The commercial. (Union City, Tenn.) 190?-193?, 1919-05-09
GOVERNMENT STILL
LOSING ON RAILROADS.
Operating Difcit for Past 8 Months
$192,OOO,OOO.

ClOS6u L4dLs
The governments deficit in operat-
ing the railroads for the first three
months this year, or the difference
between net earnings and one-fourth
of the guaranteed annusA compensa-
ton, was about $192,OOO,OOO for all
roads under federal management.
The government loss Tor 1919 was
1925, 1000, 900.
The entire government loss incurr-
ed in Is months of federal operation
was $418,OOO,OOO
Marked reduction of freight traffic
.under records of similar periods OF
the last two years were responsible
for the bad financial showing, and
conditions in April, though not yet
reported fully, show no promise OF
improvement.
Despite the big government def
cts, the director-general does not
contemplate any general increase in
the level of rates, but prefers to a.
wait restoration of normal business
conditions.
The government also incurred a
deficit of about $14,540,0O0 in eight
months operation of the American
Railway Express Company, the con-
solidated express corporation up to
March 1, 1919.
"The present unfavorable results
naturally lead to agitation of the
question whether there ought to be
an increase of rates." said Mr.. Hines
in his statement. my own judgment
is that the present conditions arc too
abnormal to serve as a basis for any
general change in the level of rates,
and that it is preferable to defer &C
tion on that subject until there shall
have been a fuller opportunity to get
a more reliable and possibly a more
normal measure of the conditions,
meanwhile resorting to every prac-
ticable economy, studying the situa-
ton with the greatest care, and keep
ing the public fully informed as to
developments"
A Matter of Estimates.
The deficit of $192, 100000 incurr-
ed by the government in January,
February and March, as figured by
Mr.. Hines, greatly exceeded the esti-
mate made public earlier in the day
by the bureau of railway economics,
because Mr.. Hines calculated the
guaranteed compensation for the
three months at three-twelfths of the
| annual compensation. The bureau
of railway economics calculated each
onth's share on the basis of the
average for that month in the three
pre-war years. The railroad admin
istration also included small roads,
not included in the so-called class
one, which are under government
control, and also expenses of the
central administration and cost of
operating inland waterways.
Mr.. Hines explained that his sys-
tenn of calculating tenGed to show
the railroad administration position
rather at disadvantage for the first
three months, but added:
still it seems preferable to charge
a full one-twelfth of the rental into
| ooob Of those r,opfbs nathan tbon ~
run the risk of an impression arising
that there is any disposition to under
state the actual results.
ITO large extent the unfavora BILE
results for January, February and
March are due to the fact that bust
ness has fallen off and that expenses
could not be corrcspondingly read
1 justed so that the loss largely arises
in connection with the period Of re-
adjustment through which the coun-
try is going. Industrial enterprises
generally have suffered embarrass-
ment on account of the fact that bust
ness has been curtailed so much more
rapidly than expense could be cur
tailed. The railroad business is prob.
ably in it's nature less elastic than
any other business and shows more
unfavorably the embarrassment of, re-
adjustment.
Trying to Readjust Costs.
1.-THE entire railroad organization
has been and is working most earn
cstly to readjust these costs to meet
the present conditions, but the nature
of the railroad business whether I'M
der private or public control is such
that to very large extent it is i'm
possible to offset loss in business by
a corresponding reduction in costs.
On the other hand when there shall
be substantial increase in business
the revenue therefrom will be largely
reflected in the net because the costs
will not be correspondingly increas-
ed 1t is believed that the improve
ment will be considerably emphssiz-
ed by the reason of the fact that
maintenance work has been carried
forward during the favorable weather