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ITALIZATION OF RAILROADS
he Railroads of the United States
Are Not Over Capitalized as Com
pared with Those of Other
Washington, 1). C., July 18.-The
(ist important question likely to en
age the attention of the 60th Con
ess is that of railway capitalization.
resident Roosevelt, Attorney Gen
eral Bonaparte, and the Inter-state
Commerce Commission are studying
the question with a view of arriving
at a definite plan to be presented to
the national law-making body when
it convenes ,the first Monday in De
cember. President Roosevelt and
Chairman Knapp, of the Interstate
Commerce Commission. have declared
that there is no foundation for the
claim that our railways are over cap
e italized. and there is little doubt that
a sane and just plan for the control
of capitalization in the future will be
formulated by those having the mat
ter in charge. The plan presented will
undoubtedly be based upon lines guar
anteeing justice to both the railroads
and to those who use them and invest
in their securities.
In view of the fact that much mis
information on the subject of railway
capitalization has been diffused
through the medium of yellow jour
nals it has been deemed advisable to
consult those who have given the
questi much thought in order that
the lie may be advised of unim
peac le information relating to this
grea iestion. With that object in
view --rof. H. T. Newcomb, one of
our greatest and most learned econo
mists and statisticians. has been ask
ed to communicate through the press
of the country his views on the sub
Professor Newcomb, in speaking of
the matter, gave it as his opinion that
there are feiv subjects relating to the
industrial life of the American peo
ple upon which so much misinforma
tion is current or concerning which
there is such widespread misunder
standing as that of the capitalization
of American railways. This is unfor
tunate for not only is the direct own
ership of railway shares and bonds al
ready greatly diffused but they would
constitute, if unwise legislation could
e avoided, the most staple and satis
ctory investment generally opened
those whose moderate incomes, as
ers, artisans, or clerks, permit on
y small accumulations. With the as
surance again.. t unjust interference
whih would result from full public
omprehension, the existence of such
ready means of investing small sav
gs would once become the greatest
centive to economy and frugality.
It is unfortunate, also, because such
misunderstanding is a constant threat
against the security afforded by the
billions of dollars of railway bonds
and the smaller quantity of railway
shares that are held in the treasuries
of savings banks. life insurance com
panies. fire insurance companies, and
bonding guaranteeing companies, and
on which depend their- ability to ful
fill their obligations to millions of
American citizens. Further than this
it is unfortunate because it is one of
the causes whichi is depleting the
mone ymarket of capital. seeking in.
vestment in railway enterprises, in
creasing the difficulty of obtaining
funds for new construction and foi
renewals and improvements and bring.
ing about a rise in interest rates thai
must prove a burden to the industry
of the nation. Misunderstanding has
not occurred because the subject is
necessarily obscure or attended with
difficulty, for it is neither. The In
terstate Commerce Commission has
published eighteen successive annual
volumes of railway statistics, the Cen
sus Office has devoted volumes and
folio pamphlets to the same subjeel
and there are many private publica
tions that are reliable ,and valuable
Whoever wil-l study the subject witi
intelligence and without prejudic<
will, from the materials thus avail
able, be able to reach an accurate con
The latest statistical report issuei
'by the Interstate Commerce Commis
sion covers the fiscal year which end
ed with June 30, 1905. At the end oi
that year the railways of the United
Stes'had an aggregate length oj
218,101 miles, of which 217,018 mniles
ere covered by reports to the Coin
ission. 'The total ecapitalization of
he reporting railways on that dat<
-as $11,167,105,992 or at the rate of
1,457 per mile of line.
The aggregate railway mileage od
11 the countries of Europe, in June
906, was 177,491 miles, with a total
apitalization of $20,018,418,000, o
n average of $112,786 per mile, oi
ore. than twice the average in this
untry. Thus the European railway
vstem which has less than S2 miles
r each 100 miles in the United
ates, sustains $179.26 of capitaliza.
on for every $100 sustained by the
ailwvays of 'this country. Even Can.
aa, with its system of approximately
n000 miles of railway, largely buill
with Ihe ail of eredit 1-anled by the
2 I\ !l1i I1t ( ) slWS a1 i I a2e ZIalVC
talization lf over $60.000 per mile., or
neary 20 per cent higher than the
The capitalizationl represent ing
American raliways consists of securi
ties of many di-fierent grades. each
"rade mnaking its claim for annual re
turns to its owners with separate
force and having its own degree of
power or lack of power to enforce its
demands. The highest grade of secur
itv consists of mortgage bonds which
carry the right to a definite income
with the property itself pledged
against default. Other funded debt
includes bonds based upon income
which involve no lien upon the pro
perty and equipment trust obligations.
Se1cured by liens upon rolling stock.
