of the various articles of food as selected by Mr. Wright in his
inquiry into the cost of living in 1901 and adopted by the Bureau of
Labor in subsequent Bulletins. These for thirty articles of food for
the eighteen years 1890 to 1907, as given in Bulletin No. 77 of the
Bureau of Labor, and for the two years 1908-1909 as computed from
Bradstreet's index and other sources of commodity prices, are given
in the following statement relatively to the average price for 1890
to 1899 == 100:
RELATIVE RETAIL PRICES OF THE PRINCIPAL ARTICLES OF FOOD IN THE
UNITED STATES, 1890 TO 1909. (Average price for 1890-1899 == 100.0.)
=====+======+======+======+======+======+======+======+======+======+======
| | | | | | | | |Chickns|
| | | | | | | | | (year |
|Apples|Beans,|Beef, |Beef, |Beef, |Bread,|Butter|Cheese|or more|Cof-
Year |Evapo-| Dry |Fresh,|Fresh,|Salt |Wheat | | | old) | fee
| rated| |Roasts|Roasts| | | | |dressed|
-----+------+------+------+------+------+------+------+------+------+------
1890 |109.0 |103.3 | 99.5 | 98.8 | 97.5 | 100.3| 99.2| 98.8 | 101.3| 105.4
1891 |110.3 |106.2 |100.0 | 99.4 | 98.3 | 100.3| 106.4|100.3 | 104.0| 105.2
1892 | 99.3 |102.4 | 99.6 | 99.3 | 99.5 | 100.3| 106.8|101.5 | 103.8| 103.8
1893 |107.0 |105.0 | 99.0 | 99.6 |100.3 | 100.1| 109.9|101.8 | 104.2| 104.8
1894 |105.8 |102.8 | 98.3 | 98.2 | 98.9 | 99.9| 101.7|101.6 | 98.6| 103.3
1895 | 97.4 |100.5 | 98.6 | 99.1 | 99.6 | 99.7| 97.0| 99.2 | 98.4| 101.7
1896 | 88.6 | 92.7 | 99.1 | 99.5 | 99.8 | 99.9| 92.7| 97.9 | 97.1| 99.6
1897 | 87.8 | 91.5 |100.3 |100.2 |100.9 | 100.0| 93.1| 99.0 | 94.0| 94.6
1898 | 95.4 | 95.9 |101.7 |102.0 |102.1 | 99.8| 95.1| 97.5 | 96.8| 91.1
1899 | 99.5 | 99.7 |103.7 |103.9 |103.2 | 99.6| 97.7|102.4 | 101.8| 90.5
1900 | 95.2 |110.0 |106.5 |106.4 |103.7 | 99.7| 101.4|103.9 | 100.8| 91.1
1901 | 96.8 |113.9 |110.7 |111.0 |106.1 | 99.4| 103.2|103.3 | 103.0| 90.7
1902 |104.4 |116.8 |118.6 |118.5 |116.0 | 99.4| 111.5|107.3 | 113.2| 89.6
1903 |100.8 |118.1 |113.1 |112.9 |108.8 | 100.2| 110.8|109.4 | 113.5| 89.3
1904 | 99.2 |116.8 |112.8 |113.4 |108.3 | 103.9| 109.0|107.4 | 120.7| 91.8
1905 |106.0 |116.3 |112.2 |112.9 |107.9 | 104.5| 112.7|110.9 | 123.6| 93.6
1906 |115.6 |115.2 |115.7 |116.5 |110.8 | 102.3| 118.2|115.5 | 129.1| 94.7
1907 |124.6 |118.8 |119.1 |120.6 |114.1 | 104.5| 127.6|123.2 | 131.4| 95.0
1908 |126.4 |138.9 |126.2 |131.5 |116.4 | 124.5| 123.5|121.3 | 128.6| 94.7
1909 |128.6 |141.2 |132.6 |134.1 |128.2 | 124.5| 134.8|142.0 | 150.2| 108.6
| | | | | | | | | |
-----+------+------+------+------+------+------+------+------+------+------
| | | | | | |Milk, | | |
Year | Corn | Eggs |Fish, |Fish, |Flour | Lard |Fresh,|Mola- |Mutton|Pork,
| Meal | |Fresh | Salt |Wheat | |unski-| sses | |Fresh
