The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-05-28
SAYS PRE-WAR
RAILFRBIGHT
RATESFAR0 OFF
Cannot Come With Railroads
Meeting Huge Expenditures
Now. Says Flynn
TRANSPORTATION ACT
Railroad Earnings Found Les,
Since Passage of Esch-
CumminS Bill
TRANSPORTATION ACT

tons, Edward +. Flynn Of st, Paul,
director of the Bureau of Public Re
iations Of the Great Northern Rail
way, told the North Dakota Retail
Merchants Association here this al
tcrnoon.
''Thc operating expenses Of the
railroads between December, 1917,
and February. 1920. increased, under
government operation, $6,2Ou,00o Il
day." Mr.. Flynn said while they
have since been decreased $500, 900
under government operation still re
mains. Add TO this the fact that
since 1917, railway taxes have in
creased about $l5O,0OO a day, and it
is obvious that pre-war rates cannot
be restored as long as pre-war cx-
penses and taxes are exceeded by
over $5.800,000 a day"
Mr.. Flynn declared railroad earn
ings are low. and that since the pass
age of the Esch- Cummins act, E!uch
criticized by radicals, they have de-
clined.
-
income of the railways averaged, in
1916 and 1917, $2,S00,00 a day, while
the average for the period of three
years ending September |, 1923, af
ter the Transportation Act was pass
ed, was $2,l0o,000 Il day" Mr.. Flynn
said.
1T is self-evident that the rail-
roads being permitted to earn large
profits since the Transportation Act
was passed has not kept rates up, as
profits earned have been less than
before"
Regarding valuation of railroads
Mr.. Flynn said:
Certain senators who claim that
the valuation of the railways should
be based upon the market value of
the railway securities, assert that as
the market value in 1920, when the
tentative valuation was made, was
only twelve billion dollars. the APP
ploximate valuation of nineteen bill
lion dollars was seven billion dollars
too high However, from the fact
that under government operation the
railways had incurred large deficits,
making their financial future eX-
tremely uncertain, the market value
of railway securities in 1920 was the
lowest ever reached.
Valuation Dispute
"At the federal conference on rail
road valuation. which was held last
summer in Chicago, Senator LaFol-
lette and his associates criticized the
Interstate Commerce Commission for
not asccrtaining the actual invest
ment in the railroads and basing
their valuation accordingly.
"Thcy contend that the railways
are entitled to earn only fair re-
turn on what the properties have
actually cost. The large valuation
arrived at by the Commission, they
claimed, was because it had consid-
cred principally the probable cost of
reproduction of the properties. The
assertion is made by the spokesman
for this group Of men that the actual
cost. of the railways has been only
thirteen to fifteen billion dollars.
HIS, HoWtNSI, - a. HlCIc SucSS. w Hllt
the accounts of the railways would
indicate that their cost has been
about twenty-one billion dollars, the
Interstate Commerce Commiss on,
after years of investigation, has
found that while the tentative value
of the railroads as of 1914, is $751;
900 200, the cost is not ascertain
able, which is not surprising, since
the railroads have been in process
of development and construct ion
nearly hundred years.
''The Supreme Court of the United
States, time and time again, and
three times within the last year. has
held that the valuation of railroad
or other public utility, could not
constitutionally be based on it's cost
alone, as many other elements must
be considered, in addition to its ac-
tual estimated cost, including the in
crease in the value of its land and
vailing wages, prices of materials,
etc.
Reduction Effect
"The effect upon rates, supposing
the valuation to be reduced six OF
seven billion dollars, is an important
question. 1t is with the object of
bringing rates GOWN that a reduction
of valuation is advocated. Approx
mately IS per cent of the total earn
ings of the railroads was required to
pay their operating expenses and tax
es in 1923. No change in the valua-
ton would affect operating expenses
or taxes at all. If the valuation were
wiped out completely, the resulting
reduction of rates would be only
about fifteen per cent. If it were re.
duced one third, almost as much as
certain senators advocate, the reduc-
ton of rates would be only five
per cent. The average rate on wheat
from the Dakotas to Minneapolis, and
from points in Kansas to Kansas
City, is less than 10 cents bushel
"A reduction of five per cent, in thu
rates from the great wheat-growinl
sections to the nearest large centra
markets would average, therefore
less than one-half cent d bushel. The
exp0rt rate on wheat from Hutchin.
son, Kansas, to Galveston is ~ cents
"A reduction of per cent for thi:
long haul would be only about one
and One-half cents bushei--less
than the average daily fluctuation il
the market price.
z s.The total cost of railroad trans
portation to the average American
family of 4.3 persons in 1923 wa
about 86 cents day. The reduction
OF 8 per cent in rates which woult
BE effected by reducing the valuation
Of the roads one-third would result
"a ! saving TO the average family q