THE OMAHA SUNDAY HHK: .TANTTAKV 8, 1011. Proposed Increase in Railroad Rates The Shippers Urn rrnmlrd by K. J. MrVann, rmmllof of the Omaha Frelcht Birwi. 'This article wan contributed bv Mr. Mr- Increase. $M.Wono more than sufficient to Turin to the annual financial revle of the pay foP th estimated Inereaiw In wages. New York Tillies.) UK controversy between tht shipping rubllc and the rnil rnadn In officlnl classification territory and Western trunk line committee territory Hroae over the announced Intention of T those railroads to make material advance In thMr charges for transporting freiftlu. The shippers In those two eran1 divisions of railroad geography opposed the ad vances upon the ground that those ad vances were unnecessary. The earnings of the railroads, the shippers claimed, wero ample to pay all expenpes. meet the fld charges and leave sufficient ninrirln for dividends and surplus. The spokesmen of the railroads Insisted that the shippers were not well Informed. It was true, they admitted, that the gross receipts of the railroads had Increased, but they argued that operating expenses had also Increased ; that they were confronted with furthor Increases on account of the advance? in wages, and that they must largely augment their gross receipts to meet the situation they were facing. Space will not permit more than th3 barest mention of the '.evelopment of this controversy. The shippers Interested In the eastern rates met In mass convention at Chicago May 17 and appointed a con ference committee with power to open negotiations with the eastern presidents. The eastern president Ignored the com mittee and proceeded with the preparation of the advanced rates. A meeting of western shippers was held at Omaha. May 84. Here the situation was more acute. The western advances had been published and would become effective June 1. The treatment of the conference committee ap pointed at Chicago was known. It was felt that a similar move would be a waste of time and that drastic action was neces sary. The administration was called upon for aid, through the enforcement of the conspiracy clause of the Sherman anti trust law. The response was prompt and effective. Mr. Wlckrrsham petitioned for a restraining order against the Western Trunk Lino committee roads. Judge Dyer granted It on May 31. Congress was also retltiotiod for help and almost Immediately put a revision In the commerce law that any railroad which advanced any rate In effect January 1, 1010, or thereafter must Justify Its act before the Interstate Com merce commission If called upon to do so. Thereupon the eastern and western rail way presidents sent committees to the White House and offered to withdraw the proponed advances and submit the whole controversy to ths commission. President Taft arranged the basis for such submis sion. The commission Issued the necessary orders and appointed dates for hearings at Chicago, New York and Washington for the taking of evidence upon the ques tion of the necessity for the proposed ad vances. It Is probable that the majority of the readers of the Times annual review are not shippers or railroad people. In order that they may clearly understand the mag nitude of this controversy, a brief explana tion and a few figures are necessary. Of ficial Classification territory Is that part of the United States bounded on the east by the Atlantic ocean; on the south by the Potomac and Ohio rivers; on the west by tha Mississippi river and on ths north by the Canada line. This great territory overlaps the western Trunk Lin Commit tee territory, which is bounded on the eat by Lake Michigan a,nd the Indiana Illinois state line; on the south by the Missouri-Arkansas state line; on the west by tha Missouri river, and on the north by the Canada Una. Taken together, these two railroad ter ritorial divisions coincide roughly with groups I, h. III and VI, as established by the Interstate Commerce commission and shown In Its statistical report for the fis cal year ending June 30, UK. According to that report there were 129,000 miles of railway In the United States, of which 116,000, more than SO per cent, are Included 1:1 these four groups. Of the 1,600,000,OUO tons of freight handled, by all the rail ways of the United States that year about 71 per cent U, 1 jO.000.00 tons) were handled In these four groups. Of the 687,000,000 freight train miles that were run In the United States for tha year ended June .,30, (0 per cent, were run In groups I, 11, III and VI. Finally, of the 3, 315, 000,000 total operating revenues of the railways of the United States for the year ended Jiwm 30, 190S, the railways In these four groups earned $l.ii,H0,0iA), about 60 per cent. It Is impossiulle to Indicate accurately how much revenue would be added to