| | | | | | |mmed | | |
-----+------+------+------+------+------+------+------+------+------+------
1890 |100.0 |100.6 | 99.3 |100.7 |109.7 | 98.2| 100.5|104.7 | 100.7| 97.0
1891 |109.7 |106.9 | 99.6 |101.7 |112.5 | 99.8| 100.5|101.7 | 100.6| 98.7
1892 |105.2 |106.8 |100.1 |102.2 |105.1 | 103.6| 100.6|101.2 | 101.0| 100.5
1893 |103.1 |108.1 |100.1 |103.4 | 96.1 | 117.9| 100.4|100.6 | 99.9| 107.0
1894 |102.2 | 96.3 |100.4 |101.5 | 88.7 | 106.9| 100.2|100.3 | 97.8| 101.8
1895 |100.8 | 99.3 | 99.8 | 98.9 | 89.0 | 100.1| 100.0| 99.0 | 98.7| 99.7
1896 | 95.0 | 92.8 |100.2 | 97.5 | 92.7 | 92.5| 99.9| 98.7 | 98.7| 97.4
1897 | 93.7 | 91.4 | 99.8 | 95.2 |104.3 | 89.8| 99.7| 97.7 | 99.6| 97.6
1898 | 95.0 | 96.2 |100.5 | 98.8 |107.4 | 93.9| 99.4| 97.9 | 100.4| 98.6
1899 | 95.1 |101.1 |100.2 |100.2 | 94.6 | 97.1| 98.9| 98.2 | 102.6| 101.7
1900 | 97.4 | 99.9 |100.4 | 99.1 | 94.3 | 104.4| 99.9|102.2 | 105.6| 107.7
1901 |107.1 |105.7 |101.4 |100.9 | 94.4 | 118.1| 101.1|101.3 | 109.0| 117.9
1902 |118.8 |119.1 |105.0 |102.8 | 94.9 | 134.3| 103.3|102.1 | 114.7| 128.3
1903 |120.7 |125.3 |107.3 |108.4 |101.2 | 126.7| 105.8|103.8 | 112.6| 127.0
1904 |121.5 |130.9 |107.9 |111.7 |119.9 | 117.3| 106.3|104.0 | 114.1| 124.0
1905 |122.2 |131.6 |109.9 |113.8 |119.9 | 116.6| 107.0|104.4 | 117.8| 126.6
1906 |123.2 |134.2 |116.2 |116.8 |180.1 | 128.0| 108.9|105.3 | 124.1| 137.7
1907 |131.6 |137.7 |120.6 |121.6 |117.7 | 134.2| 116.8|107.7 | 130.1| 142.5
1908 |154.0 |140.2 |116.2 |118.4 |140.0 | 132.1| 115.4|102.2 | 126.4| 141.6
1909 |160 |142.2 |120.4 |122.6 |154.4 | 153.8| 141.6|106.4 | 134.8| 168.2
| | | | | | | | | |
-----+------+------+------+------+------+------+------+------+------+------
|Pork, |Pork, | Pork,|Potat-| | | | | |
Year |Salt, |Salt, | Salt,| oes, |Prunes| Rice | Sugar| Tea | Veal |Vine-
|Bacon |dry or| Ham |Irish | | | | | | gar
| |pickled| | | | | | | |
-----+------+------+------+------+------+------+------+------+------+------
1890 | 95.8 | 95.3 | 98.7 |109.3 |116.8 | 101.3| 118.6| 100.0| 98.8| 102.9
1891 | 96.6 | 98.9 | 99.3 |116.6 |116.5 | 102.5| 102.7| 100.4| 99.6| 105.5
1892 | 99.1 |100.5 |101.9 | 95.7 |113.5 | 101.3| 96.2| 100.2| 100.0| 102.7
1893 |109.0 |108.7 |109.3 |112.3 |115.6 | 98.4| 101.5| 100.1| 100.0| 99.5
1894 |103.6 |103.4 |101.9 |102.6 |100.9 | 99.0| 93.8| 98.7| 98.7| 99.8
1895 | 99.4 | 99.2 | 98.8 | 91.8 | 94.2 | 98.8| 91.8| 98.5| 98.5| 98.9
1896 | 96.7 | 95.5 | 97.6 | 77.0 | 86.8 | 96.7| 96.6| 98.8| 99.5| 97.2
1897 | 97.4 | 97.3 | 98.2 | 93.0 | 84.3 | 97.9| 95.7| 98.5| 99.9| 97.4
1898 |100.2 | 99.1 | 95.1 |105.4 | 86.3 | 101.7| 101.3| 100.7| 101.2| 97.9
1899 |102.9 |101.8 | 99.2 | 96.1 | 85.1 | 102.4| 101.7| 104.4| 103.7| 98.3
