424 IOWA DEPARTMENT OF AGRICULTURE 



degree, either the present value or the original cost of the American rail- 

 roads. Yet all the property investment is still in that investment. I have 

 another term for that; I call it book value. I wish you would remember 

 that, and then think how easy it is to arrange your books. The property 

 investment is not a safe index. 



Something has been said that the railroads had failed to maintain 

 their properties adequately. You know that was very widely claimed. 

 The other day I went into the law department of the Railroad Adminis- 

 tration, and Mr. Matthews gave me this memorandum: 



"UNITED STATES RAILROAD ADMINISTRATION, 



"W. G. McAdoo, Director General of Railroads. 

 "Division of Law; John Barton Payne, General Counsel. 



"Washington, January 27, 1919. 



, (Memorandum for Mr. Clifford Thorne.) 



"Mr. Matthews stated today that as near as he could recall, at least 

 fifty claims have been preferred by different companies for compensation 

 in excess of the standard return based on the claim that the company nad 

 expended an abnormal amount of money during the test period for main- 

 tenance; that most of these claims have been acted on by the Railroad 

 Administration already; that some are still pending and under investiga- 

 tion; and that of the claims of this character finally acted on, none have 

 been allowed. 



"Accompanying this memorandum is a list of a few companies of this 

 character, selected at random, showing the amount of the claims made 

 by them. 



"The above statement does not apply to claims for excessive equip- 

 ment purchased during the test period. There are about fifty or more 

 of these." 



The Rock Island now claims they were over-maintaining their prop- 

 erty to the tune of $1,500,000 a year during the three years ending in 1917. 

 The Chicago and Eastern Illinois claim an over-maintenance of $600,000 

 a year. The Frisco claimed they were over-maintaining their property 

 by $1,500,000, and the Missouri, Kansas and Texas claimed they were over- 

 maintaining their property by $1,000,000 a year. 



I have merely given you these figures to show you that it is owing 

 to what you are trying to put over. Now, if all these facts be true, 

 what caused that billion-dollar increase in rates last year? Well, you 

 had the wage increase, the totals including many advances during the 

 last six months, and which now totals, I am informed, between $700,000,000 

 and $800,000,000. You had an increase in coal of $140,000,000. You had 

 other increases; and it was because of these increases that Mr. McAdoo 

 made the advance. He specifically said those were the reasons, and it 

 was not to make up for a deficiency existing in the years before. The 

 average wage increase in labor on the railroads has been close to 40 per 

 cent. You only had the rate advance six months of the year, while you 

 had the bulk of the labor advance twelve months of the year. 