this vast sum by the proposed advances. Many cellmates have been made, but they are ail predicated upo the niovetut ut of lml nobs for preceding periods ana might be nullified entirely by the effect upon the commerce ot the country if the advance demanded by the railroads should be ul loaed by the commission. Under tho provisions of the newly enacted law, the railroads found themselves In the novel position of making an affirm ative showing In support of their demands. The eastern Unas pooled their Itsucs and presented as the backbone of their cast: a statement Indicating that the advances in wages which tlicy had been couipclU to make, and would be compelled to make, would add e36.OuO.Ooft per annum It their oporatlng expense account, w bile tliclr es timate of the Increase in thli- revenues, baaed on the new rate, would only lu cre be those revenues fc:j.OuQ,uuo. These tab ulations were Introduced by the clerks who made them, During the entire New York was earned upon the basis of the old rates These results seem to completely sustain the contention of the shippers that In creases In the eastern rates are entirely unnecessary. The advances made bv the railroads In Western Trunk Line territory were not important In end of themselves, but the executives of those lines made It clear that It vu their intention to follow these advances with others thst would augment their revenues materially, If the commis sion approved the first figures submitted. The theory of the western roads wii much the same as that finally adopted by the eustern roads, vis.: That their op erating expenses were increasing with greater relative rapidity than their gross earnings, and that they must augment their gross earnings materially In order to pay their dividends and fixed charge and create the amount of surplus thst they considered necessary to preserve their credit. The principal western roads presented an elaborate theory of fair re turn, based portly upon the evidence of Vice President May of Price, Waterhouse Co., and partly upon the theory that they were entitled to capitalize their sur plus, earnings that had been put back Into the property. Mr. May's theory was that fair return Included not only present div idends, but the right to returns upon the Investment from the beginning of the company's history. In other words, if the Santa Fe road passed Its dividends during several bad years It was entitled to add the amount of those passed dividends to Its present dividends, so that the aver age would equal a fair return for all the years of Its existence. The other theory was put forward by the Burlington and Northwestern. The Burlington claimed that It had a right to a fair return upon 1127,000,000 of surplus reinvested In Its property, and the Northwestern showing Indicated a claim to earn returns upon nearly ITO.OOO.OW of surplus Income rein vested In the same manner. Tho Burlington road laid great stress upon the evidence of Its general manager, Mr. Ward, that the property would cost r,30,0OO,0O0 to reproduce. Included In this estimate was ll0,OO0,009 land value. Mr. Ward testified that he based this value upon an ascertained actual value of sur rounding property, which was multiplied by three upon the theory that It cost a railroad three times the value of sur rounding property to obtain land for Its use. Tha fair Inference from Mr. Ward's testimony was that he had applied this multiple of three throughout. When the Burlington was confronted with the fact that the cost to the railroads of terminal property In four large cities was as fol lows: Omaha. 160 per cent of adjoining land. Minneapolis, 160 per cent of adjoining land. St. Paul, 175 per cent of adjoining land. JDuluth, 126 per cent of adjoining land, and that the use of the multiple ot ISO supported by these figures cut Ward's value estimate Id two, Mr. Ward was put back on the stand and modified his first testimony materially. He corrected his evidence by the statement that he bad not used a multiple of three uniformly, but only with reference to farm lands. The value per aero upon which he supported his estimate of farm lands were so far out of line with actual values, even admitting the correctness of his multiple of I, that It la not anticipated that the oommfsslon will pay much attention to that estimate as a basis for tha claim of fair return. The underlying theory of tha testimony of all tha western railroads seemed to be that the commission ought to accept with out question their statements of the amount of their operating expenses, and not to go behind those statements dealing only with the net revenues left after de ducting these operating expenses from the gross revenues. If the testimony of the railroads themselves showed no abnormal or unusual conditions as to