The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1923-04-18
PARALLEL Lines
RAISE COSTS
Of FREIGHT
Railroad Needs Of Nation
Pointed Out by Expert-con-
troll by United States.
BY w. s. COUSINS.
Copyright. 1923. by Cosmopolitan
News Service.)

Copyright. 1928, by Cosmopolitan
News Service.)
NEW YORK, April 1S.-One oil
the recognized defects of the trans
portation system today is that 1t is
made up of a number of unrelated
nonco-operative lines, which dupli-
cate transportation facilities In
some sections Of the country, while
leaving others inadequately pro-
vided for.
The higher operating expense OF
a parallel railroad is as obvious as
that of parallel milk route in a
suburban section, or duplicating
street car line which does not
double the service to the section
through which it operates.
The transportation act, which,
after many years consideration,
was finally approved in 1920, repre-
sents the first intelligent effort by
the American Congress to correlate
the scattered transportation lines.
This would arrange the lines into a
unified harmonious system, capable
of caring for the increasing de-
mands of business, with operation
on a scale to permit Of gradually
lower costs.
Briefly. it provides for lte equi-
railroad companies in the interests
of the so-called weaker lines and
their general Encouragement for the
Improvement of national transporta.
ton service.
Expansion i'm. Fifty Years.
The United States, in its pro-
digious growth and expansion dur
ing the past fifty years, may be
compared to the fat boy, who, in a
brief period, .outgrows his jumper
and his breeches and keeps on
growing faster than his mother can
make new ones
While transportation lines have
penetrated some new sections far in
advance of requirements, they have
been exceedingly tardy in others,
and thus it happens that many Of
the richest sections have been han.
dicapped in their development by
inadequate transportation.
Short lines now exist in prosper
Gus sections which might better be
served by through trans-continental
routes. The rich and prosperous
Mississippi valley, for example. is
now served by a number of lines
whose both terminal points lie well
within the district instead of reach
ing all the way from the Atlantic
to the Pacific. One of the objects
OF the transportation act is to over
: come these obvious defects.
In a recent statement Senator
Capper is quoted as saying:
Congress cannot legislate d.
rectly on railroad rates, because the
Interstate Commerce Commission
has that power. But we can do
something that will help, and q
great deal OF effort next session
viii be put on the amendments TO
the Esch- Cummins act, especially
section 15-A, known as the guaran-
tee clause, on the rate making pro-
vision.
''But the supervisory act does not
guarantee anything. It names as
a fair basis of net earnings an
amount equal to So per cent OF
the actual valuation Of the property
Of the roads, and directs the COM
merce commission to name freight
rates that will produce such earn
tngs. There is no provision Of law
by which a; deficit would be made
up to the roads,"
Suspicion Of the Public.
A good deal Of public suspicion
OF, and antagonism to, the big rail-
road managers and railroad bank.
ers Of this country is due to the
fact that they have never been able
to shake off the odium Of IVA
tered stock"
Just how much this amounts to
in various railroad lines is of course
probIematicaI, but the best apollo
gists for the railroad companies
will not deny that in their early
day thousands of dollars worth of
bonds, not to say bogus stocks,
were issued and allotted to those
who were in any way helpful in
the opening up of new lines.
The local politician doubtless
came in for his share, and the
banker and the lobbyist at Wash
1ngton, and thus the new lines
started off with a handicap which
they have carried ever since.
But stock issues carry neither the
mandatory provisions for regular
interest. payments, nor the power
OF foreclosure contained In a bond
issue indenture and railroads which
are unable to continue the payment
OF dividends are under no obligation
to impoverish themselves in order
to maintain such payments.
There is an evident injustice to
stockholders who pay real money
Tor their stock, in that their div
tdends are no more secure than are
the disbursements to stockholders
who got in on the ground floor"
The Interstate Commerce Com
mission, which was instructed to
make a valuation Of the American
railway systems as basis for the
calculation of reasonable freight
rates, has tentatively calculated the
actual value of the class I roads
as OF December 81, 1922, at SIS. IT'S. :
$4,000, against which the railroad
managers have placed a book valua-
ton, from their balance sheets, of
$21, 100, 1929 ,1O2. Here we have an
apparent discrepancy Of $4,000, 000,.
900.
Some of the Discrepancies.
A few examples will show
definitely how these discrepancies
appear. The New York, Ontario
and Western Lines, to which has
been assigned a Government valua.
ton of $45, e51 ,370, carries book
valuation of $85,101, 1927 and has
outstanding stocks and bonds in the
sum of $88,245,983.
Partly as a recognition Of over
valuation, a certificate for a full
share of the stock of. this company
can be purchased on the stock ex
change for $40, shrinkage OF
about 80 per cent.