The labor journal. [volume] (Everett, Wash.) 1909-1976, 1920-11-12
PROFITEERS TO
FILE CLAIM FOR
HIGHER TARIFF



to demand another boost in freight
rates and passenger fares on the
ground that the increases granted
last August are not sufficient to
provide the six per cent to share
holders guaranteed under the Cum
mins-Esch law. Returns for the
month of September, the first
month of operation under the new
tariff rates fixed by the interstate
commerce commission, indicate that
while the gross receipts have in
creased over September, 1919, when
the roads were operated by the gov
eminent, the expenditures have
grown in larger proportion, so that
net returns fall far below those of
last year. We quote from an ar
ticle printed on the financial page
of the New York Times, October 20:
"The September earnings state
ment of nine more railroads, as
submitted to the interstate COM
merce commission, which were
available in Wall street yesterday,
indicate that while there was ma
ings under the new freight and pas
senger rate schedule, net earnings
were not benefited as much as had
been generally expected. This was
true particularly when comparisons
were made with the figures for
September, 1919"
Below Government Rental
The financial writer of the Times
gives several reasons for the slump
in net earnings, among them being
due to the new wage schedule
awarded by the labor board and in
creased cost of maintenance. While
complete figures will not be avail
able for September until next week
present returns indicate that most
of the roads have failed to make,
even with the increased rates, net
return equal to the rental paid to
the roads by the government which
was continued as a guarantee for
six months, or from March to Sep
TENDER l.
Increase Only 1.O7 Per Cent
The net operating income for
ninety Class A roads with mile
age of 14,198.17 for the month of
September shows an increase of
only LOT per cent over September,
1919. Based upon these figures
and contingent upon the same ratio
being maintained by the other
roads, the bureau of railway eco
Monies predicts that the net oper-
ating income for all the railroads
will be approximately $80000,00O
for September. This is said to in
dictate a total of $30,O0O,000 less
than the monthly requirements of
the Cummins-Esch law, which guar
antees return of 6per cent.
According to the bureau, the rail
roads are not at present approach
ing earning figures that will carry
them over the 6 per cent mark set
by the interstate commerce COM
mission as return on the valuation.
Take the net earnings of the
Delaware, Lackawanna & Western
for example. In September, this
road was able to show a profit of
$9S3,778, as against the standard
monthly rental paid by the govern
ment of $1,312,456, showing that
under The new rates the road failed
by $328,678 to reach the guarantee
received from the government. The
Norfolk & Western had net earn
ings in September of 81 1924 1858, as
compared with monthly guarantee
of $1,719,511 paid by the govern
ment.
Can Keep Boosting Rates
Under the Cummins-Esch law
private managers of the roads are
not required to account for ex-
penditures, such as salaries to Off
cials and equipment purchased from
concerns in which officers and direc-
tors of the roads hold stock The
Cummins- Esch bill, however, COM
mands the interstate commerce
commission to fix a rate that will
guarantee 6 per cent rate that will
guarantee six per cent dividend to
shareholders, and this rate may be
advanced from time to time as the
figures presented by the private
managers show is necessary to meet
the mandates of the new law.
This process will continue until
such time as the law is repealed by
congress or some other method of
operating the roads is determined
upon. In the meantime the public
pays the bill-the produced receives
less for what he produces and the
consumer pays more for what he
consumes. The private railroad
grab from both ends.
cool1o CuAIJ ENCE 1OA C;por