the amount of their operating expenses, their position in this respect would not be open to se rious question. Counsel for the shippers, however, made an exhaustive analysis of the operating expenses ot the principal western railroads upon the theory that the transportation conditions In the west ware controlled by tha Atchison, Tcpeka & Santa Ke, Chicago, Burlington at Qulncy, Chicago & Northwestern and Chicago, Mil waukeo Jk St. Paul railways, and that the commission must decide the case with reference to the showing made by thoae four roads because of their commanding position and because of the fact that they were generally admitted to bd capitalized with reasonable fairness and to be hon estly and ably managed. This analysis showed an unprecedented Increase In operating expenses under the heads of maintenance of way, structures and equipment. The testimony of the exe cutives of three of these roada had been to tho effect that their properties had been kept up from year to year in such shaps that they were belter at the end of each year than they had been the preceding year. Notwithstanding this fact, their maintenance expenses were very largely Increased during the fiscal year ending UU0. The Increases showed most clearly in these items which could be most readily controlled by the fiat of management. No claim was made by the shippers that these accounts hud been deliberately padded for the purpose of Increasing operating ex pense. Tho theory presented for the con. slueratlon ot the commission was that, if the Judgment ot the management had re cited In tho contracting of unusually heavy maintenance, expenses during the fiscal yei.r 11' in. that fa-t should not be made A point presented by the shippers for the consideration of the commission was the reduction of railroad earnings to the basis which the railroad people themselves are so fund of presenting, vis: Considering the railroad as a manufacturer and seller of transportation and presenting its gross profits from the sale of Its wares. On this basis It was shown that the Chicago A Northwesten railroad had done a business of t74.O0O.O00 in the year 1110 and. after paying the cost of selling Its transporta tion had a gross rroflt of 82.7c out of every dollar received, available for taxes, de preciation, fixed charges, dividends, spe cial funds, and Including a surplus of e,4iP,000 over all these Items. Upon the same basis the Panta Fe was shown to have sold 1X,00Q.0C0 worth of transporta tion and to have left a gross profit of 36 6c out of every dollar. The Chicago. Burling ton & Qulncy railroad sold fss.CCO.OOO worth of transportation, out of which It had a gross profit of S3 8c on each dol lar. In addition to these profits, It Is, of course, understood that there Is included In the operating expenses a very laige amount of money which Is really re-Invested In the property by way of maintenance charges, which, of course, Increases the value behind the securities. Mr. Ward testified that the Burlington road had put about JS.CCO.OOO into Its property during tha year 1810, but the account of his company for that year showed a little over $1. 000,000 -deducted from surplus Income under the heading of additions and betterments. The natural Inference Is that nearly 17,000,000 was ex pended for maintenance charges that In crease value of the property and was charged to operating expenses. Many important facts were developed In cidentally during the hearing of the west ern terllmony thlch, from the shippers' point of view, would militate strongly against the claims ot the western railroads that they needed more revenue. One In stance of this was the Issue of fl00.oo0.uoo worth of Chicago, Milwaukee A St. Paul slock which paid 7 per cent or 17,000,000 In dividends In 1910, in exchange for a like amount of Chicago, Milwaukee 4 Puget Sound bonds, which paid 3 per cent to the parent company. This, of course, made a net loss of $3.0ot,000 in the Income account of the St. Paul road, which their witness strenuously Insisted was made up by the additional business gained through the building of the Puget Sound road, but no definite evidence was Introduced In sup port of this claim. Another Item of this character was the exhibit ot the Santa Fe system, which showed that that road had charged oft Its Income account since It reorganized In 1896, 130,000,000 which was put back Into the property by way of additions and betterments; about tS.500,(XiO net discount on Its bonds and 12,600,000 fuel reserve fund, a total of 141,000,000. In addition this exhibit showed an existing surplus in Income account of $24,000,000, or a total In excess of $85,000,000 surplus Income earned by that road In addition to operating expenses, fixed charges and dividends. Mr. Ripley testified that this