If it were possible to obtain con
plete statisties concerning the vast ex
peiditures made within the last de
cade for the betterment of the great
railway sysems of the country the
facts disclosed would amaze those
who are inclined to accept the char
ges of "'over-eapitalization." Fi
gures recently published showing the
combined expenditures of the eleven
operating companies of the Pennsyl
va1nia railroad system during the per
iod of six and one-half years that
ended with June 30. 1906, show a total
outlay exceeding the total par values
of all the stocks outstanding against
If it were true that "over-capital
ization'' does exist, to the full extent
of the wildest charge of the noisiest
demagogue, the fact would be of no
injury and of no consequence to the
purchaser of railway services. The
persistence of the erroneous notion
that there is some occult force in par
values which make their inflation an
easy means of extorting excessive
rates from the shipping and traveling
public is one of the strangest of
phenomena in the whole history of di
popular delusion. d
If niore comprehensive proof that
there is no such relation as is alleged at
between capitalization and rates is
desirea it is at hand. The statistics si
published by the Interstate Commerce .
Commission permit the separation of
the data supplied into totals each
representing one of the three great
terri >rial divisions of the United
The importance of mere par values
to influence charges for their own,
benefit is further established by the
fact that throughout the entire his
tory of American railway development
large portions of the aggregate capital
ization have gone without any return
whatever. Even the amazing pros
perity of the last five years has not
sufficed to prevent more than one
third of all railway shares and a con
siderable .volume of railway bonds
from going portionless.
The wages of railway labor have
been repeatedly advanced since 1897;
the cost of fuel for locomotives, of
rails and ties, of lumber, in fact of
every item of railway expenditure has
been constantly soaring; taxes on
railway property are everywhere high
tr; the owners of such property are
threatened with double taxation by E
means of taxes on incomes and on in- e<
heritances--but rates have gone down R
and are ever tending downward. How
much further these proeesses ca.n and
ought to go constitute the gravest in- "
dustrial problem that the people of
the United States have to solve.
James S. McOarthy.
Bottler of Imperial Ginger
Ale, Root Beer, Cham
pagne Cider, Wiseola and
Domestic Lager Beer in
pints, 10 dozen to the cask,
$8.50 per cask.
Write for complete price s~
list. Wholesale and retaila
dealer in Wines and Li- p
the contract for'
your new build- ~
ing see W. T. Liv
ingston. B es t
Lock Box No. 59.,
Newberrv. S. C
LOOK AT THES
Canadian Oak Rocker.
This beautiftl C m:e Se:,t Rocker, made up of 'elect Canadian air
:ied Oak, i, o we, L:ura nteed to us that should you b :y one and it
d not give e:ire satisfaction we would replace it with a new one
iy time within a year from date of shipment. Revular pr:ce $3-50,
ecial price $> 5-.
Solid Guaranteed Oak Centre Table, Fancy Po$r I.amp.
ther round or sqpare. This Table is Lenigth 35 N inches. extends to
ually as good material as the Oak 55 em m w--- u. 4 fancy
>cker above. Regular price 22 inch con.e shade. clear glass oil fount,
spcil rce~2S.. No :Sun l'r;s .4 d chimney.
So0, spca rce- o Each ?.350
BeauifulNottngha Lac curain
inchs wie, btto hol stiche
Beauifu Notingam ace urtinsweight, hard woven; Medallion,
inchs wde,buton hle tithedFloral and all-over designs in
oundedgs Etrem legth3~4Combinations of Green, Tan,
irds inbeatifl pttens.ReglarRed, &c. ~ ft. x T2 ft.
ice er air$3.0, secil piceEach... .. ......$4.85
fyou order amounts to $10.00 or mor e. Remit with
ost Office or Express Money Order. Checks out of
~olumbia cost 15c. Exchange, besides delay.
[he Lion Furniture Co.,
1624 Main St., Columbia, S. C.
WRITE FOR BEAUTIFUL CA TALGUE.
Srad Julu Clearance Sale!
We have too many summer goods, and rath
ar than carry them over we are going to make
:he price on them RED HOT. This sale com
nences Friday 12th, and includes all colored
ummer Dress Goods, Colored Parasols, La
lies' Slippers, Men's Straw Hats, Ladies' Hats
and Flowers, Summer Clothing, Men's Low
Quarter Shoes. We sell Domestic Sewing Ma
::hines $25.00, New Defender Drop Head
Sewing Machine $17.93, Machine warranted
Just received our 32nd car, making 3,555
bbls. choice Tennessee Flour, and while it lasts
goes for best patent $5.35, half pat. $4.90.
Every barrel guaranteed to give satisfaction.
PROSPERITY, S. C.
Broaddus & Rull
HERALD & NEWS
Pens and Ink,
In fact anything you need along that line.
CIGARS AND TOBACCO.
Don't forget to call on them.
They are also agents for Laurens Steam
Which we use are without exception the purest grade.*
We believe in PURITY.
We constantly preach PURITY.
*We always practice PURITY .when preparing medi
c0 URITY counts, and counts for much, in medicines. S
Ask your doctor.
MAYES' DRUG STORE.3*
VERY LOW RATES'
NORFOLK AND RETURN
Accout Jamestown Ter-Centennial Exposition
Season, Sixty Day and Fifteen Day Tickets on sale
daily, commencing April 19th, to and including No
vember 30th, 1907.
Very low rates will also be made for MILITARY and
BRASS BANDS in uniform attending the Exposition.
STOP OVERS will be allowed on Season, Sixty Day
and Fifteen Day Tickets, same as on Summer Tour
For full and* complete information call on Ticket
Agents Southern Railway, or write
R. W. Hunt
Charleston, S. C