The Washington herald., 1920-02-23
GROSS REVENUES FADE

CROSS REVENUES FADE
High Costs Turn Record
Business Into Insignih- !
cant Net. |
Although railroad revenues In
1919 passed the five-billion-doilsr
mark for the first time, the high
cost of labor and materials so In
creased the operating expenses that
the net return on the total rail-
road Investment fell to 2.63 per cent
new. low Understanding to prac-
ticaIIy complete returns to the In
terstate Commerce Commission.
The net operating income for the
second year Of government opera
ton was, therefore. less than half of
the net return of 51s per cent pro-
vided for in the Esch-Cummins bill
as agreed upon by the Congressional
conference committee as the mini
mum of financial safety for the rail-
roads and about 81 per cent of the
standard return guaranteed during
Federal control.
The Glass I roads Chose having
operating revenues above s1.000.0OO
a year, earned net for the year
1914. .00O. 900, while 5l7 per cent on
the total property investment of the
roads, SIS, 500. 900. 900. would be ST.
072. .0O0, 900.
The effect of the war and the
thigh cost Of living on railroad
earnings and expenses is shown in
the following figures Of four years
operation OF the Glass 1 roads:
Earned on
Invest
Net oper- ment.
Year. Revenues. ating income. p. ct.
let6..... SS.G22. .OOO.o 900 sl,o55. .Ooo,O 900 5.se
iDi7.. 4.OJo. .OoO, 900 975, ,0o0. 600 5.31
i91s..... 4.91s.eOo,OoO eo.ooo.Ooo 3.7s
IBID. l.174.oOO.OOO 5i4,OOO,0oO s.6S
The operating expenses and taxes
were S5E. 10000 in 1916. $3,075. .00oO0O
in 1917. si.223, coo in 1918 and $780,
cocoon in 1919.
While the total receipts in this
period have increased s1,552. .0O0, 900.
or 43 per cent. the payroll and the
cost Of coal and materials have
risen about s2.100. .00o. 900. or 81 per
cent. The result is that the net
operating income, out of which in
terest and dividends are paid, has
been reduced by s540,o0O.00O, or
more than one-half.
Compared with Test Period.
The 1919 earnings compared as
follows with the average for the
three-year test period Q915-1917)
upon which is based the govern
ment war guarantee to the rail-
road companies:
Test pe-
Item, l0l9 riod average
Revenue ..... s.. .1s4. 900. 900 1896, ,OoO. 900
ExPns. and taxes 4,66s, 900 e,490. .Ooo. 900
Net opsr inc. 51s. 600 900 Dos. .OOO. 900
While the completed detailed re-
ports forf1919 will not be assembled
for several months, the New York
Times estimates from data now at
hand - the following comparative
costs of operating the railroads in
1919 and in the test period prior t0
government control:
Increase
1919. Test period. p. ct.
Wages =. So 6OO. 100000 l.S40, 600. 900 o.
Materials 1,s1I. 100000 10000. 900 = 70
Taxes 80. 199.OoO.OOO 1JO.OOO.OOO SO
Total "a. $50. .Ooo. 900 s.. 400. 900. 900 81
AS compared with 1918, the 1913 fig
-es show as follows:
Increase
Rcvns. 81, ,is4, 900. 900 s4,91s, OoO. 900 so
Expenses
and taxes ACES. 100000 4,2es, 900, 900 1913
ing me. 51s.OOO.OOO s.OOO.OO .12.4
The net operating income for the
year shows a deficit Of S39Q.000.O00
as compared with the government
guarantee.
A statement authorized by Direc-
tor General Hines estimates the de-
felt at S349. 100000 by recasting the
accounts so as to charge back to
1918 retroactive wage increases
awarded and paid in 1919. The 1918
deficit was S215,000,000. so that the
total for the two years Is $605!O00.-
900. Other government losses and
expenses In operating the transpor-
tation system, including the ex-
penses OF the Railroad Administra-
tion and the deficit of the express
and waterways, bring the total loss
above $500. 900, which will be in
creased in the two months ending
March /, when the roads are turned
back to the companies.
For the month of December. 1919,
the railroads under government con-
troll earned a net operating income
of S12.410.000. as compared with an
average of $73,323, 900 in December
during the test period. The reve-
nues and eXpeSes as compared with
1918 were as follows:
Increase,
Dec, 1919. Dec. 1918. p. ct. !
Revenues .S4JO. .JO7 900 s43s, 72O,0O0 go
Expenses 412.s26.OOO 394, $4,000 4.54
Taxes sa,Gss'ooO T,s55,ooo SOL
Vet operat-
ing inc. 12.4lO.OOo .14,52o. 600 $3.50
sDeficit
On the basis of the 1919 showing
and taking the property investment
of S19,500.0O0.00O as the value, the
standard of the Esch-
Cummins bill would require a net
operating income of $1.072, 000, 900 to
produce 5l5 per cent. This would |
represent an increase of about $685.
0O0. 900 over the net of 1919. But as
with what the railroads |
Of Glass actually earned in 1915, |
81. .055. 900, 900, 1t would require an !
increase of only $17.000,000. The
difference represents the cost Of re-
storing the relation between reve- |
nues and expenses which has been |
by the enormous increases |
In wages and other costs during the