[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.