Evening journal., 1917-04-07

Pennsylvania Rail
Let me give you few specific in-i
stances Of the rising costs with which /
the railroads ale obliged to contend, /
and which, combined with virtually
stationary rates. have put a practical
stop to railroad development. In the
proceedings before the Interstate
Commerce Commission last week. TO
which / have already referred, the
president OF the PENNSYLVANIA Rail-
road system was one Of the principal
participants.
Here are some of the facts Mr. Rea
told the commission:
Seven railroads. the Pennsylvania,
New York Central. Chesapeake and
Ohio Norfolk and Western, Virgin.an,
Baltimore and Ohio and Western
Maryland, face a probable addition OF
S31,O0O,O00 TO their fuel bill for 1917.
The taxes paid by these seven rail-
roads in 1916 we're 81 per cent. great
er than in 1906 The Federal income
tax was doubled last year, having been
increased from 1 to per cent. For
the present year a further large in
crease will result by reason of the
new Federal capital stock tax.
Materials used by the Pennsylvania
lines east OF Pittsburg have risen an
average Of Is per cent. in two years.
On a very conservative estimate.
Mr.. Rea said. the Adamson law will
cost the Pennsylvania lines east more
than 100000 and the entire system
at least Sl3.500,0 600 additional a year
for the increased wages Of the men
affected. Other wage increases which
10
thOrize will add 1880 600 a year to
the payrolls of the lines east and ST.
100000 for the system.
Including other advances in costs.
Mr.. Rea estimated that during the
present year the Pennsylvania Rail-
road lines east OF Pittsburg face to-
tai increase of $4,000. 600 i'm expen-
ses. and the entire system, lines cast
and west an increase Of $4,000. 600
Something serious will happen to
our surplus unless these prospective
Increases in expenses. which Mr.. Rea
said he had no desire to oyerstate, are
met with ADEQUATE revenues.
Since last October. although our
traihc has been at or very close to
record volume, our net operating in
come has been going steadily back
ward. This has recently been greatly
accentuated. For February the results
can conservatively be described as
alarming Exact figures have not yet
been fully compiled, but from the
preliminary estimates it seems clear
that the railway operating income of
the entire Pennsylvania system for
February, 1917 will show decrease
OF $3.50 900, or about 60 per cent. as
compared with the same month last
year, although the volume OF gross
business was but little changed In
these figures no allowance has been
made for the effect OF the Adamson
law wage increases. If they had been
counted in for February 0hey must.
as you know, now be paid. the terms
Of the law being retroactive from Jan.
1, 1910, the net results for February
would have been smaller by at least
another million dollars. This means
that the net earnings OF the Pennsyl-
vania system for February of this
year, after the payment Of the Adam
son law wage increases will show a
shrinkage OF not less than S4,400000
or 78 per cent when compared with
the results of February, 1916.
Is 1t any wonder, then, in view OF
the narrowing margin between rail-
road receipts and expenses, that the
New York Central Railroad one OF the
great transportation properties Of the
country, recently failed in the effort
to sell $25.000,000 of stock at par, or
that the Erie Railroad and Southern
Railway failed in their attempts to
work out comprehensive financing
schemes
In 1916 the only railroad stock is
sued on the New York Stock Exchange
for new construction. was 1881 1855,
issued by the Cleveland and Pittsburg
Railroad for q small amount OF work
done in 1915-and even that stock was
guaranteed by the Pennsylvania Rail-
road.
Last year. in fact, was the first year
in which not a single share OF new
railroad common stock was listed on
the New York Stock Exchange in
which the public took the chance OF
the investment of money for new rail-
road building in the United States
proving sound.
These are not pleasant facts, but
YOU cannot ignore them. They are OF
! profound importance to the shippers
Of this country.
You know now what il means to
be short OF facilities You appreciate
now how intimately the normal pro-
cesses OF our national life are depend
| ent upon adequate railroad facilities
The one thing that has stared you
| in the face which ever way YOU
turned was that the railroads are
swamped with business which they
haven't the facilities to handle prop
erly.
The lines haven't the terminal IA
cilities; they haven't the power; many
have not the cars to handle properll
the business that has been forced upoI
them during the past year
The treatment Of cars while in thu
hands Of the shippers is another story
l was much impressed in reading
from the recent annual report OF Pres