Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1914-10-23
RAILROADS ARE
FACING A CRISIS,
SAYS SAMUEL REA
President of Pennsylvania,
Before Commerce Board,
Gives Smaller Earnings
and European War as
Cause.

WASHINGTON. oct. 23.-Asserting that
the railroads of the East are facing a
crisis that demands the complete ad.
vance of per cent. in freight rates asked
for, Samuel Rea, president Of the Penn
syvania Railroad, took tn" stand before
the Interstate Commerce Commission to-
day. The attorneys for the roads decided
finally to call Mr. Roa as one ul th"it
concluding witnesses.
THE railroads have appeI lied to the
commission to modify tn" order made last
July" said Mr. Rea. in his argum mt,
because since then certain facts have
transpired and certain events have uC-
CURED in the light of which the present
situation of the railroads should he
judged. We consider this situation q
sufficient reason for the commission to
grant what the railroads ask. Among
these new factors are:
"First-Complete figures covering the
financial results for the fiscal year 1914
which are now for the first time aavilable
in this case: also statements Of operation
covering the months of July and August
of the present fiscal year.
"Second-The European war"
LOWEST RETURN IN 10 YEARS
I'm the fiscal year 1914 the decrease in
the volume of business Of the carriers
was only about 3ra per cent. in the high
est level in their history viz, in 1918.
Yet at the end of 1914 the owners of these
properties find the return upon their
property investment, at the lowest figure
for 10 years lower than in 1900 when the
industry was lifting its head after the
great oppression OF the COS; lower. in
deed. than in the two years 1895 or 1899
which the commission in its recent report
excluded from comparison on the ground
that those were years Of business depres-
sion. record such as this clearly indi-
Gates something radically wrong with the
underlying conditions Of the railroad
business.
The operating returns for July and
August add to the seriousness Of the
situation For those two months the
decline in gross earnings averages about
per cent, as against loss of less
than 31a per cent. for the entire year
1914 The companies have been compelled,
By reason Of this, to continue the forced
retrenchment in operating expenses
Mr.. Rea declared that retrenchment
policy and practice would not produce
real savings In expenses or real increases
in net profits, for, he pointed out sooner
or later the property and equipment must
be brought up to the standard.
with regard 70 the European war" Mr..
Rea continued, the question has natur-
ally suggested itself. In what rese oct
may its effect upon the railroads he re-
garded as peculiarly iustifying them in
asking for relief Why should not the
railroads consider the burden that it
brings upon them one which they
should themselves shoulder Without seek
ing to be relieved therefrOma
THE railroads, however. are subject 10
regulation by public authority. covering
not merely the rates they ,Fall charge,
but many OF the conditions affecting their
operating costs and methods; they are.
and have been. placed i'm a category en-
tirely distinct from that Of Industries not
subject to such regulation.
"CRIsTs NO LONGER QUESTIONED"
II feel that the existence of A crisis in
the affairs Of these railroads can no
longer be questioned. Having earned a
return of only $50 per cent. in 1914 on
the property investment, with operating
revenue progressively diminishing since
the close Of the fiscal year; with praC-
ticallv all impro. emcnt work suspended
with forces largely reduced with passen- /
ger and freight train service Curtailed;
and maintenance Of roadway and equip
ment deferred, this is a time for very def
mite and certain relief.
II am convinced that in addition 10
whatever may be eventually realized from
tNe methods for obtaining additional rev.
en-, 'es suggested tentatively by the COM
the situation is one that calls
for positive and immediate treatment on
the broadest possible scale within the
powers of the commission
The increases i'm freight rates allowed /
by the Interstate Commerce Commission I
last July in the per cent. advance rate /.
case will net the PENNSYLVANIA lines east ,
of Pittsburgh about $3.50 trl a year, ac- |
iuu N Ft1-'