EIGHTEENTH ANNUAL YEAR BOOK — PART VII 429 



all operating expenses and taxes) during the five mtmths subsequent to 

 LLe months for which the commission had the figures, has beyii 19 per 

 cent greater than the commission's method of estimate show«!. Wo made 

 two estimates. The net revenues during the first nine montl.'s of the year 

 Were $10,000,000 greater than we estimated for the entire twelve months 

 on one basis, and $10,000,000 less than we estimated on the other basis for 

 the twelve months. 



But now I come to the prince of guessers. I have here a little exhibit 

 labeled, "A Twentieth Century Prophet." I have in front of me photo- 

 graphic copies of the brief filed before the Interstate Commerce Commis- 

 sion last spring. Mr. Patterson, chief counsel, adopted this method of 

 estimating. He used the revenues of last year, and the increased ex- 

 penses of this year. That creates an imaginary year that does not begin 

 anywhere or end anywhere. iWe maintained that such a method of esti- 

 mate was fallacious; that if you are going to estimate the increased 

 expenses, you ought to estimate the increased earnings. Either you ought 

 to adopt the earnings and expenses of last year, or adopt the increased 

 earnings and expenses of this year. If you are going to guess expenses, 

 guess earnings. His proposition is an imaginary one. He states in this 

 connection: 



"It must be remembered that the increases in revenue and expenses 

 are both an estimated annual amount based on the business of 1916. They 

 plainly show the financial situation of the carriers, altho they are not 

 necessarily the figures for the year 1917, as some of the expenses and 

 revenues will not be effective for the entire year 1917, in fact, the 15 per 

 cent advance on merchandise and other commodities can only become 

 effective on July 1, 1917, while the higher basis of operating costs has 

 not yet become fully effective.''' 



Here are the exhibits. There is a photographic copy of one page of 

 Mr. Patterson's brief. He said that if they did not get any advances 

 during 1917 their net operating income for this imaginary year (I don't 

 think it is entitled to be called any year) would be $215,000,000. 



Now, folks, we were fortunate in having during the rehearing another 

 exhibit prepared by this same prince of guessers. In this exhibit Mr. 

 Patterson showed the net operating income for the first nine months of 

 1917 to be $233,000,000, in other words over $68,000,000 greater in nine 

 months than he estimated for twelve months. It is true that there were 

 about two months of advances' in those last figures. Those advances 

 granted would approximate about $16,000,000 during that period. In other 

 words, allowing for the advances, the actual returns showed a net oper- 

 ating income for the eastern railroads more than $50,000,000 greater than 

 Mr. Patterson estimated for the entire year. 



Now with the actual returns exceeding the estimate of the Interstate 

 Commerce Commission, exceeding the estimate of the shippers, and ex- 

 ceeding the estimate of the railroads, isn't it a most remarkable situation 

 that these gentlemen are able to fiood the newspapers of the country with 

 the misrepresentations that you have beeli reading day in and day out? 

 I want to tell you that for the eastern railroads as a whole that surplus 

 of $145,000,000 and $147,000,000, which I stated a few minutes ago, was 

 arrived at by a computation based upon their own exhibits. 



