The Farmington times. (Farmington, St. Francois County, Mo.) 1905-1926, 1920-07-23
FARM BUREAU NOTES

The American Farm Bureau FEEDER
alton together with several shippers
associations handling livestock, grain
and other products, knowing that I'M
less they had some protection in the
readjustment of freight rates that
were sure to come, hired Clifford
Thorne and corps of clerks to work
under his direction to see that the ship
ping rates of agricultural products
were not raised out of all proportion
to all other classes of freight. The
things brought to light by the investi-
cation, which required months of work
are of interest not only to the farmers
in st. Francois county, but to people
of all trades and professions.
This report showed three outstand-
ing things: (1) that the railroad val
uation on which the guaranteed six
per cent returns are figured, are ire
mendously over-valued to the extent
of several thousand million dollars;
~ that the present basis of income
and expenditure is not fair basis to
figure profits upon; and (3) that even
on the present, basis, the, calculations
of the railroads allow for increased ex-
penditures next year but do not allow
for increased business and revenue.
Mr.. Thorne showed-and supported
with volumes of carefully tabuIated
figures-than on the basis of the fig
ures submitted, the railroads would
need an increase of only 10 per cent,
instead of the proposed 27.S5 per cent,
to pay the six per cent dividends guar
anteed under the new railroad law.
If this contention is successful, it
would mean the saving to the public
in freight over-charges, a sum amour
ting to approximately million dollars
day. According to the figures pre-
sented, the railways would still be
getting adequate returns to meet all
maintenance and operating expenses
and to pay the siv per cent dividends.
During the past three years, the
total annual interest charge on the
public debt of the United States Gov
eminent has increased from $23,000,-
900 to $1,053, 100000.
The report of Mr.. Thorne shows that
the railroads are asking for an in
crease in freight rates which will pro-
duce $1,0l7,776,995 annually. This is
the first billiondollar case ever tried
before any tribunal.
If the railroad interests are sue
cessful in their demands, the increas-
ed transportation burden on our peo-
pie will be twice as large as the total
annual tax burden occasioned by the
greatest war debt in our history.
The "book" value of American rail-
roads in the United States, is $20,616,-
$1,000 and in no sense constitutes the
actual investment. No deduction has
been made for depreciation in giving
out this estimate of value. The rail
road people have assumed that all
cars, locomotives, rails and ties today
are brand new, right out of the shops.
Such a method of appraisal is unjust
and has been specifically repudiated
by the Supreme Court of the United
States. This item of depreciation
amounts to 1895, 384,881.
Railroad securities are selling below
par at present. The railroad people
value their property at par and then
add three billion ($3,000,000,0 00) dol
ars or three thousand million dollars
greater than the total par value of all
their stocks and bonds outstanding in
the hands of the public. The present
market value of American railroads,
based on securities in the hands of the
public is approximately $12,200,000,-
600. The railroads desire to add to
this $8,000,000,000, or total of $780,
600,000,000.
Even placing a par value on the
railroads instead of the above market
or commercial value, it is less than
SIT, 000,000,000 Contrast that figure
with the $20,600,000,0 900 demanded as
a basis, by the railroads in this case.
Granted that the reproduction cost
now, less depreciation, of all property
other than land, plus the present value
of land, used for carrier purposes, is
greater than the par value, we tagc
the figures Of the railroads which |
shows that the present value is equiv
alent to 1921 per cent of their So
called property investment. 1921 per
cent Of SIC, 900, 000,0 900 gives value of
SIT, 155, 100000.
The railroads contended that an al
lowance of "going value" working |
capital, and materials and supplies |
should be added to the $20,600, 000,-
900. Going values has been the subject |
to much controversy. At present there
are no competent figures whatsoever
as to the amount of such values, if !
they should be added.
To offset this, the following point
NJ