Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-12-14

The Commission has determined I
that 81 per cent is fair rate OF =
return, and fixed $4,000, 000, 900 as
the aggregate value of railroad
property used in providing trans
portation. This valuation is based
upon an investigation of the actual
value of railroad property, before
the war, plus investments since.
and has nothing to do with the
amount of stocks and bonds. The
rate of return named is not as.
sured to individual companies. y
but is simply the basis upon which,
rate-calculations are made. The.
companies must compete, with the
result that some will doubtless,
earn more than So per cent. and
others will earn less. Those earn.-
ing more are required to pay one
half the excess into a fund to be
managed by the Interstate Com
mission and invested in reserve !,
railroad equipment. available for
use in emergencies like the
present.
The primary purpose of railroad
regulation of course is to protect
the public. The roads are natural
monopolies and it is right thar
their charges and operations
should be under governmental
control. The interest of the EschHa
Cummins law is to give assurance
to the public on one hand, that the,e
charges will be restricted, and too
the investors on the other handC
that in regulating charges the
Interstate Commission will not
90 so far as to prevent a fair req
turn on capital actually invested.
The threat to repeal the Esch-
Cummins law naturally has the eff
feet Of increasing the timidity of
the public toward railroad invest
ments. Railroad service cannot be,
had without the facilities, and,
these cannot be had unless the in +.
vesting public is assured of a re-.
turn corresponding to what can be
had in other fields of investment.
One view commonly held at tn"
sources of this agitation seems to-
be that the railroads are owned by
a few rich bankers who are able to-
put their hands in their pockets
for all the money needed to pro- .
vide the necessary expansion Of
service. The railroads, however,
are not owned by bankers; the
ownership is widely distributed
and will respond with additional 4
capital only as it believes the in-+
vestment to be safe. Some of the I.
stronger companies are still able
to raise money by giving mort.d
cages that come ahead Of the
stock. but this is just like putting
a second mortgage on farm. h
This process cannot be carried in,
definitely. because the margin Of
safety grows smaller. Proper .
financing of the railroads requires
that approximately one-half of the,
capital shall be represented by cap
ital stock: in other words. that pro-
portion should be proprietary cap-.
ital, in order to obtain favorable
terms upon borrowed money. Very :
little new capital has been raised
for railroads by that means re-
Gently. Most Of the purchases Of
equipment lately have been accom-
plishcd on the installment plan.~
iHOl tSdSlHS tiic Equipment lOE'"
about Is per cent of the value. =,
The railroad blockade this fall
has shown that the biggest railroad
problem is how to raise the money,
to keep the railroads up to the &
growing business of the country. .
The railroad companies came in
to the crop-moving season with
much motive power in poor condi--
ton as a result of the shipments
strike, and have had to deal with
an extra heavy movement OF coal,
resulting from the coal strike. and
with all traffic reviving. in the lasts,
week of October l.0l4,4S0 carloads
of freight were loaded, which isl
but a fraction of one per cent ber.
low the peakloading of any week
in the history of the country. Tho.
car loading figures for the past
month not only exceed those for
November, 1921, but are the high
est for that month on record.