The Connecticut labor news., 1923-10-27
I. c. c. Shows Up
(Continued from First Page)

(Continued from First Page)
 include every share of "watered' stock issued during the past 75 years If dividend were declared by ev- cry road, the profit would be sufic- tent to pay an average dividend of S.o per cent. on the par value of every share, including the "watered" stock.
 Stockholders Get 1s Per Cent. The market value of railroad stock is perhaps 25 per cent. less than its par value, and many stockholders se- cured their shares at less than half of par. A dividend of 8.o per cent. on par, therefore, would be a return of practically IS per cent. on investment.
 However, 30 per cent. of the rail roads will not pay dividends. Last year less than 70 per cent. of all roads made return to stockholders. If this percentage holds good this year, which seems likely, the average rate on par value of dividend stocks will greatly exceed the figures given above. ~ .-@
 It is pointed out. by these federal officials that some of the roads are earning at rate sthat will make 1t pOSSlDlC IOI tlGI1 lO utSlI1DulC HICl- ons"-in the shape of "stock divi- the par value of their outstanding stock.
 Hundreds of millions of dollars will go to surplus after regular divi- dends are declared and later distEi- buted in the shape of stock dividends based on capitalization of these sur pluses, as has been done by some railroads in the past few years.
 Average Return" Is Misleading.
 It IS pointed out by the commission that the leverage rate of return so widely advertised in the newspa pers-is no indication of the size of dividends Last year the average re- turn of all railroads was about per cent, while the average dividend paid was three times that amount.
 This was accounted for in various ways: r
 First The "value" on which the roads claim the right to earn 5M per cent is billions in excess of the amount actually invested,
 Second The roads only pay 458 on ten billions of bonds. When the roads are earning big money the bondhold CTS, do not benefit; the stockholders get all the velvet"
 Third. Some roads are rolling in wealth while others are in bad shape The Cummins-E Esch bill was supposed to equalize this, but. it has not worked according to the prom ises of it's supporters.
 National Scandal" Threatens.
 Were it not for the fact that roads he western and southwestern groups are in bad financial condition, due to the agricultural depression, the total earnings of all carriers would be so large that they would constitute a national scandal" say some members of the commission.
 Every road in the Great Lakes region, the Ohio-Indiana, Allegheny, the Pocahontas, and the southern reg ions has increased it's profits this year. The Baltimore & Ohio, the Pennsylvania, the Delaware & Hud- son, the Nickel Plate, the Clover Leaf, the Pere Marquette, the Illin- ois Central, the New York Central, all the anthracite roads and more than score of others have reported profits in excess of hte figures de- manded of the government as rental during the war and which was re- garded as "shockingly" large by Sen ator Cummins
 Rate Reduction Is Possible.
 Railroad earnings are now being earnestly studied by members of the commission, in connection with the possibility of reducing freight rates.
 It is not denied that members of the commission are apprehensive that they will come in for heavy censure because they have sanctioned rates that enable the railroads to profit to an extent beyond the most sanguine expectations of the managers.
 The big-proft roads are embarked on money-spending orgy in des- perate effort to conceal the extent of their earnings. Had maintenance figures been kept at last years level, 1t is pointed out, the net profit for the year would surely be at least quar- ter of a billion dollars greater than the 5M per cent. return guaranteed hv the CI1rnminS law