Norwich bulletin., 1915-01-05
RadIey's Views on
 New Haven Road
GIVEN BEFORE 2oTH CENTURY LIMITED CLUB. SPRINGFIELD.
HOPEFUL FOR FUTURE
Says Present Condition Was Brought About by Some Unwise Finance, a
 Great Deal of unwise Operation and Unwise Politics.

Springfield, Mass, Jan. 4-Presfdens Arthur T. Hadley, of Yale university, spoke on the railroad situation, with special reference to the New York, New Haven and Hartford road, before the Twentieth Century Limited club Of this city, this evening. He said in substance:
 The present condition of the New Haven road was brought about by a combination of some uDwise finance with great deal of ur-Tise operation and unwise politics.
 Westchester Deal Justified
 At the end of 1903 the New Haven road had outstanding about S75,OOO. OOO of stock and S8,00O, ,O00 of fixed annual charges ahead of the stock. Ten years later it's outstanding stock had in creased to 5150, ,00O, 900 and it's ar- nual charges to S21 900 900 During the decade the management had is- sued securities and obligations to the value of SS60,0 0,000. One quarter of this sum represented mere refunding operations; one quarter was for inn provementS in the road itself; one quarter for the purchase of connect ing railroads and steamship lines and one quarter for trolley properties, Most of the purchases were made as early as 1907. The prices paid were high, but there was very little fnan-
 
 Rhode Island and Berkshire trolley developments, little that could be call ed recklessness. The purchase of the New orE, Westchester and Boston, which has been more severely criti- cized than any other, was justied by the necessity of controlling an import ant entrance to New York city.
 Adverse Political Conditions.
 For three or four years all went we'll The securities paid dividends. the company's credit and prospects continued good. Then adverse poltt- icai conditions came into play. The Interstate Commerce act of 1910 pre- vented the railroads from raising their rates at a time when everybody else was raising theirs. In 1913 the New Haven road paid 5000 ,000 more for wages and fuel than would have been tlfe case at the prices which prevailed ten years earlier and received no more for its services. This trouble was felt by railroads throughout the country, but it more particularly hard on the New Haven because this road derived so large part of it's revenue from passengers Methods of handling freight had become more economical as the volume of traffic increased. Methods of handling passengers be- came more expensive under the same conditions. The authorities of New York state compelled the New Haven road to do it's communication passeu- ger business at rates which mean Q direct loss of nearly s1,000,000 3. year. The United States government pen alized the road an equal amount for the carriage of the mails. These three things, taken together, would have in VOlVed a serious reduction of the New Haven dividend even if there had been no outside purchases of any kind
 Unwise Measures Adopted.
 
 rent income unwise measures were adopted. Instead of cutting off un- profitable services and paying strict attention to discipline, the manage ment ecOnomized on maintenance, The effect of this false economy was seen ! in an appalling series of railroad ac- cidents. A change in the headship of the company in 1913 stopped the accidents immediately and gradually introduced much needed reforms in the operation of the railroad.
 Two New Elements.
 "But meantime two new clements had entered into the sftuation-a com merciaI depression which greatly re- duced the railroad traffic of New Eng land and a desire on the part of the government to dissolve the system by a prosecution under the Sherman act. What would have been the outcome of such a prosecution if the case had come 70 Lrla1 no one can tell. DnOGE ordinary circumstances the company would have contested the question in the courts and would have had the matter judicially decided. Under eX- isting conditions such a suit would have meant a receivership The best the company could do was to obtain 8 decree which would allow adequate time for the sale of it's holdings in other transportation lines so that the stockholders might obtain a fair price for them.
 Substantial Surplus Insured.
 IT the business of the country. and particularly that of New England, should recover from the present de- precision within a reasonable time, the economies already brought about by MT. Elliott, coupled with the more friendly policy of the Interstate Com merce Commission to the road fin the matter of rates, are sufficient to insure 8 substantial surplus of earnings above expenses from the road itself: while the terms of the supreme court de- cree regarding the sale of outside hold ings and the excellence of the trls- tees selected under that decree are such as to give ground for hope that the loss on these properties will be by no means so great as was at one time assumed.