Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-05-06
PLEA Of RAILROADS
| FOR HIGHER RATES
Illinois Centraps President
Alleges Largely Decreased
Income Basis in South.

Claiming that the net annual in
come basis of the railroads in the
south has been reduced to s16.269. 900
on an investment Of $2.2S4.O00, 900. or
less than 1 per cent on the invest
ment, c. H. Markham, president Of
the Illinois Central railroad, today
filed with the Interstate Commerce
Commission an application for in
creased rates to place these roads on
the s per cent income basis provided
In the transportation act Of 1920.
Declaring that "a grave emergency
exists" and that the credit Of the
carriers should be f1rmuly established.
so that they may perform their pub
lie service. Mr.. Markham presented to
the commission an estimate of the
needed additional revenue of $780,
10000 to place the roads on the 6
per cent income. This increase is
equal to 20.7 per cent on the total
revenue. or 800 per cent if applied
only to the freight traffic. The south
ern roads propose tina. al! the needed
new revenue be obtained on freight,
leaving passenger rates undisturbed.
Plan to Avoid Disturbance.
To avoid disturbance in the dis
tribution of traffic the carriers recon-
mend special treatment be given to
carload commodity rates OH coal and
coke. cement, stone and other low
grade mineral products. Increases
proposed on coal and coke vary from
80 to 80 cents ton, on cement from
80 cents to S1.40 ton. on building
sand, gravel. stone. etc. from 25 to so
cents ton. 1t is proposed TO advance
All other rates 81 per cent.
\ basis of rates yielding less than
s per cent on the investment. MIR.
Markham contends. will not enable
He says:
The nations present and growing
business, the settlement of new agri
cultural sections, and the develop
ment of its mineral resources require
more locomotives and cars. enlarged
and improved terminals, the build
ing of new lines of railway, the adj
dition of second tracks and other ia
cilities. Funds for the purchase of
additional equipment and for the con-
struction of additional lines and ia
cilities can be obtained only through
the sale of securities. Railroad Sc
curities cannot, to an adequate ex-
tent. be sold on basis that is not
prohibitory until there is rehabili-
tation Of the credit Of railroads.
Analysis Of Earning Power.
In an analysis Of the earning power
of the southern roads Mr.. Markham
states that owing to the tremendous
increase in the cost Of operation,
which increase has not been accom-
panied by a corresponding increase
in rates of transportation, these car
riers will sustain exceedingly heavy
losses unless their rates are sub
stantially advanced. He says: For the
twelve months ending october 81.
1919, statistics compiled for $4,000
miles out of total of $4,000 miles in
the south show the following results:
Total operating revenues $oU. $40
2l2,747. leaving net operating reve-
nue., $73,422.746. After deducting rail-
way tax accruals, uncollectible reve-
nue. and adjusting equipment and
joint facility rent. the net railway
operating income was sol EOS .42S.
"When the actual results for the
twelve months are revised to renect
adjustments in revenue and expenses
now in effect, but not III enect
throu ghout the twelve-month period.
SO as to adjust the results of that
period to present day conditions. the
final result is to reduce the net rail
way operating income from $o1,20S,-
428 to s16.26s.429.
Discusses Property Inveatment.
1.-The property investment for these
railways in the southern group Is
se,2s3.9so.e4s. The sum of $1s7.o3s 49,
is required to pay s per cent on this
property investment, as contrasted
with the net railway operating in
come of $16.269.429 for the year end
ing October 81. 1919. after making
final adjustments to renect present
conditions. This deficit amounts to
S120,77o.02S. 1t is apparent, there
fore, that if the needed increase in
revenue is to be derived from in
creases in freight rates and charges.
then the same (both interstate and
intrastate, must be advanced 800 per
cent to produce the sum of $780,
770OoS.'
MI. Markham states that the prop
erty investment account basis is sub
stantially less than the aggregate
value of the property in the south
srn group, and this basis should be
taken as the minimum representing
the lowest value which can fairly
be used for the purpose Of establish
ing a rate basis to meet the present
emergency"