Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1924-11-29
Views of Nj. c. Head
(Continued from Page One)

Views of Nj. c. Head
Continued from Page one)
preventing discrimination IN rates
and service, and to assuring public
ity as 10 security issues and uniform
accounting. II should be enforced
only 10 protect the public against
discrimination and bad faith. IL
should not interfere with the exercise
of proper discretion on the part OF
railroad managers. II should
not be enforced against the
better Judgment of trained railroad
men except for good and sufficient
reasons. Regulation must not mean
the power 10 enfeeble or destroy.
He said a railroad should have q
budget but 1t should be elastic ana
allow of changes and revision from
time to time as revenues actually
earned become known, and allows
improvements to be undertaken and
service extended when operating re-
suits warrant.
Valuation and Return on Investment
In dealing with the railroad situa-
ton Immediately following Federal
Control and i'll prescribing rates for
transportation of freight, the terri
tory in the United States was divid-
ed into four groups, and tentatively
valued. as follows:
Eastern .............. 'SH.suV'"ou'ou"
Southern ............. 2,OOO,oue,0Vo
Western ...'
Mountain Pacific .... S,1Oo,Ooo,ooo
Total $4,000, 900, 900
The New England lines are en-
braccd III the Eastern Group, which
includes the territory about as fol-
lows: North OF Norfolk, Cincinnati
and the Ohio River; east of the Mis-
sissippi River. the Illinois River ami
Chicago; and It includes the trunk
lines and Central Freight Association
territory.
In fixing the rates for the railroads
so that they might be able to earn
return (now so ~ on the fair value
of the property devoted to public
Use. the Interstate Commerce Com
mission ruled that - rates should
be SO adjusted that the railroads In
each group, considered as whole,
should he able to earn the maximum
prescribed.
IL the maximum of 5a4 % as above
We're to be applied to the valuation
of the Maine Central Railroad ana
leased lines as tentatively found ny
the Interstate Commerce Commission
as of June 80. 1916. based on 1914
values and adjusted to December 81.
1923, It would produce the following:
Total railway operating revenues
for 1928 were s21.192,26 The valua-
ton found as above was $70.271,454.
The net railway operating income for
1929 was :l,9S3,142, or 2.S2"o of the
valuation. Had the net railway
operating income been on the basis
Of $40 of the valuation. 1t would
have been $4,040.60 or an increase
of $2,057,467. so that instead of a
surplus after charges for 1923 of
S10.464, the surplus after charges
would have been, on above basis,
s., 0e7,931.
wish to call attention to the fol-
lowing in connection with the results
Of the company's operations for the
ten months ended with October, 1929
and 1928: The surplus after charges
for 1929 was $244,694. an improve
ment over 1928 OF s4l0.011. 1t Is now
expected that the surplus for the
year will be about 100000. The loss
in revenues on freight in 1924. COM
pared with 1923. was s4s0,000, on
passenger s43S000. and on total
operating revenues $4,000. The re-
Iuction in operating expenses was
sl.11S,00O This expense included
extra cost on account of washouts
over the line-s125, 900. There was
an Improvement In the income from
car hire of :294.00o. The decrease
T., hrnYtuhf
about by a favorable winter, reduced
coal costs. and improved condition
Of cars and engines. allowing closing
Of the shops during the summer.
The taxes for the year 1924 will be
about s1,22O,00o, which includes the
State Of Maine excise tax for the
privilege OF doing business-s963,o $50.
Taxes
Taxes are taking from the railroads
an ever Increasing share of their in
come, and now constitute one of the
largest items IN the cost of their SER
vice The Bureau or Railway Econ
omics az Washington has compiled
figures which show that 44fo of tho
total income of the railroads Of the
United States in 1921. SO in 1922 and
$50 in 1923 went for taxes OF all
kinds. federal, state and local An
even larger percentage Of the revenue
Of the railroads in Maine IS required
for this purpose hy reason of the alb
normally high excise tax which is as
sessed upon them by the state Of
Maine for the privilege of exercising
their franchises within the state.
This tax. which Is in addition 10 To-
cal assessments. is based entirely
upon gross receipts and Is now as
sessed at the same rate upon all of
the principal railroads Of the State re-
CARELESS Of their varying values and
earning capacities. The taxable abili-
ty Of a railroad and It's franchise value
are determined by the net profit which
results from It's operation and not By
its gross revenue. The present Law
IL, therefore. unsound in principle and
unjust IN practice and bears no rela-
ton 10 the value Of the railroad fran
chise which IS the subject OF the tax.
by reason Of advances in rates and
fares which have been necessary to
meet increased charges Of operation
this franchise tax has more than
doubled IN the last few years al
though. during the same time. the net
earnings OF the railroads. which have
been most heavily affected by the tax,
have greatly diminished. The present
Law should be promptly revised 80
that the tax assessed under its pro-
visions will be more in harmony with
present-day conditions In the field of
transportation.
The railroads operating IN Maine
Will accordingly propose to the next
legislature the adoption Of the "gross-
net plan" so-called, in place OF the
present method. Under this plan the
tax on gross receipts would be re-