Arizona republican., 1919-05-07
RAILROAD DEFICIT IS DISCLOSED IN A
 BOLD STATEMENT
Director Hines Discusses Conditions-Calls Atten- tion to Decreased Busi- ness Shows Impossibility of Reducing Cost to Equal ize Loss

The governments deficit in op-
 erating the railroads for the first
 three months this year, or the diff
 ference between net earnings and
 one-fourth of the guaranteed an-
 nuaI compensation, was about
 $192,000, 900 for all roads under fed
 eral management.
 The governments loss for 1918
 was s226,o00,o0e.
 The entire government loss in-
 cured in IS months of federal
 operation was S418,o00,o00.
 Marked reduction of traffic un-
 der records of similar periods of
 the last two years were respon-
 sibe for the bad financial show
 ing, and conditions in April,
 though not yet reported fully. show
 no promise of improvement.
 Despite the big government deficits the director general does not contem- plate any general increase in the level of rates, but prefers to wait restora- tion of normal business conditions.
 The government also incurred def icit of about S14.540,o0 in eight months operation of the American Railroad Express company, the consolidated ex- press corporation, up to March l, 1919.
 "The present unfayorable results naturally lead to agitation of the question whether there ought to be an increase of rates," said Mir. Hines in his statement.
 Conditions too Abnormal
 My own judgment is that the pres ent conditions are too abnormal to serve as a basis for any general change in Inc tpUnI nf v,d +ho+ 1t fe preferable to defer action on that sub ject until there shall have been a i fuller opportunity to get a more re- liable, and possibly a more normal measure of the conditions, meanwhile resorting to every practicable econ omy studying the situation with the greatest care, and keeping the public fully informed as to developments"
 The deficit of $1S2 1000, O00 incurred by the government in January, Febru- ary and March, as figured by MT. Hines greatly exceeded the estimate made | public earlier in the day by the bureau of railroad economics, because MT Hines calculated the government com 1 pensation for the three months as three-twelfths of the annual compen- sation. The bureau of railroad eco monies calculated each months share on the basis of the averages for that month in the three pre-war years. The 1 administrations figures also included [ small roads, not incluedd in the so- ! called class one, which under govern l ment control, and also expenses of the l central administration and cost C. l operating inland waterways.
 MT. Hines explained that his systen, ! of calculating tended to show the rail, road administrations position rather al 1 a disadvantage for the first thre. months, but added:
 Still it seems preferable to charge Q full one-twelfth of the rental into 1 each Of these months, rather than tC run the risk of an impression arising that there is any disposition to under. state the actual results.
 Business has Decreased
 ITO a large extent the unfavorabl; results for January, February anC March are due to the fact that bushes. has fallen off and that expenses coulC not be correspondingly readiusted, SC that the loss largely arises in connec tion with the period of readjustmen through which the country is going Industrial enterprises generally hay, suffered embarrassment on account o ! lAlC ldLL LIldL DuSiEtSS IdS Dh6U cur I tailed so much more rapidly than ex penses could be curtailed. The rail road business is probably in it's natur, less elastic than any other business an shows more unfavorably the embar rassment of readjustment
 "The entire railroad organization ha been and is working most earnestly t readjust these costs to meet the presen conditions, but the nature of the rail road business, whether under private o public control, is such that to yer, large extent, it is impossible to offse loss in business by a corresponding re duction in costs. On the other hand when there shall be Q substantial in crease in business, the revenues there from will be largely reflected in the net because the costs will not be core spondinglv increased. It is believe, that this improvement will be consider { ably emphasized by reason of the fac that maintenance work has been car ried forward during the favorabl weather of January, February an March, on a liberal basis despite un favorable business, and this should b reflected in a saving in maintenanc costs later in the year.
 Tn the midst of the present perio of postwar readjustment. it is impos sible to make any confident statemen as to the results of the railroad opera tions for the remainder of this calenda year.
 Tt is my policy to give the publi the facts, and where the inference t be drawn is doubtful, to resolve tn doubt in such way as to avoid the ris of making a statement more favorabl ! than the ulfimata facts will iuStify'