Evening star., 1920-06-27
GERMAN RAILROADS
SHOW BIG DEFICIT
Industry, Once Prussia's
Greatest Whip, in Chaos
Despite Rate Boost.
BY PAUL HIRSCH.
(Ex-President Prussian State Min
istry.)

! istryo
Correspondence of The Star and Chi
cagO Daily News.
| BERLIN, Germany, June 1.-The in
sane coup of DR. Kapp on March 10
prevented among other things the
| taking over of the German railways
on April /, as had been arranged.
! In consequence, the date of taking
| them over had to be postponed until
| July l, on which date all railways
which are now the property of the
various German provinces will pass
| into the hands of the German re-
public.
This is an important political and eco
! nomic step. 1t is important politically
because it furthers German unity by
deeds and not words 1t is economically
| important because the central govern
| ment will gain substantially in power by
| the acquisition of these rights heretofore
| vested in the provinces. We must not
| forget that. under the rule of the kaiser.
the predominance of Prussia. lay in her
| railway control. Even today, in spite
! of serious deficits. the railways continue
{ to be great economic factor
| Prussia, which contained the great
est railway mileage in Germany, made
yearly profit of approximately 570,
| between 1911 and 1915. In 1915 there
was a profit of not less than 672,000,000
! marks ($16S. 00O,000). Since then the
state of affairs has changed completely;
! in place of these profits we find deficits
of almost unbelievable amounts. In
spite of the fact that the railroad ad-
minstration occupies the favorable po-
sition of a monopoly. last years deficit
amounted to 4.300.000.000 marks ($f.-
075,000,000) which comes to about 49,
100000 marks (s3,750,000) a day.
| Net Earnings Show Decrease.
Consequently. in a single year. almost
| a third of the invested capital belonging
to this huge network is being used up
| Calculating the yielding interest of the
i invested capital in all German railroads
| for the year 1913 at the rate of 4 per
! cent. share on the income would
| amount to 21.4 per cent. while today it
would amount only to 1916 per cent.
| This shows that the interest instead of
increasing relatively. is dropping.
In spite of the fact that the income of
| the railways consequent upon the tre-
mendous rise in the freight rates has
| increased considerably. the net proceeds
have not increased, but have decreased
interest on the invested capital, while
on paper it shows an increase, has de-
creased so far as real income is con-
cerned.
The share of the national debt repre-
sented by the railway system for the
year 1919 amounted to over 10000, 900, 900
! marks (s2.500, ,000,0 The interest on
| this total amounts to 10000 marks
($12S. 100000 while the sum which
should be set aside for sinking fund pur-
poses is 100000 marks (S15, ,400, ,000).
But payments for interest and sinking
| fund purposes are of no significance un-
| less they come out of the railway profits
and not. as was the case, from general
state or public funds.
The trouble is that the increase in in
come has not kept pace with the in
crease in expenses; the wages of the
| workers and salaries of officials as well
as the cost of repairs have increased be-
yond all expectations. Not only have
cost of living, but the number of en-
ployes has been greatly increased. In
| Prussia alone the increase of employees
over 1917 is LILO officials and $3.50
| it is doubtful If as much productive
| work is done as was done before the in
| crease.
All Operating Costs Higher.
| How much the expenditure for ma
terial has advanced may be gathered
from the following statistics: The
cost of rails, which in 1917 was 120
! (sS050): iron tools have gone from
| 200 marks to Sal; coal from 27.95
marks to 55 And the end of these in
| creases is not in sight.
! The bad state of finances has been
brought about partly through the ne
cessity which arose after the war of
relieving the widespread -unemploy-
ment. More than 100000 new en-
| ployes have been taken on since the
armistice and the total personnel.
which formerly ran from 100000 to
600, 900, now numbers 10000. Con
tracts now under way will run to
| 1000, 600, 900 marks (s500, ,000, ,o00). The
| first class workmen have since the last
wage increase been receiving $50
marks (nominally S71s cents) per
hour and new demands are made con-
stantly.
| The capacity of the workshops also
! is taxed to it's utmost. The wear and
| tear of the war. the abolition of Sum-
day work and the Introduction of the
leight-hour day, all these have played
! their part in bringing about the ex-
| listing state of affairs. The admins
tration is doing its best in the face
| of great difficulties and more and
more the men are cooperating. If
apparent unwillingness to work crops
up now and then it must be remem-
bered that the same state of affairs
| existed in 1870.