There is instruction and warning behind the remarkable increase in the ratio of taxation shown in the figures for 1894 to 1897. There is the reflection of similar conditions in the rising ratios of 1908 and 1909.
[X]
DAMAGES AND INJURIES TO PERSONS
There are two items in railway accounts connected with the expense of operation that give the management most serious concern, because no means has been devised to limit or control them. In a leaflet issued by this Bureau in September last, it was estimated that the payments of American railways on account of "Injuries to Persons" and "Loss and Damage" for the year 1908 would approximate $56,700,000, or more than 2.3 per cent of their gross earnings. The Commission has not yet made public the final figures for 1908, but the returns on these accounts of the 368 roads reporting to this Bureau for the year 1909, aggregate $56,379,024, or 2.37 per cent of their gross earnings.
Divided according to the new system of accounting adopted by the Commission, these returns show the following figures:
| Summary of Payments on Account of Injuries to Persons and Loss and Damage During the Year 1909. | |||
| Account | Amount | Per Cent of Earnings | |
| Injuries to persons | $23,456,038 | .99 | |
| Maintenance of way | $ 2,702,066 | ||
| Maintenance of equipment | 2,315,119 | ||
| Transportation | 18,438,853 | ||
| Loss and damage | 32,922,986 | 1.38 | |
| To freight | $24,768,453 | ||
| To baggage | 300,869 | ||
| To property | 4,469,496 | ||
| To live stock, etc. | 3,384,168 | ||
| Total | $56,379,024 | 2.37 | |
Unlike many of the other expenses of American railways, the burden of this "cost of operation" does not fall heaviest on the large systems. In the case of one road of moderate importance payments on these two accounts amounting to 4.8 per cent of gross earnings were enough to tip the balance into a deficit after paying interest on funded debt; one minor but prosperous road, after paying 14 per cent of gross receipts to meet these two accounts, had nothing left for dividends after paying interest, which amounted to less than 10 per cent of its earnings; and a small third road after being called on to pay 21.5 per cent of its earnings for injuries and damages had only 6 per cent of its operating revenue left to pay interest on funded debt, which called for 20 per cent of the earnings, and taxes reduced the net operating revenue to less than 4 per cent.
These are extreme cases but they illustrate how the "Injury and Damage" claims strike roads that can ill afford to pay them as well as the great systems which are the common prey of every claimant with enough of a grievance to interest an attorney who scents a contingent fee.
That the claims behind these expenses are largely meretricious is indicated, if not proved, by their disproportionate increase in the past ten years, during which the railways have expended millions in providing safeguards for their trains and employes. This increase absolutely and relatively to gross earnings is shown in the following statement: