Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-02-23

.->-------------
the. confidence OF investors in American
railroad securities, not only IN tn,s
country, but in Europe was greatly
weakened.
In other lines Of industry when
credit Is endangered by diminishing
profits, relief may be found by reducing
operating expenses or increasing prices
but the railroads could do neither, for
their rates were under government con :
troll, and they were obliged to MAINTAIN
Tor the public service at the minimum
OF its efficiency. -.---
-, 1t has been vesy conclusively proven
that the growth and prosperity OF the
United States are directly dependent
upon the railroads. The railroad CON.
panies are the principal customers OF
the steel trade Zone of the most i'm
portant of our manufacturing indus
tries). The cessation of railroad pur-
chases in the past always caused wide :.
spread depression on this trade, and
also in the equipment and allied indus
tries.
This point was strikingly exempli-
fled In the great industrial boom for
the five years ending June 30, 1907,
which up to the abnormal war activities
of the past five years was regarded as
the period Of the greatest industrial ac-
tivity ifAthe history Of the nation. Ex-
animation of the statistics covering this
important era in the country's indus
trial prosperity seem to justify the
opinion that IL the influence of the gail
road companies did not predominate
therein, II. at least, set in motion the
means that produced that activity.
Started the Prosperity
This conclusion would seem to be
negatively proved by the fact that the
industrial depression began Immediately
upon the suspension by the railroad
companies of their construction work
and the completion or withdrawal Of
their orders for equipment late in 1907.
For the five years ended June 30,
1907, the railroads expended in con
struction and equipment, which was
charged to capital accounts, nearly
81 900, 900, 900 over and above their
ordinary operating expenditures, and
over and above their extraordinary
operating expenditures that attended the
enormous operations of those years.
In the same period the gross earnings
increased 1881 ,942 ,803. This increase
was equal to more than 35 per cent OF
the expenditures for equipment and con :
struction in the five years named. Ex :
employing the extraordinary character
of these expenditures, 1t needs only to be
stated that the expenditures for con :
struction and equipment during those
five years were greater than the ex-
penditures on the same account during
the previous ten years. In that period
these expenditures totaled only 81 .572, =
631 ,233. and that the increase in the
gross earnings during the five year
period was nearly twice as great as the
increase in the ten year period.
This side of the railroad situation
could be gone into at greater lengths
but 1t is simply cited as an argument
of the need of giving the transportation
industry a square DEAL" when the
roads, after March /, will be allowed to
stand on their own legs again after
being in the braces of government con
troll the last two years.
A Narrow Margin
The position of the roads from a pri
vate ownership viewpoint is exemplified
in the operations of year 1915. jus,
prior to passing of the transportation
industry under government control. In
that year for the first time in ten years
(1909 barely excepted), the operating
ratio of the railways of the United
States was within the margin of safety
the margin that insures adequate
service for the present and adequate
facilities for the future.
According to careful compilation the
net operating income Of the railways in
1915, which was a year of phenomenal
traffic, with all expenditures rigidly
scrutinized and severely curtailed
amounted to barely 6 per cent on net
capitalization of S67 400 per mile. On
gross capitalization it would be less than
8 per cent, with no deductions for sink
ing' funds, improvements and better
ments and other reserve appropriations,
without which. the railroads cannot be
efficiently maintained to meet the traffic
demands of the nation.