The Miller press. [volume] (Miller, S.D.) 190?-current, 1922-02-23
CAN RAILROADS STAND RATE CUT
An Analysis BY Farm Bureau Expert

Huron, Feb. 21.-The South Dakota
Farm Bureau Federation has just re-
ceived word that its national Office
appeared before the Interstate Com
merce Commission in Washington and
introduced in evidence the only gen.
eral financial analysis on behalf of
any group of shippers in the general
rate case.
The Farm Bureau, through its coun-
sci Clifford Thorne, showed that the
average receipts on every ton hauled
a mile by American Railroads last
year was greater than for any year
in the past 40 years. Much has been
said about railroads being favored
to get their money by the sale of bonds
instead of by the sale of stock in re-
cent years. Mr.. Thorne has made an
analysis of all the securities outstand-
ing in the hands of the public during
the past thirty years, and finds that
for the last year in which financial
reports are given the percentage of
total funded debt to stock outstand-
ing in the hands of the public was less
for the year 1905, and only One-tenth
of one per cent more than in 1904.
This proves that the ratio of bonds
outstanding to stock outstanding is
no greater than it was Is years ago.
Car Capacity Greater
The report of the American Farm
Bureau says: Much has been said
about the railroads failing to keep up
their facilities of recent years. We
have been told about the increase in
number of engines and cars not being
sufficient. While it is true that in
1920 1.-THE latest year available) there
were approximately only Is per cent
more engines in number than in 1908.
Mr.. Thorne finds that the tractive
power had increased Gel per cent.
While the total number of cars in 1920
exceeded those in 1908 by only IL per
cent, the capacity of the cars in 1920
was 81 per cent greater than in 1908.
In other words, these statements about
increased facilities totally ignore the
larger size of the cars and engines.
The capacity of the cars has increased
three times as much as the number,
and is the true measure of the amount
of facility furnished. And use has
never been made of more than SIS per
cent of the capacity of the cars avail
able.
Another important analysis intro
duced by the Farm Bureau was a re-
view of all the tentative valuations
which have been completed up to the
present time by the Interstate Com
merce Commission. There were 1S2
roads covered-every road for which
any tentative valuation has been com
pleted. II covers 10 per cent Of the
mileage of the country. This docu-
ment showed that the final valuation
was only 70 Ia per cent of the pro.
perty investment. This is liberal to
the carriers, because in the final val
uation is included an allowance fol
cash, materials, supplies, and going
value, but the property Investment
figured does not include these items
Excess deflation of additions and bet
terments made subsequent to the orr
ginal appraisal will not cause a var
iation in the property investment fig
ure OF more than 2 per cent, and il
will not cause a decline in the rate o.
return due to the adjustment of more
than one tenth of one per cent.
Valuation Too High
Applying these ratios to the tota
property investment in America. 1t in
dicates that the tentative valuation
made by the Interstate Commerce
Commission is approximately 5000,
O00, 900 greater than it ought to be
In addition to that. Mr.. Thorne show
that the par value of all stocks an'
bonds outstanding in the hands of tn,
public (water and ALL is approximat,
ly SO, ZOO, 000, 900 less than the tenta
tive valuation and approximately "a,
0O0. 000, 900 less than the railroads so
called property investment, which
merely a book value figure.
THE Farm Bureaus analysis OF tn
unit quantities of rails. ties and bal
last showed that there was no unde
maintenance in 1920. No evidence !
! available for 1921. This statemen
was by Mr.. Pettijohn. who was tn
Chief Cost Accountant for the Unite
! States Railroad Administration
The complete Farm Bureau analyst
VI So