1900 |109.7 |107.7 |105.3 | 93.5 | 83.0 | 102.4| 104.9| 105.5| 104.9| 98.5
1901 |121.0 |117.5 |110.2 |116.8 | 82.6 | 103.5| 103.0| 106.7| 108.8| 98.9
1902 |135.6 |132.5 |119.4 |117.0 | 83.4 | 103.5| 96.1| 106.0| 114.9| 99.1
1904 |137.9 |125.8 |118.4 |121.3 | 79.6 | 101.6| 101.9| 105.8| 115.5| 98.9
1905 |138.8 |126.0 |118.5 |110.2 | 81.4 | 102.6| 98.2| 105.5| 123.2| 102.6
1907 |157.3 |141.2 |130.7 |120.6 | 88.4 | 108.5| 99.6| 105.3| 125.0| 104.5
1908 |142.4 |137.4 |112.0 |138.4 | -- | 105.1| 100.0| 108.6| 124.2| 112.4
1909 |180.0 |151.2 |145.0 |120.0 | -- | 103.3| 105.0| 109.0| 130.2| 113.0
| | | | | | | | | |
-----+------+------+------+------+------+------+------+------+------+------
No authority is claimed for the prices in these tables for the
years 1908 and 1909. They merely represent the tendencies in those
years, as found in official and unofficial wholesale prices of the
several commodities, and there are often striking divergences between
wholesale and retail prices over short periods. Eventually they
follow the same course, although not always in the same proportion.
Now let us see how the average retail price of these 30 articles of
food compares with the average daily pay of the four representative
classes of railway employes in train service for the ten years 1899
to 1909.
=====================+========================================+=========
| Average Daily Compensation |Relative
+---------+---------+----------+---------+Prices of
| | | | Other | Food,
Year |Enginemen| Firemen |Conductors| Trainmen|1890-1899
| | | | | = 100
---------------------+---------+---------+----------+---------+---------
1899 | $3.72 | $2.10 | $3.13 | $1.94 | 99.6
1900 | 3.75 | 2.14 | 3.17 | 1.96 | 101.5
1901 | 3.78 | 2.16 | 3.17 | 2.00 | 105.5
1902 | 3.84 | 2.20 | 3.21 | 2.04 | 110.9
1903 | 4.01 | 2.28 | 3.50 | 2.27 | 111.6
1905 | 4.12 | 2.38 | 3.50 | 2.31 | 112.5
1906 | 4.12 | 2.42 | 3.51 | 2.35 | 116.2
1907 | 4.30 | 2.54 | 3.69 | 2.54 | 120.7
1908 | 4.46 | 2.65 | 3.83 | 2.64 | 117.7
1909 | 4.46 | 2.67 | 3.76 | 2.60 | 127.7
+---------+---------+----------+---------+---------
Per cent. increase | 19.9 | 27.1 | 20.1 | 34.0 | 28.2
---------------------+---------+---------+----------+---------+---------
Here it will be observed the percentage of increase in the average
daily compensation of "Other trainmen" exceeds the relative increase
in the price of food, that of firemen almost equals it, while that of
enginemen and conductors is below it by approximately 8 points. But,
as demonstrated in the table from the Eighteenth Annual Report of
the Commissioner of Labor (1903), a smaller percentage of the income
of enginemen and conductors is spent on food than of those employes
receiving lower pay.