surplus was not enough, but that the road should be enabled to earn at least 6 per cent additional on Its common stock, or about 16,000,000. His theory was that sound financial policy required the piling up of tha surplus that would result. As against this testimony it was interesting to note that Mr. Gardner, president of the Chicago & Northwestern railway, tes tified that he would be satisfied with 125,000,000 surplus to be earned in ten years, which was exactly at the rate of tha surplus earned by his company In mo, under the existing rates. With respect to this item of surplus earnings, Mr. Gard ner remarked that the possession of too large a surplus tended to extravagance In management During the same line ot examination, Mr. Gardner made the significant remark that a basis of earnings which might be Justice to some lesser line, would extravagantly increase the earnings of a road like the Northwestern. This la precisely what the shippers contend with reference to the present situation, vis: that the commission ought to tlx tha rates based upon the financial situation of tha strong lines that, control the transportation situa tion, and let the overcapitalized and badly' managed roads take care of themselves. From the shippers' point ot view, the strongest argument against permitting the railroads to Increase their rates, is the argument advanced at the Chicago hearing, that to do so would be to Ignore the Inexorable economla law underlying all commercial transactions, that law which (Q)ppirtiiife at Jllilpatriclk's Monday January 9th. A few facts, truthfully told, which will attract and interest if you need merchandise At the Linen Section Very special selling of Center Pieces, Doilies, Cluny Pieces, etc. divided iuto six great lots: No. 1 24-inch Damask, figured Center Pieces, worth $1.25; Monday 89t? No. 2-lrish Embroidered Doilies, sold as high as 50c Monday 9e Xo 3 iland made Cluny Lace Doilies, 12-inch, sold at $1.00; Monday 59c Xo. 4 36-inch Irish Embroidered Lunch Cloths, sold at $2.00 nnd $2.25; Monday $1.G9 No. 5 Irish Embroidered Doilies and Cluny Pieces, sold up to GOc; 3C No. G Hand made Cluny Centers, regularly sold up to $2.25; Monday $1.69 . Notwithstanding that we started this sale with a very large stock of Bed Spreads, several numbers are almost gone. Think of this Monday and you'll save money. Now is your opportunity to buy Linens, Cloths and Napkins. Please come in the morning if possible and oblige us by taking small packages with you. Bear with us on deliveries we have done our best, but were abso lutely swamped several days last week. Beautiful Basement Bargains Heavy Cotton Suitings Galateas, Shrunks and Reps sold up to 18c; at, yard 10c Percales that were 12lLc, Monday at 10c 15o quality at 12M:C Gingham 32-inch imported Zephyrs, 25c quality, 14Mc 12Vc Ginghams at O'nC Swansdown dainty, delightful, nappy and nice; usuallv 15c to 18c; on Monday, yard 10 Blankets the $2.00 grade, 12-4 cotton; Monday. .$1.-15 The $b00 grade, 11-4 wool; Monday $4.35 Sheets Ak-Sar-Ben brand, 81 inches wide, !H) inches long, seamless, torn and hemmed; Monday, each . . . 9o Lonsdale and Fruit genuine, no faking here, 4-4, at 81 Lt Skirt orders taken Monday will be delivered in about ten days. The price for making is $2.0015 styles to choose from. We are receiving daily, new' Foulards, 1911 styles The best goods. Our prices are lower than those asked by the majority of silk men. Look at the beauties Monday. At Embroidery Counter 15e Nainsook Edge and Insertion at 9c 75c Flouncing, Nainsook and Swiss, at 39(J $1.00 27-inch Flouncings, elegant styles, at 59c Second Floor Monday "We'll sell Silk Petticoats, made of soft taffeta, messaline or choice Persian, worth $5.U0 at $2.98 Jersey top Messaline flounce Silk Taffeta Skirts, sold up to $6.50; Monday $4.15 The Undermuslin Sale is still booming tables ar ranged with very special lots for Monday. Store opens at 8 o'clock sale starts promptly. Take our advice and come in the morning if possible. Flhomas Ililpatirick & Co. Invariably operates to decrease the volume ot business In direct ratio to the Increase in the cost of doing that business. The only exception to the operation of that law is in those cases where there Is absolute monopoly in the barter and sale ot a ne cessity of life. No one has yet been heard to claim that the railroad monopoly ot transportation is absolute, and it fol lows that increases in the price of railroad transportation must decrease the volume of business. In tact, ever since the railroads became a factor in transporta tion tha universal rule applied by them has been to reduce transportation rates when they desired to increase their business and their earnings. A complete reversal ot this policy seems strange and the shippers be lieve, and