Evening star., 1924-02-07
RAIL INVESTORS
| NEED NOT WORRY
Large Equipment Purchases
Reported to Be Already
Amply Financed.
BY j. G. ROYLE.

Special Dispatch to The Star.
NEW YORK, February 7.-Railroad
investors, of whom there are hun
dreds of thousands in the United
States, and some of whom have been
suffering from periodic rumors that
something unexpected was going to
be done by governmental agencies to
their investments, have had their
minds relieved. Deputy Commission
er of Internal Revenue Maddox in a
statement to the writer declared to-
day he knew of no pending decision
which would affect the carriers in
connection with depreciation of the
new equipment which the roads are
buying and must buy SO freely this
year.
New Equipment Purchased.
Most of this new equipment has
been purchased with money raised
by the sale of equipment trust GER
tificates. These certificates. in most
cases. have a life of ten years, one
tired by sinking fund process each
year. Under the nature of this financ-
ing, title to the cars and locomotives
purchased is vested in the trustee
uHIll SuCn time DIS The ueDl Is COIl-
pletely Cancelled. although the roads
had possession of the equipment and
used it.
The question was raised as TO whether
the carriers would be allowed to
charge off, in presenting statements
for tax purposes, the depreciation on
such equipment, in view of the fact
that title to the cars did not pass
to the companies until they were
completely paid for. This question
ho Of nf Il
lions of dollars.
Commissioner Maddox says, how
ever, that there is a precedent in such
matters in the rulings on property
sonal belief that if the question ever
were seriously raised, deductions on
equipment would be allowed, exactly
in the case of other mortGaged prop
erty.
Not Vital to Investors.
Other statisticians pointed out that
for the "long haul" investor it made
comparatively little difference wheth-
er the railroads were allowed to
charge off the depreciation in equip
ment over a term of years or in
lump.
payments has not sufficed to check
purchases of cars and locomotives
In the last year over 10000 new
freight cars have gone into service.
II is OBVIOUS, however, tndl tHe
country still is undersupplied with
freight cars. The equipment shops
now are working on orders for 10000
cars, and it is probable that at least
100000 will be bought this year. Cars
as loaded nowadays are carrying
about IA per cent moro freight than
they ever did before, and are being
moved faster and over longer dis
tances. In fact. the mileage made by
each car is estimated to average 20
per cent higher now than year ago.
Bad Order Cars Reduced.
The number of bad order cars is
being reduced, SO that it represents
only slight notch above 5 per cent
of the number in use. The cars now
being ordered are of the special,
rather than the general, box and fiat
car type. Refrigerator, coal, mail,
express and tank cars are being
bought more extensively than the
cars designed to handle mixed
cargoes.
The New York Central has recently
placed an order for seventy locomo-
tives and in the last month 131 en-
gines have been purchased. while in
the same period the surplus freight
cars in repair and available for serv-
ice in the country decreased by over
$4,000.