Moreover as only two-fifths of all expenditures is spent on food
an increase of 20% in wages would take care of a 50% advance in
the average price of food--provided the increase in wages was not
attended by a corresponding increase in every other item entering
into the cost of living.
And right here's the rub with any attempt to measure wages by the
cost of living. Which is the egg and which is the hen, in the matter
of precedence. Does the cost of living lay the income or does the
income hatch the cost of living?
Economically and theoretically it is not up to the railways to
solve this world old conundrum. Practically they are called on
to meet every advance in the cost of living of their employes to
which in twenty years they have not added a nickel, and they are
denied the privilege, enjoyed by every other employer of labor,
to add its increased cost to the price of their only commodity or
service--transportation.
Today the advances in the scale of railway wages awarded, proposed
and demanded mean an increase of from $60,000,000 to $75,000,000 in
the annual "cost of living" of the railways. The advance made in
1906-07 added $120,000,000 to the pay roll of 1908. Combined, these
two advances within three years mean an increase of approximately
$200,000,000 a year to the operating expenses of the railways without
adding a single unit to efficiency of the labor factor in railway
operation.
_This is equal to an annual first charge of 5% on $4,000,000,000!_
Imagine the hue and cry from the press, the immediate injunctions
from Washington, the despondent wail from Wall Street, if the
railways proposed to pour that much "water" into their own cost of
living without getting a mile of track, a single engine, car, or
coach, a cubic yard of ballast, one untreated tie or any semblance of
improvement or new facility to show for the vast expenditure!
And yet the railways have their increased cost of living to meet just
as the rest of us. Nothing they need and must have can be purchased
at the prices of a few years back. When you mention steel rails you
have named about the only railway necessity that has not advanced
its cost of living in recent years, and the railways have to buy
100-pound rails where five years ago 80-pound rails sufficed, and ten
years ago 70 pounds was heavy enough for the lighter cars and engines
of the time.
But at the first suggestion of advancing rates to meet advancing
prices of commodities the Commissions were overwhelmed with protests
from shippers and the paring of freight rates down went on as the
prices of the goods they carried went up.
In ten years the price of lumber advanced nearly 50%. As a cheap
bulky commodity it had enjoyed a low rate in order to move it and
it was moved at the expense of other commodities. When it was
able to pay a little more toward the cost of getting it to market
the proposal of an advance was met with indignant protests from
lumber shippers and dealers and reversed thumbs by the sympathetic
commissions.
The railways pay more for their lumber and other material today than
they did ten years ago but they will have to fight for any advance
in rates to meet this part of their cost of living. It is said to
be a poor rule that will not work both ways--but the cost of living
seems to have only one way of working so far as railway economics are
concerned.
Just as a straw to indicate that high prices of food are the result
and not the basis of high wages the following table of comparative
prices in London and New York from the New York _Times_ of March 27,
1910, is instructive:
COMPARATIVE RETAIL PRICES OF ARTICLES OF FOOD IN LONDON AND NEW YORK
IN MARCH, 1910.
=====================================+============+=============
| London. | New York.
| Cents. | Cents.