urged the view upon the com mission, that the necessary result of such a policy would be to Impede the free intor; change of commodities, cause hardship to many established lines of business, heavy losses to the shipping public and bring no real gains to the railroads. By the time these lines appear In print, both the eastern and western cases will have been concluded and fully argued be fore the Interstate Commerce commission. The commission is charged with the duty of going into the subject thoroughly, and there Is no doubt that that duty will be fully, ably and conservatively performed. Whatever the decision may be. it Is hoped that it will result In establishing a sound economic basis tor the levying ot the tre mendous transportation tax upon the people ot the United States. ICE PACKER MAKES NEW MOVE Provides Cuspidors for the Vse ot the Men Who Are Cnt tla lee. F. 8. Knapp of the Omaha Box company tells of a very thoughtful Ice man. "He came info the plant on Monday," says Mr. Knapp. "and asked to have fifty boxes of a specified size made at once. He had brought a wagon to take them away immediately. I had the order filled as quickly as possible, and after the goods were delivered to the wagon, I asked him what he was going to do with the boxes. He sold he was going to till them with sand and set them about on the ice for the men at work to use as cuspidors. This struck me as being especially thoughtful, for he has about 204 men working for him, and the care taken to keep them from expectorating on the ice would seem to be Justified." Choir of Iowa Soldiers' Home hearing none uf the iwtpoi.:iUc executive officers of tho eastern rouds was put upon j the basis fur advunclng rates In order to the witness siaud until the public press, of I augment all shade of opinion, had united in ridicul ing the sort of showing that the eastern railroads niude. The uafuc executives of (oine of the prlucipal l u were then Intro duced as witnesses. Out it nas easy t ) too that their evidence was olteitd rather to meet the criticism of the pisa than to support the railroad position Lefore the commission. iubMiuviitly. at the Wash ington hearing, the presidents of the New York Central, the Pennsylvania and the Baltimore & Ohio testified. The gist of their evidence was that, In ordir to pre servo the credit of the companies anl en able them to obtain the additional capital nosary for the development of their proieitles, rates must bi advanced to such a point that a large surplus could be ac cumulated to be put back into the prop erty. Between the hearing of the eastern lines' case In New York and the taking of the testimony of the presidents of those lutes In Washington, the actual results of the operation ef the iines In official classifica tion terrltor) for the year ending June W, lsls. were made public by the Inter state Commerce commission. The rallrouj presldir.ta were confronted with the fact that the lines which were called upon tJ pay tha a.OoO COO estimated Increase In wages hud ixVtJU WO actual Increase in their net operating revenues for that year over aad above their lww earnings, the basts upon which their estimate of M. tti.vu Incrtai.e was luade. This enormous gross earnings. As an In Mance of the larrre expenditures lor maintenance, there was tie ta:ie of tha tie renewal account of t its Sunta Ko. This account showed that tfco Santa Ke company had expended tO.uJ more In lalt) than In 190S for renewals of Uts, but had laid GC0.UC0 less ties in l'.'.'U. and had reported to the commission ti:a: the co.-t of Its ties at the point of dis tribution was practically the same tor I 'cth years. Another instance was an ln- crvaso In the expenditures of the same ctmpany of tl.Vtf.0iO In 1310 over 19 under the Item of roadway and track, hummed up, the Santa lpe malntsnance accounts In creased 25 per cent; the Chicago & North western maintenance account aJ'i per cent and the Chicago, Burlington A Qulncy li-j per cent. There was also muuh railroad testimony that the winter of 130K-10 was an exceedingly hard winter and that the Illi nois coal strike, which lasted months it $-; I.V I v 'V v BRUNING IS J0LAND A JOB Two Coramlssloaera Say lie Is to Be County Storekeeper Formerly Kept a Store. Fred Brunlng, former county commis sioner and chairman of the Board of County Commissioners, will be appointed county storekeeper by the Board of Coun'y Commissioners, according to statements by Commissioners Plckard and Bedford. The board has not decided who it will place In charge of the Detention Home. "Brunlng Is Just th man for store keeper," said Mr. Bedford. "He used to be a grocery man and his long experience In his grocery store well qualifies him." Const I tut ton tor Monaco. MONTE CARLO, Jan. 7.