, 1921-11-07
Current Business Conditions

box car, . piece Of track or anything else
II, on a given railroad. we had made our
lished. say. Of June 30. 1911; we then
computed she value of what the railroad
had At that time. An that had been put
in since that time. added. has been computed
Senator Jones: THE valuation which you
have put upon the railroads Is based more
largely on cost than on present value.
Mr.. Clark: Eyes. sir. 1t is based on
three different values that we determined.
date of valuation. then. upon the cost Of
reproduction less depreciation, which repre-
sents the deprecated condition. of the prop
erty as 81 that date. and then the actual cost
Senator Pomerene: "$is, 900. 600. 900 was
the best Judgment of the Commission after
going through all the data that had been
Commissioner Clark: Yes, air."
Senator Pomerene: That shoald set at
rest the charge that there is $4,000, 00o, 900
Of water in the railroads now"
That statement should be conclusive
as to the basis of the valuations, par
ticularly so far as the brothcrhoods
are concerned, for Mr.. Clark formerly
was head of the Order of Railway
Conductors, resigning TO become a
member of the Interstate Commerce
Commission, to which he vas APP
pointed by President Roosevelt. He
amply demonstrated his qualifications
for the position by his service on the
Board, where he rose to the Chairman
ship, which he held at the time the
valuation was adopted. Probably no
member of the body has been more
influential in recent years than Mr..
Clark. 1t does not reflect, therefore,
in any way upon the original appoint
ment to surmisc that in making It
President Roosevelt was influenced in
some degree by a desire to have a man
on the Board who would understand
the point of view of the employees, and
in whom they would have confidence.
The opinion is often expressed that
employers should continue to operate
/. even though they are not finding sale
i. for their products. in order to give
!, employment for labor. The prac-
: ticabiity of this policy may be judged
from the following figures given out
by the General Electric Company,
!. showing the distribution of its income
. over a period of three years, and those
!, the most prosperous years of its his
l tory. The figures show the average
t distribution of each dollar of gross
: receipts in the years l9iS-l9-20:
Wages and salaries tpaid to an aver
E age OF $1,000 enployces)..-.....- AZ
|. Materials, supplies. depreciation, oper-
I atinE charge, and iosses.....-..- 4o.s
/. Taxes ...... SIS
Surplus (used for charging plants,
i inventories and working capstzl).. ~
{ Dividends to all stockholders leverage
number. 2i.461) 40
! Transportation, telephone and tele-
gfapn -
= Interest on borrowed capital........ Ia
= This statement will show the neces-
Z sity for a continuous inflow~of money
e to keep the business in funds to oper-
ate. The costs of operation took over
: 81 per cen of the gross receipts as
e fast as they came, and the gross
it receipts aggregated hundreds of mil.
= lions of dollars 1t is impossible fol
5 such an organization to operate long
, without selling its products. The
= figures also show how small is the
possibility of increasing wages at Oh,
a expense of. profits. evcn If all OF III,
:: latter were devoted TO that purpos,
= in the case of one of the most pros,
a pcrous companies in the country.