New-York tribune., 1919-09-16
Rail
Policy Urged
To Aid Trade
Equipment E~per, Tells
House Committee Pros.
lnrisy Follows Volume
of Purchases by Roads
Fixed Income Essential
Transportation Managers
Must BE Able 10 Plan
for Future, He Declares
NeW lork Tribune
IL r.

New lork Trihuno
Washington Burcau
WASHINGTON, Sept. Contend
ing that railway purchases measure
general business prosperity, that rail
way revenue determines volume of
purchases, and that accumulation of
railway surplus would stabilize both
railway buying and general prosperity,
Edward Leigh, president Of the Chicago
Railway Equipment Company, appeared
to-day before the House Committee on
Interstate Commerce as the representa-
tive of the Railway Business Associa-
tion, manufacturers Of railway sup
plies. While not passing judgment on
the provision of the Cummins bill for
ditfusing excess railway profits, Mr.
Leigh warmly welcomcdLhc principle
underlying that clause which provides
for a fair return in any year
provide reasonably for future years
in which there may be insufficient
earnings"
Our association Mr.. Leigh said,
"docs not say that income should be
ditfused IN any of the ways suggested
What | am here to urge is that YOU
adopt as your own the basic thought
underlying the definition Of fair re-
turn which have just cited from the
Cummins bill, namely, that surplus
should be permitted, to any railroad
that can earn it. as a fund for years
Of adversely.
Some Of the plans so ably conceived
and presented to you seem to be ami
mated primarily by solicitude for the
present holder Of outstanding securi-
ties. Some OF the so-callcd rules for
rate making have set forth that rates
should be such as TO yield a return as
if the bc-all and cnd-all of rates was
the return.
'But to The user Of transportation
and to the user Of what is transported,
,hc return is merely means to ar end
namely, attraction OF neW capital for
additions and bcttermcnts, including
those which promise economies and
hence, ultimately q check on rate al-
vances.
Our association specifically favors:
Federal statutory rule of which the
effect viii be tina. rates and fares OF
lhc railways within each traffic section
shall be sufficient 20 yield the average
year its necessary expenses and to pro
vide the credit basis for average ia
ciitics
The railway supply business en-
2loys approNimalc. 10000 persons.
approximately 1000 0oo moro ar en-
ploTed BY me railways themselves.
Railway Nalues Compared
"The charts which ] c.ger to the
the value OF railway road and equip
mcnt to the capital ol ali manufactur-
ing idustries is about II per cent TO
50 per cent; that the valu4 Of all ma
chincry, implements and tools in all
manufacturing industries, in the ratio
Of about 40 per cent for The railways
and 60 per cont for the manu- facluring
industries. and that the valuc O rail-
way cans and locomotives is :ep4 OIL
matctlY SA.l3j.@le 100. while tae value
OF farm m&etincly, Joola and implc-
mcnts is Sl,&6 - mis-, the ValUe Of
cars and locomotives being three times
as great as all the farm machinery,
tools and implements in the country.
'For more than twenty-five years |
have observed that when the railroads
of the country enter the hcl6 of sub
stantal purchases there invariably fol-
lows a period of general business pros
peritN, and likewise the cessation Of
such purchases is invariably followed
by a decline N general business.
business History AnalyzeG
"Analysis OF business conditions OF
each yea from 1907 to 1914. as /
have chartered them, shows the effect
Of tluctuation IN railroad prosperity
and the effect Of railway purchasing
upon general business prosperity The
period preceding 1907 was one oi in
creasing net income for the railroads.
Car orders reached a minimum in 1905
and 1906. In 1908, due to investing
the Interstate Commerce Commission
with rate making power and placing
upon the commission no rcspcnsibili-
ty for transportation dcve .opment.
railway purchases became controlled
by abnormal conditions which have
continued more or less from 1908 to
the present time.
"The year 1908 was notably the lean
est Of business years up to 1914, not
wthstanding bumper crops, plentiful
money and absence of disturbed po-
litical conditions the three recognized
clements making for good business. 1t
likewise recorded the smallest number
of cars ordered during tie period. g.
999 and the minimum OF railway pur-
chases for many years prior.
"'rhc conditions. Of 1905 were CON
tinued we'll into 1909. but the last
tial buying movement by the railways
This gave fairly good business year
with heavy carry over in 1910.
Slump in Buying Reflected
In 1910. general business promptly
followed and the heavy carry over
from 1909, coupled with fairly good
buying on the part of the RAILWAYS dur.
ing the first six months, made the ycal
I9iO a Stlil better year than 1902 The
falling off in car orders after the mid
die of the year was duly reflected in
the decline Of business until at the end
OF 1910 the probabilities Of 1911 were
clearly foreshadowed.
In 1911 the decline in general busi-
ness. together with the falling OFF of
railway purchases, continued through
out almost the entire year, but at its
close buying movemsnt on the part
of the railways set in
I'm l9l2, we reached a high point in
railway purchases about May. continu-
ing with normal purchases for most of
the remainder OF the wear II is hero