Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-12-29
THAT BURLINGTON DIVIDEND.

A letter from President Budd OF the Great
Northern Railway company sets forth certain facts
IN relation to the Burlington railroad and its recent
dividend of 20 per cent upon which comment was
made in the Herald a few weeks ago. Mr.. Budd ex-
plains in brief that for the past twenty years the
Burlington railroad has been capitalized for only
two-thlrds of its value, and that, therefore, during
this time it has only paid to its shareholders about
tWo-tfirds as much as if its dividend rate had been
calculated on its full valuation. The excess was
therefore allowed to accumulate in the form of a SUR
plus, and a part of this surplus has now been dis
tributed in the form of dividends in order to tide
over the stockholders, principally the Great North
ern and Northern Pacific railroad companies) until
the return Of better times. Some figures are given
indicating that the earnings of the Burlington for
twenty years past have amounted to an average Of
5.69 per cent of its value, and that during that time,
including the 20 per cent dividends recently paid,
the payments to stockholders have averaged 4.si per
cent of its value, and the difference of las per cent
has been put back each year into the property.
~tormatl is also given concerning the rela-
tons between the Burlington and its joint owners,
panies, and MI. Budd points out that while this own
has been beneficial to the Burlington it has al
so been beneficial to the two owning railroads, as
there has been a mutual exchange of traffic which
has been advantageous to all three. .
Figures are also given to show that from jan
uary l, to October 81, 1921, the net earnings of the
Great Northern road have been only two million
dollars on an investment of $50 millions, or less than
one per cent. In addition to this, the company dur
ing that period spent $1,000, 900 for additions and
betterments to its property, so that during the ten
months period, the actual payments of the company
amounted to more than its total receipts.
1t IS gratifying to receive this statement from
the head Of the Great Northern road. 1t aids to a
clearer understanding of the situation than was
otherwise possible. The whole subject, however, IL
Illustrates one of the unfortunate features of the en-
tire railway situation. The payments made for
transportation service must be made ultimately by
the great consuming public. Railway finance is not
understood by the public. 1t is intricate and COM
|plicated. Men naturally resent the thought that
they are being victimized, and when problems of
differentiation and generalization enter into a con-
sideration of the cost Of transportation service the
public becomes confused, and confusion breeds
suspicion. 1t would be highly desirable if it were
possible that the whole system of railway financing
and railway accounting might be reduced to simpler
terms SO that no basis might be afforded for the sus-
picion that the public is being victimized when as a
matter of fact, it is not paying more than it ought to
pay for service rendered. 1t is recognized that the
difficulties in the way Of such a simplifcation Of
the subject are enormous, but railway officials will
be doing themselves and the public a great service
if they devote their utmost effort to the accomplish
ment of this object.