-Prlnce Albert of Monaco today Issued a proclamation es tablishing a constitutional government for the principality of Monaco. He has 1.20) subjects. TO REFUND MERCHANTS' FARE Commercial Clab slakes the gain Arrangements as Were In ef fect Last Fall. . The jobbers and manufacturers' associa tion of the Commercial club has arranged for fare refunds to country merchants be tween January and April 20. The gen eral plan Is like that successfully pursued In fall campaign, the present one being de signed In the Interest of sales of sprlnj goods. Fatal Quarrel Over Miotirnn. NEW ORLEANS, Jan. T.-Ferdlnand Cure, a planter, Is dead and C. M. Ft. Cermaln, registrar of St. Bernard parish, Is under arrest as the result of a quarrel over the disposition of a i-hotgun. which led to a fatal shooting affray here today. 6t. (Jermaln claims he shot In self-defense. A LIQUOR CURE THAT NEVER FAILS Cured of AU Desire or Craving for Alcoholic Liquors in THREE DAYS -That is The Story Being Told by Hundreds u of Our Patients .1 4 A former Omaha woman, Mrs. Fannie several M. Hanks. Is a member of what la proba- had affected ooeratinif expenses ' bly the most remarkable choir of the en- tluouah the increase In the cost of fuel, tire west. If not of the entire country. No and freight revenues through the decreaso ' other organisation of Its kind exceeds in In coal tonnage. the aggregate age of it membors, and Notwithstanding nil of thess cSverse ' 'nr average age. The choir is that of conditions, these rracs wero er.ab'.cd to the Iowa Soldiers' Home at Marshalltown, pay tleir fixed charges, a.tiple dividends Iowa. In which Mrs. Hanks sings soprano, upon their stock, make the usual appro- The total age of the ten members, the prlations from Income for bettermer.ta ' organist and the chaplain Is 73 yeara. and carry considerable su:ns to their sur- , Their averaae age Is a years and 7 months plus account for the yer 1J;. Ths con- Mrs. Hanks has been a member of the tentlon of the shippers la that these tacts home since In October, 1SOS. Three other would Justify the commission In denying western Iowa old people are members of these roads the right to make any ad- 1 this choir, which sings regularly at all vances la their rales. I chapel services and funerals. They are Kdward B. Wsrd, basso, of Ogden, la.; Mrs. J. Cottrell. pianist, of Atlantic, la.; and Mrs. Emma Gould, alto, of Sioux City, la. The organiser, Chaplain Jesse Cole, Is a Methodist preacher, who form erly held charges In northwestern Iowa, and who Is still a member of the North western Iowa conference. He Ib a lecturer of soma note, and prior to and after the war he held various charges In Wisconsin. He was chaplain of the E'ghth Wisconsin Infantry, the ruglmeiil that becane fa mous by reason of the mascot, the live eagle, "Abe Uncoln," that It carried through the war. The members of the choir, with their ages, places or residence before being ad mitted to the home, and the positions they occupy in the choir, are as follows, reading from left to right: Top Row A H. Albert, 70. Alb!a, tenor; C. B. Wilbur. S. Polk City, tenor; Miller Tallmun, 9. H oux City, basso; Edward li. Ward. Ct, Ogden. basso. Mid dle Row Mrs. M. Proctor, , Ottumwa. soprano; Mrs. Etta Cutler, bi, Dubuuue, sotrano; Mrs. Itoena A. Walker, W, Kolfe. soprano; Mrs. Fannla M. Hanks, 64, Omaha, soprano; Mrs. J. Cottrell, SI, Atlantic, pianist; Mrs. Sophia Wilcox. t- Fort Lodge. alto: Mrs. Emma Gould, oti, Sioux City. alto. Front Row Kev. Jesse Cole, 70, chaplain Iowa Soldiers' Home, and or ganiser of the choir. The Neal internal trcit ment cures the periodical, occasional or moderate drinker, the habitual and excessive drinker and the nervous man who has to drink to keep from becoming more ner vous. It takrs away all inclination to drink, all desire and craving fr drink by neutralizing the poison of alchol in the system and ridding the blood of the pisn by a rapid process of climina- tin leaving the drinker in the same normal con dition he was in before tasting liquor, so far as the effect of alcohol may be concerned all appe tite for drink gone and he a new man. Mo Hypoderm'c Injections The Neal internal treat ment effects a perfect cure in three days with out hypadcrmic injections. A GumaheJ Contract A guarantee is given each patient t effect a perfect cure or refund the money at the end af the third day. A Modira Treatment The Neal is a Physi cian's Cure for the drink habit; it is ths most mod ern and perfect of known treatments, originated by a physician, compounded by a physician, and ad ministered by experi enced physicians. It never fails. Call, write or phone Douglas 7556, for free booklet, "The Neal Way" and endorsements, Neal Institute Co., O. B., 1502 So, 10th St., Omaha, Neb. All communications strictly confidential. Dank references given.