The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1918-02-08
GOVERNMENT MUST
PAY OWNERS OF
ROAD NEAR BILLION
This Is Estimation Follow
ing the Computation of
Earnings in 1917
M'ADOO MAY AVOID
DEFICIT BY SAVINGS
Operating Expenses, However, Must
Be Cut Deeply if Federal Con-
troll Heads Are to Come
Out Even

Washington, February 7.-Raiiroads
In 1917 earned about $95S,00o,00o,
which is near the amount the gov
ernment win have to pay the roads
this year as compensation under ma
tional operation. This was indicated
by figures on revenues. expenses and
income of all roads earning more than
81 100000 last year, available today In
unofficial computations based ON in
tcrstate commerce commission reports
for III months and estimates for De-
ccmber.
The sum the government will have to
pay the roads under the bill pending in
Congress is estimated as s945. 100000 by
Chairman Smith of the Senate commit
tee having the bill in charge.
Figures for 1917 show that if railway
income continues to decline as it has
during recent months, the government
will face deficit in making its COM
pensation payments, augmented by IN
creases in wages and the constantly r1s-
ing cost of materials and supplies.
On the other hand, the railroad admin
istration hopes to be able to cut operating
expenses sufficiently, and economic on
charges necessary only under competitive
conditions, to offset the declining income.
The size of these items, which will play
such big part in railroad financing this
year, were disclosed today by the latest
computations In December, the last
month under private operation, earning
declined sharply, according to early re-
ports to railroads now being received by
the interstate commerce commission. The
average reduction of income was esti-
mated at 80 per cent, caused by the ever
mounting cost of operations, doubly in
creased by the bitter weather of De-
cember, together with a sudden drop in
revenues resulting from traffic conges-
ton and embargoes.
COMPARATIVE FIGURES
Compared with the estimated income OF
s95S 100, 600 last year the figures for 1916
was 81 067 533, 900; for 1915, sis, $4,000; for
1914, se92 700, and for 1913 6.51o,00o.
Last year the total revenues from rail-
way operation were s4,oSS. 100000, and OPP
Grating expenses were $2,S61, 100000, leav-
ing a net revenue of 81, II, 200, eco. From
this were deducted $217,0O0,000 taxes and
minor items of unbelievable revenue to
compute the net income figure, which lis
comparable in general way to the basis
of government compensation. These fig
ures will be increased about 4 per cent
by addition of reports from numerous
small roads. having operating revenue of
less than 100000 a year. whose records
are not included with the reports of
standard class 1 roads.
The reason for the decline in net in
come last year is shown graphically by
the report. Operating revenues were 10
per cent greater than the So, 622, 000, 900 of
1916 but expenses ran more than 20 per
cent above the s2237. 100000 Of the year
previous.
Nearly all items of expense were
higher. Wages increased are estimated
at 20 per cent Cost of coal, train sup
plies and repairs went up by bounds
with which the immense receipts from
freight and other revenues did not keep
pace.
TRAVELLING IS GREATER
People travelled more in 1917 than in the
year previous. but the increased revenues
steadily declining income, War caused
an immense increase in hauling, and
from freight the roads received most of
their revenues.
These freight revenues are estimated
at $2,S06, 00000. as compared with 81
67S, 100000 in the banner net income year
OF 1916. Passenger revenues were $S10,-
100000 as compared with $7os.000,0O0 the
year before. Receipts from mail were
actually smaller than in 1916, despite the
fact that the bulk Of mail transported
was greater. Only SIS, 100000 was re-
cesved from the government on this ac-
count, nearly 100000 less than in 1916.
The reduction is attributed to the read
Justment OF the basis of payment from
weight to space.
Receipts from express companies for
hauling jumped from so, 29s, 900 in 1916 to
SOS, 00O, 900 in 1917.
For maintenance of way and struc-
lures, railroads spent $452. 900, 900.
about $28,000,000 more than the year
before. For maintenance of equipment
the cost was $692.0o0,0o0 as compared
with $597 5000 in 1916.
BIGGEST INCREASE
The biggest increase came in So
called transportation expense, which
includes the principal items of trans
portation operations. This amounted to
$1,625,00o.000. or $341. 900, 900 more than
the $1,1S4. 100000 figure OF 1916. A gov
eminent commission estimated the
added financial wage burden on rail-
roads caused by the Adamson act at
$6l,000,000, most Of which is included
In transportation expense Other wage
increases are spread out in nearly ev-
cry expense classification.
In addition to short hauling and
common use Of facilities the govern
ment hopes to effect big savings this
year by eliminating expense of traffic
solicitation agencies, maintained by
individual roads under the conaneti-
tive system. This expense constitutes
q large part of the $64,S00,000 item.
classified in railroad reports of 1917
a. traffic expense"
TAXES INCREASE
Taxes in 1917 showed a sudden in
crease in the last three months, when
railroads were able to determine for
the first time approximately what