The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-02-08
Chairman Reed Asks for Re-
duction in Passenger Fares.
Would Mean Saving of $780,
900 to Kansas Citizens.
FROM 3.6 TO 3 CENTS Per MILE
Head of p. U. C. Testifies Be-
fore l. C. C. in Washington.
Calls Attention to Favorable
Financial Condition of Roads.

lie utilities commission, returned from
, Washington today. He had nothing to
say about the gubernatoria1 situation,
but much to say about railroad rates
and other railroad matters.
Il have been very busy before the
| interstate commerce commission and
| have not been in touch with the Kan
| sas political situation" he said.
Asked if he was more of a candidate
for governor than he was when he left
for Washington before Kansas Day,
he said:
II am not"
Asked if he was less of a candidate,
the reply was the same.
Much About Railroad Rates.
But the fighting P. U. C. chairman
had much to say about railroad rates.
He said that, as a result of the show
ing made last week, he was hopeful
that passenger fares would be reduced
from 3.6 cents mile to 3 cents a mile.
Such reduction would mean a saving
to the citizens of Kansas of something
| like $1,500,00O annually. Reed said.
In addition to attempting to get
reduction in passenger fares the Kan
sas commissioner also attempted to
offer proof that the railroads can get
along profitably on a return of per
cent or less after the expiration of
the two-year period, March 1, under
which the interstate commerce COM
mission has been required to give them
rates to return them per cent The
roads are seeking a higher return and
Reed undertook to show the commits
sion that the statistics of the roads
do not justify their claim.
Testified Before I. C. C.
Reed personally took the stand as
a witness before the interstate com
merce commission. He called atten-
tion to the favorable condition of the
railroads as compared with the com
mercial, industrial and agricultural
interests of the country. He called
attention to the fact that farm prices
! had been Debated to an amount ag-
gregating seven billion dollars, and
that farm operations were now and
| had been conducted at a loss - He
pointed out that the business failures
in 1921 aggregated 1892, a larger
number than has occurred in any year
in the history of the country. The
! total liabilities involved in the failures
! of 1921 amounted to $3.50. 100000. This
sum has doubled the liabilities of any
: previous year. with one exception. In
/ the face of the most disastrous year in
! American business. Reed pointed out
that the railroad mileage in the hands
| of receivers at the close of 1921 was
| the smallest of any years since 1912,
and less than half of the receivershiI
mileage in 1915, 1916 and 1917.
Railroads Make Full Returns.
! Some of the strong railroads made
their full return in 1921. The rail-
roads as a whole made some return
, in that year, as contrasted with the
! general losses sustained by farmers
| and business men, and enormous
! losses shown in the operations of such
industrial concerns as Armour & Com
pany, Swift & Company. Sears, Roe
buck & Company, Cuba Cane Sugar
corporation, Consolidated Gas COM
pany of New York, Fisk Rubber com
! pany, Firestone Tire & Rubber COM
| pany, and others.
! 1t has been extensively claimed that
the railroad credit had become i'm
1 paired. Quoting such financial au-
thorities as Bradstreet, the Com
mercial and Financial Chronicle of
! New York, the Harvard Review of
Economics Statistics, Reed showed
/ that railroads were able to borrow
money and float refunding and new
| securities at a lesser rate of interest
than public utilities or industrial con-
Germs. The 1921 capital fotahons
/ of longtime securities for railroads
carried $50 per cent, as against 6.6S
! per cent for public utilities, and no
per cent for industrials.
"As a matter of fact" Reed stated,
'the decline in the value of railroad
! securities as related TO the net rate OF
return was not materially greater
than government bonds, with particu-
lar reference to the third and fourth
loan issues. At the close of 1921 rail-
road securities were in as good rela-
tive position as the government securi-
ties named"
! Credit Not Impaired.
! Much has been said about the need
! of new capital by the railroads. Reed
pointed out that in 1921 the railroads.
! for new capital purposes and to meet
maturing obligations, issued $685.
/ 2SS,500 in securities, which were alb
| sorbed by the market. This was more
than one-fourth of all the capital
! flotations in 1921, and these securi-
ties were floated at a lower rate of
| interest than securities of industrial,
public utilities and other concerns.
Reed claimed that railroad credit had
not been impaired.
Pointing out that the tractive power
of locomotives now on American rail-
roads had increased so per cent since
1910, and that the carrying capacity
of freight cars had increased 20 per
cent, Reed claimed that the railroads
were not candid with the country in
constantly conveying the impression
that railroad facilities were made
quate.
Car shortages have occurred and
viii occur again." he said, but the
fact is, that the peak loads of the
traffic in 1913 and 1920 were higher
than the normal tonnage is likely to
be up to 1929. Therefore, altogether
too much emphasis is being laid by the
railroads upon their new capital needs.
Their refunding needs for the years
1892, 1928 and 1924 aggregate only
$207. 100000, as against S3O2.O00, 900
in the year of 1921 alone. There has
been much misunderstanding in the
country on the railroad financial un-
,derstandirg. much of which has been
fostered by the railroads for the pur-
pose of creating a public sentiment