Daily capital journal. (Salem, Oregon) 1903-1919, 1915-11-06
THE SOUTHERN PACIFIC
AND PANAMA CANAL
''Bache Review" Tells Of
Some Of the Troubles Of
the Big Railroads

The history of Southern Pacific IS
year in its fight against adversity is
told in brief, but graphic, lines to those
who care to read the results through
groups of figures and short direct
statements of what occurred, as convey
ed in the statement of the chairman of
the executive committee for .the year
ending June 30, 1915.
Adversely piled up against the rail
roads in the latter half of 1914 through
the operating influences of the war,
when they were already struggling
against the burdens which state and
national commissions and legislatures
had for years been loading on to them.
1t cannot be denied that out of all
this adversely railroads, like individu-
ais under pressure, have learned les
sons of management and economy
which, as in Southern Pacific's case,
are showing in better net results. But
as it takes strong character in individ-
uals to stand the strain, so with rail.
roads there must be solid foundations
far above the ordinary to wrest bene-
fit from extraorli linary adversely. The
weaker fall by the way, as is shown
by the fact that under the tremendous
burdens imposed by unjust commits
sions in the last few years, onesixth
of all the railroad mileage in the Unit
ed States has gone to the wall.
The extraordinary difficulties which
beset railroads in the year under con
siieration, may be comprehended from
the recital of what Southern Pacific
had to encounter.
Hit First by Canal
The first of these adverse factors,
the competition with the Panama Canal
which affected all transcontinental
roads, was perhaps felt more by South
ern Pacific than the others. Its gross
revenues were considerably reduced,
because large volume of freight form
erly shipped by rail was diverted to
the canal on account of material reduc-
tion in rates offered by great fleet
of sailing and steam vessels which h.
floeked to the new trade opened by the
canal with offerings of great carrying
capacity and frequent sailings.
Then the war contributed in cutting
down the company IS business in various
ways. Some of the copper mines served
by the Southern Pacific were closed
down and others were operated to about
half their usual capacity. This result.
ed in large shrinkage of earnings
from transportation of the products
Of the mines and the fuel consumed in
their operation. Construction of new
buildings along the line was held up
tha y,
development was almost entirely aban
doned. This caused a material de-
crease in revenue from carrying lum
Der and other construction material.
There was also widely distributed
decrease of earnings upon general mer
chandise and miscellaneous traffic.
Earnings Dropped
The general retrenchment of the
country affected both business and
pleasure travel on this line. Passen.
ger earnings, consequently, dropped
down and this drop amounted to Al
per cent of the $S,654,5S3 total reduc-
tion in operating revenues.
So much for the early effect of the
war, on Southern Pacific $ year.
Another competitor, year by year
growing more formidable, has been
stRdily extending its operations un-
favorably to the Southern Pacific and
other railroads. This is the automobile
aided by the widespread extension of
improved highways. As with other
railroads, this competition has. been
felt this year more by Southern Pa.
cific than ever before.
Other things to be faced were, high
er cost of fuel and higher wages, and
greater expense entailed in complying
with new legislation and onerous rules
of the state commissions and the inter
state commerce commission, One item
alone added by the latter-new meth
ods of computing cost Of valuations
puts an increased burden upon all the
railroads of an aggregate of S25,O00,.
600 year.
Exposition Helped
Exposition travel since the first Of
the year has helped Southern Pacific Is
passenger earnings materially, but the
net results for the year show decrease
in volume of freight of 6.63 per cent,
and in passenger traffic of 4.94 per
cent.
Notwithstanding all the adversities
of the 1914 year, Southern Pacific, by
extreme economy and savings where
ever possible, managed TO earn 7.2O
per cent ON its stock, against 1850 per
cent the year before.
But only the strongest roads can
make such fight, the success Of which |
is due to sound foundations of manage. |
ment, organization and construction,
fortified by financial strength. These
foundations were laid by Hartman IN
the years Of railroad prosperity His
works live after him and his methods
have been followed by his successors,
who worked with him and inherited
some of his ability.
In these days of destructive rcgula.
tion by commissions, there is no oppor.
tunity to build up safe surpmses to
carry corporations through years Of de.
pressed conditions.
Condition of the Canal
The substantial volume Of freight |
which the report Of the Southern Pa. |
cfic railroad shows went through the
Panama canal last year, reducing the
Southern Pacific IS business to that ex. |
tent, is now, for the time being, divert. !