The Connecticut labor news., 1921-07-15
CAN REBUILD ROADS FOR LESS THAN HALF
 OF CLAIMED VALUES
I. C. C. Examiners Reveal Heavy Watering of Stock of Eighteen Carriers-Many Roads Are
 Iunk.

The Interstate Commerce Commits sion, proceeding under the valuation act Ot 1913, IS completing and an nOunCing its appraisal of the physical properties of number of the less i'm pOrtant carriers. Its inVesti gations in majority Of cases prove the charge that the so-called 'property invest ment accounts" are swollen with tiC- titious claims.
 Eighteen roads which have been valued, the commissions engineers find, could have been reproduced new, even at the relatively high costs of labor and materials prevailing in 1917, for just half what the carriers claim they are worth if a proper de preClatlOn charge is included in the calculation.
 While the books of these IS roads show as an investment in road and equipment the sum of $Io4,034o3I.S2, the engineers declare that only $5O,- S54, 5OOOo would be required to outtlt thelr entire properties with new equip ment. This includes land at its mar ket value when the appraisals were made, in 1917.
 Get Increased Increment. Included in these valuations is the unearned increment, which does not belong there. It IS COntended by many competent authorities that land used tor railroad purposes can not claim the natural increase of values enjoyed by property that is not united that specific use.
 These IS companies have been chosen at random from different parts of the country. None of them has ever been selected as an instance of corrupt financial management. They are so small that extraordinary man agement would be difficult to conceal. Likewise they are too small to attract the attention of large financial inter ests that have footed and wrecked other roads, notably the Frisco, the Santa Fe, the Rock Island, and the New York, New Haven & Hartford. They can be considered typical Ot American railroads.
 The most fragrant overcapitulization IS revealed Ill the accounts Ot the New Orleans, Texas X Mexico Railroad, which claims to have invested $35,- IzI,oI0 in road and equipment
 The commission reports that this property can be reproduced new for
 not more than $S,504oIo with the necessary depreciation allowance. The actual value of the road is, therefore, less than One-third of the claimed value, upon which the public is com pelled to pay eXorbitant freight charges that dividends may be guar anteed under the Cummins-Esch act.
 The Chesapeake Beach Railway, running into the city of Washington, is shown to be very largely junk. The books of the carriers claim an investment in road and equipment of $2,567,23I.oo, while the commission believes 1t could be reproduced new for $724,51o.
 The Mississippi Eastern Railroad, | insignificant in size, IS a glaring eN- l ample of the worthlessness of the
 railroads accounting systems. This road claims an investment of $75,7oo.
 It eau be rebuilt, according to the
 commission, for $2,435, or more than | 5000 per cent. less than the sum on which the owners claim dividends. Big Value Placed on Junk. An even more striking example of stock watering is furnished by the
 Central of Arkansas Railroad, which | claims an investment of $20o ooo,
 while it's phy property, including
 lands, could be reproduced new for $3,I72. This railroad has practically disintegrated, yet it is included in the | I08oo, ,ooo, ,ooo valuation placed upon American railroads as a basis for | rate-making.
 Not all railroads show such a high percentage of fictitious valuation, but
 great majority actually represent
 but a fraction of the sum alleged t. | have been invested in them.
 It has been stated that shippers are paying interest charges on the cars
 and equipment and tracks that were
 used to transport troops during the | Mexican and Civil wars Rails that
 have disappeared in rust and cars that
 have returned 10 their natural ele-
 ments are included in bloated invest | ment accounts.