The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1921-09-09
|IslDE FACTS ON
RAILROAD GRAF I |
cr,nosed of About S. Per
.lroad lol"E;d Eide Stock and As Per
Cent Bcna IN Which Earnings are
Cent W1 Uncle Sam Has Been Pay AZ
Bssed cru.,aranteed Dividend on $6,-
gss e coo, 900 Water.

Bsse Guaranteed Dividend on So'-
%sssse,Soo Water.
,n,;ttee of 48, through its
The nrihairlnan, Mr.. J. a. Is.
r,ecutive Tissue issued the following re-
Sosins, mas ,,estions that have APP
70 a' the public press IN n re e,ea-
sared 4 is article published On aug,
zee TO .,nsn Nv the Harding KAiroad
t 1st o opp Questions which have
Jsn. lh ne .nd the Committee OF AIS
20 "a, sa's sqs a as follows: ..,,;4.,
nsssW Why is it not proper pr PEI P - ISs
! ~ W" INDEBTEDNESS OF the nal dt a,s1.,
e the n noason that this is not only
The rsd h,,t fundamentally dishonest
pproper our moneys spent to replace
because ,,;nment or other deprecia-
rom on. :, ea wise add to the value Of
be pro y ',Dkeep, aid should be reck-
ense Of as an expenditure. OF addi-
ned no. ,e @ capital but as part OF
onal m .hesd expense to be paid out
he oVerne' earnings, which is insep
|'r,s be from any c0mme'e'a' p'op'
aa Oh financing requires the set
Proper pei of Of a sinking fund taken
on e .lr1.g bond issue so that the
nth ey themselves will be ultimately
o aiasd and and the Indebtedness wiped
etirear h ai.u Is common practice IN
vt i hns;ness enterprise except the
very " gu' which have never made any
a' u anro'yision. Instead Of paying
60 g. bond bonds at maturity they nave az
her he'll D0 issued new bonds, with the
np a th hs at the present time rail.
esals a .,, have a book value OF
osd s; ;mate1v $4,000, 100000, the in
assst charges of which represent !. an
s IIse;srs ai tax upon the public IN the
utoleia - increased freight and pass
haps ape p 70 Notwithstanding the fact
ngsl ii I1 If their securities could be
ha . al in the open market for
saut s11 500, 100000, The difference
.
!, wa a. Harding Plan is adopted and
/. = s s again capitalize their
q s,h la,dL they simply add a furth-
(na sot;t;ons 100000, 900 to their pres
it capitalization: In addlelon 70
H. they add the interest on these
a ands II (which at 6 per cent equals
s slG MN nm "a their annual overhead
vuSnse and necessitate additional
aFpst;on in the shape of increased
, s or otherwise in order to meet
h his increased indebtedness.
, (a) Why cannot the railroads
,.,,o their own bonds for $500, OOO, DOC
nstead of issuing them through the
Mar lsrr finance Corporation, as in eth
y case the money is collected from
he investing public?
lb) Why does the Committee OF
as contend the. Harding Plan involves
taking s5OO,0OO,OoO more out Of the
taxpayers pockets?
The railroads are not putting out
The bonds themselves because, being
uractically bankrupt, they are unable
d float them; hence they require the
WAR Finance Corporation to go spofl.
sor for the bonds and give them what
i in effect a Government guarantee
By reason of this guarantee it i
hoped that the public will invest, be.
cause they will be satisfied as to the
security.
This increased liability for $500,
100000 must eventually be satisfied
Either the railroads must pay i. by
Increasing their rates (which in Law
and in fact are taxes), or failing t.
do so the Government must make
good and add this amount to it's ia,
budget. In either case the taxpaye.
pays the bill. Meanwhile he pays tn
s3O,0OO,O0O interest annually.
3. Does not the fact that thl
money is to be used to stimulate tn
steel and equipment companies b.
giving them additional contracts 70:
replacements and repairs indicate tina
the real object of the administrator
is simply to provide work for the un
employed?
The committee of 48 does not desir
to express any opinion as to the exac
purpose Of the administration in pro
posing this legislation, but the fact
are that Immediately after the return
Of the railroads to their private own
ers some 10000 employees were dis
charged from the railroad shops an
the work transferred to private stee
and equipment companies.
The cost of doing this work in tn
private yards was considerably high
er than in the railroad shops. Thi
mas been frankly admitted by Mr.. Re
Of the Pennsylvania. The additions
expense involved has been estimate
az sfoO,OO0,000 per annum. This
understandable when it is remembers
snat repairs to specific locomotive
nnlch have been checked up al
s snown to have cost as much as $40
WV IN the private yards as compare
y a cost Of $1,000 for the same wor
~ inc railroad shops. The differenc
soss into the proht-or profiteering-
'sS 20! OF the equipment companies.
Inns IS only one illustration of til
SIssem by which Wall Street throug
W. control of railroad financing hs
,,Oollsslsteently impoverished the raj
i've; NOUS !, themselves while steadily draiz
Eas lle pockets of the investing pull
tS ~, ana dlverting the proceeds lint
n rns coHers Of the industrial entel
r ra,ses (which live upon Railroad pa
,vnage? IN which the Wall Sire.
frvup IS especially interested an
''y M winch it draws it's profits.
ata ane so-called Harding Plan ena1
wh; VIII from this same Banking Grou
which outlined tho ,,rococ;t:ar ~ Ca