The Washington herald., 1920-08-01

Western, ss,sls,45I,S72.
Makes own Valuation.
Instead, the Commission places its
own valuation on the railroads, as
follows:
Eastern. $500. 900, 900: Southern,
SO. 600. 900, 900, and Western. $780,
O0o. 900; a total OF s1S,9oo, 900, 900.
In explaining the disparity of ST.
100, 900, 900 between the two es-
Inmates, the Commission makes the
following statement:
While the valuation of the rail-
roads under the Interstate Com
merce Commission act is still incom-
plete. the work has progressed so
far that the results are of value
and Informative in reaching the de-
termination we are now required to
make. So far as the work has pro-
duced results, either as to particular
roads or as showing general ten
denotes and principles, we have
given consideration thereto. As will
appear from examination of our
various valuation reports, our in
vestigations are designed to give
information as to the original cost
Of the property. the cost of produc-
tiOn now, the accrued depreciation
the amount of the investment, the
corporate histories of the properties.
the values of the lands and other
values and elements of value, il
any.
Future Needs Considered.
In properly appraising all these
elements of value we are mindful of
the fact that the carriers are oper-
ating units and going concerns
This fact has been givenu due con-
sideration in the light of the finan-
Cial history of the transportation
system of the United States, as de-
veloped by the record and as known
to US. The needs for working capi-
tai and material and supplies on
hand have been considered and al
lOwance therefor has been made"
In estimating their financial
needs, the carriers based their fig
ures on the actual performance for
the twelve month period ended Oc-
tOber 81, 1919. This period was con-
sidered by the carriers more repre-
sentative of normal conditions than
the calendar year 1919 for the rea-
son, among others, that the bitumi-
nous coal strike began November l.,
1919, ending early in December
The commission points out that
the Eastern carriers have asked
that they be permitted to earn an
annual net railway operating in
come of s559.4O9.923, which repre-
sents per cent on a book" invest
ment Of s9,323,49S,S9S. The actual
net operating income of the Eastern
carriers for the year ended October
i
SlS,OOS,2l9, or more than $500, ,OOO,- =
600 short of the requisite amount.
Operation Costs Increase.
Continuing tits reference to the
Eastern group, the commission
states:
Not only has there been a sharp
( decline in railway operating income
, during the last three or four years,
! but the operating ratio has in
creased at a rate that causes serI-
Gus concern. For the period of five
years, beginning with 1912 and end
ing with 1915. the Eastern carriers
! were spending out of every dollar
I OF operating revenue received ap-
proximately II cents for operating
expenses. This increased to 1903
Gems in 1917, to S5.S2 cents in 1918,
to 1851 cents in 1919 and to 97.6S
cents for the first four months of
1920.
When II is considered that oper-
ating expenses do not include rail
way tax accruals, uncollectibIe rail-
way revenues, joint facility rents
hire of equipment rents for lease of
road, interest on funded and un-
funded debt and other fixed charges,
dividends and certain other items,
the above figures are significant"
Best in south.
Dealing with the revenue needs
of carriers in the Southern group,
the commission points out that the
financial condition of the roads in
this group are more favorable than
that of the carriers in either of the
other groups. The Southern carriers
ask that their rates be increased
sufficiently so that they may earn a
net railway operating income of
S136,049.091, which represents a re-
turn of 6 per cent on a book cost
of S2.267,4S4,S47. According to the
finally adjusted net railway operat-
ing income for the constructive year
ending October 81, 1919, the amount
was S16.2G9.i29 or nearly s12O.OOO. -
900 short of the required amount.
The Western carriers asked that
their rates be fixed on a basis that
will permit them to earn a net rail-
way operating income of s537. S33,-
024. representing A return of per
cent on a book cost of sS,693.SS3.T53.
The finally adjusted net railway op-
Grating income for the Western
roads during the year ended OCto-
Der 81, 1919, was s1S4.939.759. On
the basis of the predictions of the
carriers the net railway operating
Income for the Western group will
be approximately s35O.OO0,OOO less
than the annual sum to which they
claim to be entitled.
The recommendations of the rail
way executives themselves with re-
lation to the part passenger traffic
must play in the increases are close