Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-05-01

Findings JOINT
Congress Commission
in Rail Situation
Washington. April 29.-The conclu-
sion that "in the public interest the
railroad industry must rest upon its
own foundations and its revenues
must be SO constructively regulated
( that the operations of the carriers
will produce enough to pay fair wages,
| cost of materials, taxes. meet the fixed
charges, pay a fair dividend and leave
| a margin to attract investors of new
capital was announced today by the
Joint Congressional Commission OF
Agricultural Inquiry.
This conclusion. reached by the COM
| mission after a study of railroad man
agemept and financing, will be set forth
in the Forthcoming report Of the body
along with other conclusions and rec
concentrations follows:
First. that the issue of tax free Sc
curties and large expenditures for
non-productive purposes by the fed
eral, state and municipal governments
be reduced to the smallest possible
| limits so that the taxes can be de-
creased and capital funds be allowed
to increase for the use at fair interest
rates by agriculture, industry and the
railroads and thereby help to promote
industry.
Second. that the railroads establish
regional traffic executives and organ
ize public relations department to
bring about closer contact and a better
understanding between themselves and
the public.
Third, that new money for railroad
Improvement should not be raised
through constant government aid.
Fourth. that sound railroad finance
requires that larger part of the
Icredit necessary for railway construc-
ton be obtained by stock issues in
stead of by bond issues.
In reaching its conclusion and m
making its recommendation Chairman
Anderson said today the Commission
utilized this basis:
THE railroads are not sClf-sustain-
ing and are therefore not on a sound
credit basis. If this condition CON
tinues transportation service will be
crippled and the country will suffer
accordingly"
eve believe that the transportation
facilities of the country" said Rep.
Anderson speaking for the Commits
sion, must be placed upon a solid
foundation. 1t will not do to make up
deficits by appropriations OF public
funds. The railroad companies must
be operated with the expectation that
the gross revenues will be sufficient TO
cover operating expenses and leave a
reasonable return upon the investment.
1t is of paramount Importance to the
public welfare that the transporta-
ton companies be made going con-
Germs: that they be placed upon a sub
stantial foundation in every respect;
and that the operating expenses be re-
duced by careful and efficient manage
ment."
Chairman Anderson said the opposi-
ton to further government aid arese
from the present obligations upon the
Congress and the country at large. and
a matter of economic policy.
our position" he added. "is that
the government should not he called
upon to guarantee that the PRINCIPAL
of railroad securities is safe and that
the interest and dividends thereon will
be regularly paid. To obtain new rail
road capital, the opportunities to earn
and pay regular dividends must exist.
and railroad arrangements must be
encouraged to exercise the greatest in
itiative in improving and extending
transportation facilities. Further
more conditions should be created
whereby the sale of capital stock by
the principal roads Will become posi-
BILE and the continued increase in fund
cd debt will be minimized"
Figures in the report will show that
IN the last few years most railroads
have done little financing through the
sale OF stock. but have raised money
through the sale or bonds or the issu-
ancc of other evidences Of indebted
ness.
This method Of financing cannot be
indefinitely continued" Mr.. Anderson
said. Railroads cannot 60 on con-
stantly increasing their indebtedness
and not building up an equity in their
properties underlying their debt. When
the investor thinks that too large n
percentage of the value Of the prop,r-
" OF given company Is represented
by debt and not enough by stock. he
VIII decline TO buy further bonds Of
that company, or II he takes them n
VIII be only at an unduly high interest
rate"
The commissions report in calling
attention 10 the tax burden OF the rail.
roads. will show that in 1911. railroad
taxes amounted to SgS.G26.s4S. In
1913 this had increased TO SllS.3Ss.Sse
of which $liS,6Go.997 was paid as state
taxes and si.72AS6: as federal taxes
In 1870 state taxes had risen to sara
a9l,-ol. and federal taxes 20 stS.ele-
SoS. total OF se7i.siO.509. or an in
crease Of 1854 per cent over the year
1911.
New and varied forms OF taxation
are constantly being levied" said MIR.
Hh"oisoh N 'his connection. Some
OF them are intended To reach railroads
70 tha exclusion of other forms OF
business Railroads should. of course.
nay proper amount of taxes. but n
should be remembered that whatever
they Ia Ha