-------------------------------------+------------+-------------
Apples, 1 lb | 4 to 6 | 10
Bread, 1 lb | 4 | 5
Butter, 1 lb | 24 to 32 | 30 to 35
Cheese, 1 lb | 14 to 16 | 18 to 22
Cocoa, 1 lb | 16 to 36 | 25 to 50
Coffee, 1 lb | 16 to 30 | 20 to 50
Currants, 1 lb | 4 to 8 | 8 to 12
Eggs, 12 to 16 | 25 | 6 to 12--25
Codfish, 1 lb | 8 to 12 | 15 to 29
Fish (general), 1 lb | 4 to 12 | 10 to 25
Flour, 3 lbs | 9 to 10 | 12
Meats: | |
Bacon, 1 lb | 16 to 24 | 25 to 30
Beef, 1 lb | 16 to 20 | 22 to 30
Pork, 1 lb | 12 to 16 | 20 to 24
Milk, 1 pint | 4 | 4 to 5
Oatmeal, 1 lb | 4 to 6 | 5 to 10
Onions, 1 lb | 2 | 4
Oranges, 1 doz | 10 to 12 | 18 to 50
Potatoes, 1 lb | 1 to 2 | 3 to 4
Prunes, 1 lb | 8 to 12 | 10 to 18
Raisins, 1 lb | 6 to 10 | 10 to 16
Rice, 1 lb | 4 | 6
Syrup, 1 lb | 6 | 10
Sugar white, 1 lb | 6 | 6
Sugar, yellow, 1 lb | 4 | 5
Tapioca, 1 lb | 8 | 10
Tea, 1 lb | 20 to 60 | 30 to 1.50
Tomatoes, 1 lb | 8 | 12
-------------------------------------+------------+-------------
The amazing feature of this statement is that the United States
produces and exports to the United Kingdom enormous quantities of
breadstuffs, meat and provisions, which constitute the chief articles
of food in London and which are sold there at prices from 20% to 25%
lower than in New York. Clearly it is the high scale of wages that
fosters the high cost of living in the United States and there can be
little question but it breeds the high wages it feeds on.
It is humanly certain, though economically unsound, that wages will
continue to advance with the cost of living and will not recede
proportionately as prices of food fall. But both will decline
together when for any considerable period there is a surplus of
efficient labor for the requirements of American industry. Even
railway labor in the most stable of all employments yielded to this
influence in 1893 and 1894; and the prices of food receded to the low
mark in the following years 1895, 1896 and 1897. Not until wages took
their upward turn in 1898 did the cost of food begin to show above
the index average of 1890-1899.
IV
CAPITALIZATION
According to the Twenty-third Annual Report of the Interstate
Commerce Commission the amount of railway capital, including stocks
and bonds "outstanding in the hands of the public on June 30, 1908,
was $12,840,091,462, which, if assigned on a mileage basis, shows a
capitalization of $57,230 per mile of line."
In the face of all the fustian about over-capitalization of American
railways, this is a most remarkable admission, not only of their
moderate, but of their decreasing capitalization per mile.
In its report on the Intercorporate Relationships of Railways, dated
March 10, 1908, the Commission found that as the result of its
investigation the figure for railway capital outstanding in the hands
of the public, "Measuring the claim of railway securities on railway
revenues," reduced the amount "from $67,936 per mile of line (1906)
to $58,050 per mile of line."
Of course there was never any justification for using the larger sum
as a true measure of railway capitalization, for it was known to
contain at least 15% duplicated capital.
In its Statistics of Railways for the year ending June 30, 1907, the
Commission gave the net amount of railway capital outstanding in the
hands of the public at that date, "assigned on a mileage basis as
$58,298 per mile of line," or $1,068 more than the figure reported
for 1908.
As the computation for 1908 was made on a basis of 224,363 miles of
line, this would indicate a shrinkage of no less than $239,616,480 in
the par value of railway capital. It is needless to say there was no
such shrinkage.
