Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-12-18

percent is a fair rate of return, and
fixed $4,000, 100000 as the aggregate
value of railroad property used in pro-
vidlng transportation. This valua-
ton is based upon an investigation
or h actual value of RAILROAD pro-
perty, before the war. plus invest
ments since, and has nothing to do
with the amount Of stocks and bonds.
The q of return named is not as
sured to individual companies. but
is simply the basis upon which rate
calculations are made. The compan-
les must compete. with the result that
some will doubtless earn more than
. ga per cent. and others will Barn
less. Those earning more are reuuir-
ed to a oRe-half the excess into a
fund to be managed by the Inter-
state Commission and invested in re-
serve railroad equipment, available
Tor use in emergencies like the pres
ent.
The primary purpose of railroad
regulation OF course Is to protect the
pubhc. The roads are natural mono
poles and it Is right that their charg-
es and operations should be under
governmental control. The interest
OF the Esch-Cummins law is to give
assurance to the public or one hand.
that the charges will be restricted.
and to the investors on the other
hand that In regulating charges the
Interstate Commission will not go 40
far as to prevent a fair return on
capital actually invested.
The threat to repeal the Esch-Cum-
MINIS law naturally has the effect of
increasing the timidity OF the public
toward railroad investments. Railroad
service cannot be had without the ia
cllltles' n these annot be had un.
less the investing public Is assured OF
a return, corresponding to what
can be had in other fields of invest
ment. One view comm only held at
the sources of this agitation seems
to be that the railroads are owned Nv
a few rich bankers who are able tn
put their hands in their pockets for
all the money needed to provide the
necessary expansion Of service, The
railroads, however, are not owned by
bankers; the ownership is widely dis.
trihuted and will respond with addI-
tional capital only as it believes tho
investment to be safe. Some OF the
stronger companies arc still able to
raise money by giving mortgages that
come ahead Of the stock. but this A
IJust like putting a, second mortgage
on a farm. This process cannot he
carried indefinitely. because the mar
gin Of safety grows smaller. Proper
financing OF the railroads requires
that approximately one-half Of ftha
capital shall be represented by CAPT
tai stock: in other words, that pro-
portion should be proprietary capital.
I'M order to obtain favorable arm.
upon borrowed money. Very littie
new capital has been raised Tor raus
roads by that means recently. Mn.t
OF the purchases OF equipment lateiv
have been accomplished on the n.
|stallment plan, mortgaging the eouin.
mont for. about Is per cent Of the
value. SEJS
The railroad blockade this tan m.
shown that the biggest railroad. prnh-
|lemes how 70 raise the money ia. kasn
the railroads up to the growine bus.
nes1 OF III country.
The railroad c0mpanie1 came int0
the scrop-Movlng season with rnnch
motive power In poor condition 5an Z
result. Yfof the shopmsn's strike, ana
have had to5deals with an extra heayy
movement OF coal, resulting fron1sthe
coal strike, and With Ill traffic I
vlv1nG. IN the last week sof October
|1,O14,490a carloads OF ffod6ht NerA9um.
[lo4dedss which - but as1kaction 81 sons
(psf bslAw the peAk-lcadine EOf
[AnYIweAksfDsthe hfst0ryM@of4the eoun-
IA. The tar lnading nenresl for the
pct month not only sxceed sthcse or
November 115l but Afs the hfgheI1t
Her thai month n record ses