907 the cost Of construction OF the govern
meniowncd and operated railways Of New South Wales
Australia was reported 100000 a mile the cost of
structlon Of the government-owned ntereolonial Rail
way of,Ganada,as officially given s6Oi63 mile; and
The cost 6r Construction Of the goVernment-owned rail-
ways Of Germany where the paid half those
paid In this country, was reported 100000
mile The book cost Of the railways Of the United states
at that time less than $4,000 a mile.
The charge that the railways of the country over
capitalized to the extent OF SsOOOOOOOO siOOOOOOOOOO
any other large sum, absolutely peposerous
to anybody who has scintia Of knowledge regarding
railroad matters TO not WOrtl moments notice
and yet these outrageous charges regarding oyercapal
zaton must be answered again and again because, while
as applied TO the railways a whole they have not the
slightest foundation they made with such confidence
and repeated often that many people are led TO be
lievc them.
We should greatly regret to the return Of the
railroads to private operation delayed in order that a
Congressional committee might investigate charge |
known TO be false by everybody who knows anything
about the railroad business At The time should
like to see thorough Investigation and complete report
upon the subject OF railroad capitalization in the United
states made by some such committee the Present
House committee on Interstate and Foreign Commerce.
such an Investigation and report would demonstrate the
Of The Charge or great oyercapalzaon and
hereby do more than almost anything else could do TO
put the railway companies in good standing before the
american public.
That some railways have been overcapilazed every
,ody knows and from this the conclusion has been drawn
hat all railroads overcapazed The facts that there
ire numerous important railways such the Pennsyl-
ana the Burlington. the Lackawanna and the Santa Fe
which II is possible demonstrate are measured by any
standard greatly undercapilalized, and that not few
alroads which have been oyercapitalized such the
sock island have reduced their capializatons TO a
nal basis do not seem to be known to many people.