NET CAPITALIZATION IN 1909.
Following the earlier judgment of the Official Statistician, this
Bureau seeks to arrive at a fair approximation of the capitalization
of the railways of the United States through the reports of operating
roads and the capitalization of the rentals paid for leased roads.
This, in the more recent language of the Statistician, furnishes the
only capitalization that "measures the claim of railway securities on
railway revenues."
Applied to the returns received by this Bureau from 221,132 miles of
operated line, this formula yields the following result for the year
ending June 30, 1909:
SUMMARY SHOWING CAPITALIZATION OF 368 COMPANIES OPERATING 221,132
MILES OF LINE FOR THE YEAR ENDING JUNE 30, 1909.
======================================+=================================
| Capitalization
| 1909
| (182,046 Miles Owned)
--------------------------------------+----------------+----------------
Capital stock | $6,199,919,551 |
Funded debt | 8,015,841,805 |
Receivers' certificates | 20,497,447 |
|----------------+ $14,236,258,803
Rental of 39,086 miles, $120,784,982, | |
capitalized at 5%. | | 2,415,699,640
| +----------------
Total | | $16,651,958,443
| |
Deduct:(a) | |
Railway stocks owned (actual value) | $1,889,157,214 |
Other stocks owned (actual value) | 206,461,423 |
Railway bonds owned (actual value) | 1,054,095,905 |
Other bonds owned (actual value) | 140,282,728 |
|----------------+ 3,289,997,270
| |
Net capitalization, 1909 | | $13,361,961,173
Net capitalization per mile operated | | 60,425
--------------------------------------+----------------+----------------
(a) The par value of these stocks and bonds owned is given
as $4,739,231,832.
An estimate of $25,000 per mile for the 11,870 miles of line not
reporting to this Bureau would add $296,750,000 to the above total.
From this should be deducted $150,000,000 for the sum assigned by
the Official Statistician "to other properties," and we arrive at
the following close approximation of the true measure of the capital
employed in the transportation industry of the United States:
=======================================================+===============
Net capitalization, 233,002 miles operated line, 1909 |$13,508,711,173
Net capitalization per mile of line | 57,962
Net capitalization per mile of track | 39,730
-------------------------------------------------------+---------------
In computing the average capital per mile last given, no allowance
has been made for the 8,927 miles operated under trackage rights for
the sufficient reason that the rental paid therefor is represented in
the total capitalization just as fully as if so much capital had been
expended in the construction of that many miles of line.
It is worthy of note that the net capitalization thus arrived at
through a straightforward analysis of the returns of the operating
companies is in substantial agreement with the Commission's report on
the Intercorporate Relationship of Railways in 1908. The construction
of 11,000 miles of line since 1906 would undoubtedly account for the
difference between $58,050 and $57,962 per mile of line.
SUMMARY SHOWING NET CAPITALIZATION OF THE RAILWAYS OF THE UNITED
STATES, 1909-1904.
==================+==================+=========
Year | Net | Per Mile
| Capital | of Line
------------------+------------------+---------
1909 | $13,508,711,173 | $57,962
1908 | 13,007,012,563 | 58,864
1907 | 13,064,279,303 | 59,600
1906 | 12,628,000,000 | 57,966
1905 | 11,167,105,992 | 53,328
1904 | 10,711,794,278 | 52,099
------------------+------------------+---------
Owing to the intercorporate ownership of stocks and bonds and the
consequent intercorporate payments of interest and dividends, it
is no easy matter to make an entirely satisfactory estimate of the
return paid to capital out of the purely transportation revenues
of the railways. But the persistent reiteration by the Official
Statistician of the fictitious aggregate of all the dividends paid by
operating and non-operating companies, covering in 1908, by his own
admission, $3,927,453,365 duplicated capital, justifies the attempt.
