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Show I RAILROADS MUST FIX FOUNDATION ! INDEPENDENTLY ! '-! 4 "" j Joint Congressional Com- 1 mission of Agricultural I Inquiry Reaches Conclus- sions Based on Survey j PUBLIC EXPENDITURES I MUST BE CURTAILED " j No Further Government Aid J and More Money on Stock ; Sales Rather Than Bonds I Other Suggestions Made I WASHINGTON, April ?9 (By A. P . ,4 -The conclusion that "in the public ! In t reat the railroad Industry must I reat on Its cwn foundations and Its revenuee must be so constructively reicu l.ted that the operations of the j ejarrlers will produce enotiah to pay fair waa-es. coat of materials, taxes, 3 meet the fixed charges, pay a fair idlvlder.d and leave a jnargin to at-. tract Investors of new capital' was ' announced today hy the Joint con-( con-( a;rejnional commission of agricultural inquiry. . The conclusion, reached by the ! eommfsalon after a study of railroad management and financing, will be . set forth In the forthcoming report of the body along with other con-! con-! elusions and recommendations as 1 follows: First That the lasue of tax free Securities and large expenditures for Hon productive purposes by t he federal, fed-eral, state and municipal governments j be reduced to the smallest possible limits so that the taxes can he decreased de-creased and capital funds he allowed to Increase for the use at fair Interest ratea by agriculture. Industry and the railroads, and thereby help to promote Industry. Second That the railroads estab-1 Msh regional traffic executives and organ lie public relations departments to bring about closer contact and a Wtter understanding between them-selves them-selves and ths public. - Third That new money for railroad Improvement should not be raised through constant government aid. Fourth That sound railroad finance requires that a larger part of the credit necessary for railway construction con-struction be obtained by stock Issues Instead of by bond Issues. CREDIT ASI NOT 80UN0. Tn reaching its conclusion and In making Its recommendations. Chairman Chair-man Anderson said today tha com mission utilised thla basis: "The railroads sre not self-sustaining and are therefore not on a sound credit basis. If thla condition continues con-tinues transportation aervlce will be crippled and tha country will auffer Chairman Anderson said th opposition opposi-tion to further government aid aroe from th present obligations on con grass and th country at large, and ft matter of economic policy. Our position.' he added, "hi that th government should not be called upon to guarantee that th principal of railroad securities Is safe and that th Interest and dividends thereon will be regularly ' paid. To obtain new railroad capital th opportunities to earn and pay regular dividends must xtat, and railroad management must be encouraged to exercia th greatest Initiative In Improving and tenrtran-portatlonfHlltles. Kurthermor. condition should he created whereby th aal of capital stock by th principal roads will be. com possible and th continued Increase In-crease in funded debt will b minimised.' Figure In th report will show that In the last few years most railroad hav don little financing through th sal of stock, but hav to raise money through th sal of bond or th isauanc of other evidences of Indebtedness. In-debtedness. DEBT LIMIT REACHED. This method of financing cannot be indefinitely continued. Mr. Anderson said. "Railroads cannot go on constantly con-stantly Increasing their Indebtedness and not building up an equity In their properties underlying their debt. When th Investor thinks that too large a percentage or th value of th property of a given company is represented by debt and not enough by stork, he will decline to buy further fur-ther bonds of that company, or If he lakes them It will b only at an unduly un-duly high Interest rate." Th commission's report. In calling attention to th tax burden of th railroads, will show that In I'll rail, road taxes amounted to IM2.I4I. In 1911 this had Increased to 111. 38MSI. of which I1H.0 97 waa paid as Stat taxe and f4.724.ll aa federal fed-eral taxes. In 120 atate taxe had risen to 223.2sl.20l and federal taxe to l4l.4H.JOt. a total of I271.tl0.60l. or sn Increase of 171.7 per cent over th year lill. "New and varied forms of taxation are constantly being levied." said Mr. Anderson in this connection. "Rome of them are Intended to reach railroads rail-roads to the exclusion of other forms of buslneas. Railroads should, of course, pay proper amount or taxes, but It should be remembered that whatever they pay is paaaed on to the publio through rstea. It Is Important Im-portant to th agricultural Industry, which depends on that reservoir In the same way aa th railroad Industry, that th rat of Interest should not b unduly raised to the railways because of reduced net earnings or because of large Issue of tax free securities. If the interest rat to th railways rises, th Interest rat to th farmer will alao lncreaae, for the capital market Is on a competitive basis, and what affects the Interest rnte for one Industry affects th rat for sll Industries." The commieaions. It was said, hav agreed that the period of federal control con-trol waa too short and th conditions then and since too abnormal to permit per-mit a sound comparison of efficiency between government and private operation. Chairman Anderson, however, added that It might be said, measured by the relative performance and cost of service, private management In this country shows greater efficiency than governmental management. |