Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-09-01
RAILROADS MUST
BE-
EARN OWN LIVING
Period of U. S. Guaranteed
Help Now 0ver-New
Rates Most Vital.

Railroads of the nation ceased to
operate under the clause of the
TRANSFORMATION act which guarantees
their earnings last night at IL o'clock
and are again on their own re-
sources, after period of federal con-
troll lasting twenty-siX months and
a six-month guarantee period. during
which they were assured a Suaran-
tecd return by the government. Fur
tner loans from the government. no"
ever. will be available frtm the re-
voiving fund created by the trans
portation act for the purchase OF
equipment and bettermenl Oh tideh
age and material.
Definite information as to the cost
to the government OF the earnings
guarantee provision probably VIII not
BE known for several months, as the
various railroads face a large task In
balancing their books in order to give
detailed operation figures The bureau
of railway economics, however, mas
estimated that since the carriers were
returned to their owners on March l,
their earnings have been sooo,ooV.VVo
below their standard return. O1 thls
amount it is estimated, about one num-
cred million has been advanced to 15o
railroads which asked for financial re-
lief after the railroad labor boards
retroactive wage award.
Roads Report Deficit
Most of the railroads have certified
to the Interstate Commerce Commits
sion that they have incurred deficits
during the six months periods. Roads
must make applications for advances
before midnight tonight. otherwise
they must wait for final compilation
of the sums owed them by the gov
eminent.
OF the 1854 lines of consequence in
governments proposal for a division
of the surplus above the standard re-
turn and a guarantee of earnings
should the revenues fall short Among
the lines not accepting the guarantee
proposal were the Southern and Pere
Marquette systems. All the roads
which accepted the guarantee will be
entitled to a final adjustment of &C
counts by the Treasury Department
and the payment of the guaranteed
amounts.
Neither the Southern nor the Pere
Marquette have earned revenues
equivalent to the amount they would
receive under the guarantee, accord
ing to ]. n. Parmaiee, director of the
bureau of railway economics. In the
first four months of the guarantee
period. March, April, May and June,
railroad revenues exceeded actual ex-
penditures for operation only once,
MarCh revenues represented net re-
turn of $13.700,000 while there were
deficits of s2s. 100000 in April, of $11,-
100000 in May and Of $500 900 in
June.
Depending On New Rates.
Official figures have not been COM
piled by the Interstate Commerce
Commission for July and August,
but Mr.. Parmelee estimated a deficit
for both months, based on the re-
suits of the same months last year.
The wage award, he said. would add
more than s50.000.00O to operating
expenses for each month, while about
s200, 100000 in back pay to employees
will come out of the earnings of July
and August unless the corporations
have sufficient funds on hand to draw
on a reserve.
For the reason that the deficit has
been so great, officials are preparing
to give close study to the result Of
the recent rate increases. The In
terstate Commerce Commission has
estimated the increased rates would
yield about $1,000, 200. 900 annually.
But this sum will not be sufficient,
it was said, unless traffic comes in
larger volume and there is a de-
crease in cost of operation.