430 IOWA DEPARTMENT OF AGRICULTURE 



There is this that we must look out for in the future. There will be 

 times when great congestion will come, and there will be unrepresentative 

 emergency periods; and, more than that, it is possible to juggle figures. 

 It can not always continue the way I have been describing. The thing that 

 surprises me is the amazing fact that with that kind of a record at this 

 particular moment, they should have the nerve to ask to further increase 

 the transportation burden upon the American people. But we must 

 anticipate that in the future there will be periods of depression — ups and 

 downs — in the railroad industry, just as well as in yours. Do you make a 

 dividend every year of six to ten per cent on the value of your farm? 

 Don't you have periods of depression? 



Let me describe some strange figures. Mr. Patterson was taking the 

 leading part for the railroads, and I wanted to see what the Pennsylvania 

 System had done to their earnings. I had one of our accountants compile 

 a table showing the net operating income of that system during the past 

 ten years. I found that the net operating income above expenses of the 

 Pennsylvania System, during the month of February, 1917, was about 

 one-tenth of what it was during the month of January; about one-tenth 

 of what it was during the same month of the preceding year; and less 

 than onetenth of what it was during the next month. And when those 

 February figures began coming in, President Rea rushed down to Washing- 

 ton, in company with other railroad presidents, and demanded an imme- 

 diate advance in freight rates to meet the crisis, without any investigation. 

 And a lot of numb-skulls out here in the west and elsewhere said: Yes, 

 give it to the railroads; let them have it; of course we want railroad 

 facilities. They didn t want an investigation to see whether those facts 

 were representative or not. The next month their operating income was 

 over ten times what it was that month. 



I looked back over previous years to see whether there was any similar 

 event in their past history. I found one such on one of the subsidiaries 

 in the year 1913 — the P., C, C. & St. L. I looked at the annual report 

 of that company to its stockholders, and I found it was because of the 

 flood. There was just one other time in the past ten years when that oc- 

 curred, and that was in 1914. In February, 1914, their operatng income 

 was less than one-third what it was the preceding month for the whole 

 system (the same relationship for the different parts of the system), and 

 less than one-fourth what it was during the next month. Then I began 

 to look over the record of the 1914 advanced rate case, and I found it was 

 just when those figures were coming in that the railioads demanded an 

 immediate advance in freight rates without time for argument or brief. 

 They didn't want to give me ten days. 



Mr. Cockerill: They had resolutions sent to all the commercial clubs 

 in Iov;a, asking them to endorse it immediately. 



Mr. Thorne: Now, folks, I don't want to say that the Pennsylvania 

 accounting officers are crooked; but it looks rather strange that they can 

 so arrange their accounts, or their accounts show such an enormous falling 

 off in one month, and when those figures come in, they rush down to the 

 commission, asking for an immediate advance without investigation. But 

 there are many possibilities in accounting, especially in maintenance and 



