New-York tribune., 1920-03-12
Railroads Need
Still Another
Raise i'm Rates
xsoO. 600, 600 Increase Re
ouired in Earnings to Put
lines on Basis Existing
Il Time Control Began
Unable Now to Meet Law
Passenger Tariffs to Stay
at Present Levels, Though
Traffic Is Much Heavier
By Stanley Frost
,ee;o; Dispatch to The Tribune

vAsHINGTON. March 11.-Railroad
..,.. will have to be increased little
rors than ssso,ooo,ooo on the basis
=; last years balance sheet if the rail-
,o.as are to be restored to as good con-
s;.;ou as they were in three years pre-
vicus to government control--a period
auring which prices and wages were
.,ready advancing and during which
,hev had to practice such economy that
.sore was g. considerable deterioration
Of the properties.
The rates will have to be increased
bv s5Ss. .ooO 900 if they are to meet the
sL per cent specified in the new
transportation act and another $780,
100000 to meet the per cent which
* permitted to provide reinvestment in
the properties.
be bigger yet if there is to be a further
increase in the price of supplies to be
taken care of, and very much bigger
If any important increase in wages is
Ry8utGQ, WHlSu Is dkAUOS& 2AcF1IAQ1S. IL
the wage increase, for example, should
be only half what the workers are now
ssking the rate increase would have
to be s1,1s5, 900 to meet the per
cent provision.
Passenger Rates Unchanged
Practically all this increase will have
to come out of freight rates. There is
no talk even of increasing pas
senger fares, and though there has
been SO per cent increase in passenger
traffic in the last few years the equip
ment is now so crowded that there can
be little further help from this source
till new cars are provided.
The increases since the government
took control have averaged 28.4 per
cent in passenger fares and 34.4 per
cent in freight rates. The increased
fares and Increased traffic together
have sent the passenger income up
from an average Of $685., $50, 700 in the
test period of three years before the
government took control to S1,17S,119,-
s45, an increase of S492, ,439,251. The
freight income has gone from an aver
age of 81 ,369 054 ,426 in the test period
TO 1856, 734.5.3 in 1919. an increase of
$l1S7, ,680,147
How far short these tremendous in
creases have fallen of keeping up with
expenses is shown by the deficit of
$3.50, ,1425 5OS, which the government has
had to make up for 1919 alone to pay
the roads the guaranteed equivalent of
their net income during the test period
Ii this deficit is to be made up out
OF freight revenues. it will require an
Increase of Ill per cent in the aver
age rates. But during the three years
in which the standard on which these
ngures are based the roads were suffer-
ing severely.
Credit Declined Rapidly
Though their earnings were fairly
high, their credit and the prices Of
their stocks and bonds were declining
steadily. they were unable to extend
their lines to meet the growth of the
country or to borrow for the increased
equipment that was urgently needed.
The result was that the end of the
test period found the roads far less
nearly equal to the needs Of the coun-
try thar did the beginning, a sure
evidence that the position of the roads
reeded strengthening.
Congress took this into considera-
uon in passing the transportation act.
and provided that the roads should be
permitted to earn not less than 5k
per cent on their value and another
nan per cent, at the discretion of the
interstate Commerce Commission, to be
used for improvements.
1t is on this basis that the rate In
creases should be figured. On the
present valuation of the roads, which
Is s2O,O5O,000,0 900. this will require an
income Of s1,100,000, 900 at 51z per cent
ana OF 81 200 600, ,000 at per cent. This
leaves deficit TO be made up in
asrreight IRE rates of s585.ooo,ooo, or $685.
ooo,0OU-l6.5 per cent Or 1915 per cent
Inc latter figure will be more nearly
correct, There are certain correc-
,ions that should be made to the 1919
Oalance sheet, on which these figures
are based, anta these increase to 20.6
per cent the advance that will have
70 os made in rates if the roads are
70 oe assured the stable position which
Tue transportation act intends.
put even this is not all. Prices are
Hlll going up. Wages also have gone
up in the latter half of 1919, so that
1ney do not all show on the balance
ssneet, and it is almost inevitable that
shey will go up still more. If the in
crease is half the demands the deficit
!or the first year after they go into
ssnect will jump to at least 81 1885 ,000,-
yVV on the s per cent basis of earn
.ags, and that would. mean a freight
rate Increase of 33.5 per cent.
Aooed to previous increases, the to-
tai rate advance since 1914 would then
Os ABOUT 70 per cent-a smaller ad-
s vance than the average increase in
Prices, which is estimated at 822 per
!, 1920. -
Thirty-four Meet STANDARD Return"
Even this increase would not be
ssaoagn to make all the railroads safe
msestments. Just as the deficits
sss ssalnst liked charges vary with individ-
S aai roads, SO the deficits against the
,ss,sasndard return" Of the weak 1914
WI period show wide inequalities