The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1919-05-10
Director General Explains Loss
Under Government Control
BUSINESS HAS FALLEN
OFF CONSIDERABLY
Rates Will Not Be Increased at
Present AS Business viii I'M
prove.

Washington, May 6.-Director Gen
eral Hines in a, discussion Of recent
railroad earnings tonight disclosed
that:
The governments deficit in operat-
ing the railroads for the first three
months this year, or the difference De-
tween net earnings and one-fourth OF
the guaranteed annual compensation
was about $192,000,000 for all roads
under federal management.
The governments loss for 1918 was
s2e6, 100000.
TIL centre government loss incur
red in Is months Of federal operation
was s41S,000, 900.
Marked reduction of freight traffic
under records Of similar periods OF
che last two years were responsible Icr
/ the bad financial showing and condl-
| ton in April though not yet fully re-
ported show no promise Of improve
naent.
Despite the big government deficits
the director general does not con-
template any general increase in the
level of rates but prefers to await re-
storation of normal business condl-
tions.
The government also incurred de-
fcit of about $14,540,o00 in eight
Railway Express Company the con
solidated express corporation up 20
March 1. 1919.
.The present unfavorable results
naturally lead TO an agitation OF The
question whether there ought to be
an increase Of rates. said Hr. Hines
in his statement, my own judgment
is that the present conditions are 100
abnormal to serve as a basis for any
general change in the level OF rates
and that it is preferable to defer ac-
ton on that subject until there shall
have been fuller opportunity to get
a more reliable and possibly q more
normal measure Of the conditions.
meanwhile resorting to every practl-
cal economy, studying the situation
with the greatest care and keeping
the public fully informed as to de"e-
lopment.'
The deficit Of s19200c 900 incurred
by the government IN January, Feb
ruarv and March as figured by Mr.
Hines, great!y exceeded the estimate
made public earlier in the day by the
bureau Of railway economies because
Mr. Hines calculated the guaranteed
compensation. The bureau of railway
economics calculated each months
share on the basis of the average for
that month in the three pre-war years.
The railroad administration figures
Sol dc iro; ;,,G-
ed in So-calIed class ], which are under
government control. and also eN-
penses OF the central administration
and cost Of operating inland water
ways.
Mr. Hines explained that his system
of calculating tended to show the
railroad administrations position rath-
er at disadvantage for the first thr &c
months, but added:
'Still it seems preferable to charge
a full one-twelfth of the rental into
run the risk of an impression arising
that there is any disposition to un-
der state the actual results.
ITO a large extent the unfavorapie
results for January. February and
March are due to the fact that busl-
ness has fallen off and that expenses
could not be correspondingly read
justcd so that the loss largely arises
in connection with the period Of re-
adjustment through which the coun- |
try is; going. Industrial enterprises I
generally have suffered embarrass- !
men, on account Of the fact that bas- |
mess has been curtailed so much |
moro rapidly than expenses have been |
curtailed The railroad business Isl
probably in its nature more elastic
than other business and shows more
unfavorab.y the embarrassment Of re- /
adjustment.
The entire railroad organization
has been and is working most earn
estl!' to readiust these costs to meet
the present conditions. but tie nature
of the railroad business whether un-
der private or public control is such
that to 9. very large extent it is i'm
possible TO offset loss in business by
Il corresponding reduction in costs.
On the other hand. when there snail
be q substantial increase in business
the revenues there from viii be large
ly reflected in the net because the
costs Will not be corrcspondinsly in
creased 1t is believed that this I'M
provement viii he considerably en-
phaSized by reason of the fact that
maintenance work has been carried
forward during the favorable wealth
er of January. February and March.
OF Il liberal basis despite unfavorabic
business and this should be reflected
in saving IN maintenance costs Ia
ter in the year
'In the midst of the present period
Of postwar rcadjustmcnt il is impos
si5le TO make any confident statement
as to the results Of railroad opera
tions for the remainder OF this calen-
dar year.
at is my policy to give the public
the facts and, where the inference to
he drawn is doubtful. to resolve the
doubt in such way as to avoid tho
risk Of making a statement more f.
vorabIc than the ultimate facts VIII
Justify"