The operating income of the roads reporting to this Bureau for the
year 1909 is arrived at thus:
===============================================+===============
Gross earnings (221,132 miles operated) | $2,375,141,766
Operating expenses | 1,568,008,389
+---------------
Net earnings from operation | $ 807,133,377
Less taxes | 82,650,214
+---------------
Net operating income | $ 724,483,163
-----------------------------------------------+---------------
This $724,483,163 is the balance in the hands of the 368 companies
of the moneys received by them from transportation, or, as the
Official Statistician now calls it, "rail operations," for the
payment of interest, rent, other deductions, dividends, additions and
betterments, reserves, surplus and deficits. But before proceeding to
this distribution these companies received $200,725,696 income from
other sources, principally interest and dividends on stocks and bonds
owned and for rent of track, and a net balance of $5,410,338 from
outside operations. The total of these two sums, $206,136,034, may be
arbitrarily applied first to offset the item of rent, $120,784,982,
paid for leased lines and track, and the balance in payment of
interest and dividends in proportion to the value of bonds and stocks
owned as above, viz.: 36% and 64%, respectively.
This enables us to make the following distribution of the net
operating income of the railways reporting to this Bureau, as follows:
===============================+=============+==========================
Net operating income, as above | | |$724,483,163
Disposition of same: | | |
Interest on funded debt |$324,181,521 | |
Less paid from "other income"| 30,843,416 |$293,338,105 |
Interest on current liab- | | |
ilities | | 22,546,779 |
Other deductions | | 70,174,473 |
Dividends preferred stock | 50,183,739 | |
Dividends common stock | 176,607,550 | |
+-------------+ |
|$226,791,289 | |
Less paid from "other income"| 54,832,742 | 171,958,547 |
+-------------+ |
Dividends on other securities| | 769,222 |
Additions and betterments | | |
charged to income | | 24,807,546 |
Appropriations to reserves | | 16,984,447 |
Miscellaneous | | 5,602,761 |
Deficits of weak lines | | 4,996,195 |
Surplus available for adjust-| | |
ments and improvements | | 113,205,088 |$724,483,163
-------------------------------+-------------+-------------+------------
This table shows the actual disposition made of the net income from
operation of the roads reporting to this Bureau, representing 97% of
the railway business of the United States, except that $120,784,982
of the income from other sources has been eliminated from the account
and applied to offset the rental paid by the reporting roads.
It will be observed that the gross dividends declared were only
$226,791,289, which is 3.64% on the par value of the stock of the 368
reporting companies.
MISREPRESENTATIONS AS TO DIVIDENDS.
The discrepancy between this condition and the official statement as
to dividends declared in 1908 calls for an analysis of the latter.
This reads, "The amount of dividends declared during the year (1908)
was $386,879,362, being equivalent to 7.99% on dividend-paying stock.
For the year ending June 30, 1907, the amount of dividends declared
was $308,088,027."
Two income accounts--one of operating roads and the other of leased
roads--for the year ending June 30, 1908, give a clew as to how the
Official Statistician more than doubles the dividends actually paid
out of transportation revenues. The gross total is made up of these
four items:
===================================================+=============
Operating roads: |
Dividends declared from current income | $271,328,453
Dividends declared out of surplus | 57,733,808
|
Leased roads: |
Dividends declared from current income | 33,843,577
Dividends declared out of surplus | 27,550,596
+-------------
Total | $390,456,434
---------------------------------------------------+-------------
As these income accounts show that the operating companies received
$280,427,460 "other income" from outside operations and sources other
than transportation, and the leased roads received $111,153,013
"income from lease of road," the source of the major part of this
fictitious dividend is revealed. The $280,427,460 from other sources
would pay the entire income of the leased roads and leave nearly
$170,000,000 to extinguish so much of the dividends declared by the
operating roads.
Modified as to details, this is what actually occurs every year. In
the year 1908 the total amount paid out of transportation revenues on
account of capital of the 97% of the railways of the United States
reporting to this Bureau was represented in the sums: