The sun., 1919-05-07
DEFICIT In RAIL
CONTROL BY j. s.
IS$418,OOO,OOO
Not Advisable to Increase
Freight Rates at This
Time, Says Hines.
SEES HOPE IN FUTURE
Relief Lies in Action by Con-
grcss-Wage Increases
Figure in Loss.
Special Despatch to Tar suS.

WASHINGTON, May 6.-Director-Gen-
eral of Railroads Hines believes that
an advance in freight rates for the
railroads of the country IL not adyis-
able at the present time. Though rev.
erues are not keeping pace with ex-
penses and deficit is rolling up, the
Olrector-General believes that more
normal times should be awaited before
the general rate level is changed.
The Director Generals attitude with
respect TO the financial situation con-
fronting the roads was made plain in
an official statement to-day in which
he presents figures showing a deficit
in Government operation OF 1925, OO0.-
900 in 1918 and y192, 100000 more for
the first three months Of the first
quarter of 1919, total OF $41S,00O, 900
for fifteen months of Government on
Grafton. He says that the April re-
suits probably will be worse than those
for March. when the Eastern roads ac
tual!y failed to make expenses, much
less the rental guaranteed them by the
Government, and for the country az n
whole earnings fell far short OF the
rental guarantee. though roads in tho
South, Central and Western territories
had no actual loss.
Sees Better Results Later.
Notwithstanding this situation. Mr..
Hines expresses the view that better re-
suits will come later In the year and the
deficit will at least be partly OFFSET.
II is this factor. he says, and the pres
ent abnormal conditions that lead to the
conclusion that a rate increase Is in
a cit
prove temporary.
Figures presented by the Director
General show an even greater deficit
than those printed in the THE Sun ave
days ago and those presented by the
Bureau Of Railway Economics TODAY
from lnterstateCommerce Commission re-
turns. Mr.. Hines figures include some
small companies. water lines and the
central administration which do not ap-
pear In the other figures. They make
The deficit larger
II is plain that Congress will have TO
take speedy action to relieve the rail-
road situation as soon as II Is called
Provision has been made for May needs,
but II 1t becomes necessary to carry
the temporary financing plans to the
end of the year the task will be a dim
cult one.
In statement made with the declared
intention OF keeping the public as fully
informed as possible. the Director Gem
eral said:
The result for the calendar year
1918 show that at December 81, 1918,
the deficit incurred by the railroad ad-
min!stration for that year. after de-
Quoting the rental due the railroad
companies, amounted to $226,000, 900.
This included the expenses or the CEN
ial and regional administrations and
also included the operations OF the in
land waterways under control of the
railroad administration. as well as the
Incidental and miscellaneous items
which must be taken into account in a
complete statement.
Huge Total for Three Morth..
There remained comparatively small
amounts Of back pay for the calendar
year 1918. which were not charged into
the accounts for that year. but which
have largely been charged into the
three months ending with March. 1919.
For the months OF January, Febru-
ary' March, 1919, the aggregate deficit
incurred after deductin.y the rental due
the railroad companies was approx
mately $4,000 This figure in
Guides not only the class I railroads but
all other roads under Federal control.
me expenses of the central and regional
administrations, the operation of inland
waterways under control of the Rail-
road Administration, as well as some
incidental and miscellaneous items.
IN arriving at this figure there has
Been charged against each of these
months one-twelfth of the annual rental
o. me railroads. Generally speaking
'hese three months have always earned
much less than three-twelfths of the
return for the year. so that a substan-
ualIy less charge OF rental into these
months would not be Inappropriate. Still
IL seems preferable to charge a full
one-twelfth of the rental into each OF
mese months rather than to run the
IlsA OF an impression arising that there
Is any disposition to understate the &C
tual results.
10 large extent the unfavorable re-
suits for January, February and March
are due 20 the fact that business has
ieHen of and that expenses could not
oe correspondingly readjusted so that
me loss largely arises in connection
WIN the period Of readtustment through
"hicn the country IL going.
industrial enterprises generally have
suffered embarrassment on account OF
the TACT that business has been curtailed
60 much more rapidly than expenses
could be curtalled. The railroad bust
ness probably Is in its nature less elias
Tic than any other business and shows
more unfavorably the embarrassment
Of readjustment.
since the first of the year I have
conteNed repeatedly with the regional
directors and also have conferred with
nearly all the Federal managers in the
LhlIed states on the subject OF costs
me entire railroad organization has
oeen and IL working most earnestly tc
readJust these costs to meet the present
conditions but the nature of the rail
ROAD business. whether under private oil
PUBIC control, is such that to a very
large extent 1t is impossible TO Offset
loss IN business by a corresponding re.
auction In costs. On the other hand
"h'n there shall be substantial in
crease IN business the revenues there
IRON will be largely reflected In the
ret because the costs Will not be cor
.espondingly Increased
u Is believed that this improvement
WILL be considerably emphasized by
reason OF the fact that the maintenance
"orH has been carried forward during
'ne favorable weather of January. Feb
.iary and March on a liberal bash
nrSplte unfavorable business, and this
should be reflected in a saving in main
'nance costs later In the year.
while passenger business for tho
t'ree months was only slightly less thar
'fst year the loss In freight business
aa much more pronounced.
II IL impossible on the basis of these
tnree months to predict the results 10.
'Ae year as a whole, although II 1,
.'AeVed the results will be very much
"ss unfavorable II as seems to be gen