New-York tribune., 1921-05-22

America. The other policy would be to
permit cars and locomotives to run just
as long as they would hold together,
making only such temporary patchwork
repairs as were necessary to hold the
car together. Because of the scarcity
of labor and materials, this was, in
many instances, the case on roads un-
der government operation.
The difference that can be made in
a property in period of five or ten
years by pursuing one or another of
these policies is great enough TO make
the difference between prosperity and
bankruptcy. A management can take
a well-maintained road with fairly high
standards and operate it for five wears
largely on its own fat. Maintenance
expenditures can be held down to the
bare necessities Of keeping the prop
erty in safe condition, but at the end
of that period the whole system, like
the one-horse shay, will be found to
be on the point of collapse. Every
thing needs renewal at once, rails, ties.
ballast, bridges, stations. All the loco
motives should have a thorough over
hauling in the shops. etc. This sor.
OF thing has happened many times in
the past, and the natural consequence
is bankruptcy and receivership.
analysis VIII Sho,e
The point I wish to emphasizes. how
ever, is that any kind of careful
analysis will show what process Is ro-
ing on. 1t would be quite impossible
Tor two competing roads to pursue op
posite policies in regard to mainte-
nance and not have the facts obvious
ter of fact, it would be obvious to any
man who would carefully study the
monthly and yearly reports made by
each road to the Interstate Commerce
commission. In the yearly reports the
III or more primary accounts are each
shown separately. If under the same
conditions one road spent twice as
much mile for rails over a series of
years as its competitor is would hardly
need demonstration or detailed prob
ing into the accounts of the company
to convince any one that either ono
read was being allowed to deteriorate
or the other road was being bettered
out of expenses, or that both these
things were occurring simultaneously.
When, therefore, shippers in oppos-
ing a rate increase argue that road
is padding its expense account it is
matter which is comparatively easily
susceptible of proof, and in the same
way when labor leaders argue that
there is graft going on in the contract
ing for maintenance of equipment or
of roadway the facts are susceptible
OF proof.
Policy on Upkeep
One of the most important questions
that holders of railroad securities arc
or should be asking of railroad ac-
counts is a true statement as to how
With q great falling off in traffic it
has been nearly, not quite, universal
American railroad practice to reduce
expenditures for upkeep OF the prop
erty. Theoretically this is wrong, but
practically it is defensible.
The government had handed the
roads back in poor physical condition
as far as roadways and structures was
concerned and in miserable shape as
far as freight cars were concerned.
What the railroad managements would
have liked to have done would have
been to make appropriations for main
critics in first class physical condition,
while the traffic was slack and let the
legal departments fight it out with the
government as to how much of this
cost was chsrgeable against the gov
ernment for its neglect of the previous
three years. This the managements
have been unable to do for lack of
funds. Most of the Eastern and
Southern, all of the New England,
many of the Middle Western and some
of the Transcontinentals are struggling
to make outgo and income balance. To
what extent this is affecting the up
nf
mystery. 1t is determinable, and fair
ly accurately so, in large way by an
examination of the accounts rendered
each month by the railroad companies
to the Interstate Commerce Commits
sion.
The Pennsylvania recently reduced
its dividends. What policy is it pur-
suing toward upkeep of the property {?
In the first three months of 1920,
S1S,636,000 was spent for maintenance
of way and structures. Wages are 20
per cent higher than in the first three
months of 1920. Assume, therefore,
that the same work cost 10 per cent
more in 1921 than in 1920. In 1921
the Pennsylvania spent s13 $4,000 on
maintenance. That being so the Penn
sylvania has cut down its maintenance
of way and structures by more than
80 per cent in the first three months
of 1921 as compared with 1920. The
Baltimore & Ohio, it's nearest COM
petitor, appropriated $4,460,000 for
maintenance Of way and structures in
the first three months Of 1921, as
against $5,e48,000 in 1920, cut, al
lowing for the increased costs of doing
the same thing, of 35 per cent. The
New York Central appropriated $s,-
96S,0O0 in 1921 and $7,715,o00 in 1920,
an increase, even allowing for in
creased prices. The Chesapeake g.
Ohio spent $780, 900 in 1921 and ST.
s506.000 in 1920, and the Erie spent
s2,518,o00 in 1921 and $2,ss0,oo0 in
1920.
The Atlantic Coast Line, which is.
continuing to. pay its dividend, spent
$2,676,000 in 1921 and $2,327, 900 in
1920. The Southern Railway, which
has suspended it's preferred dividends,
spent $5,6s1,000 in 1921 and s5,187s 900
in 1920.
Analogous Situation-12, pit Bod ital >.
An examination of the maintenance
and equipment figures shows an an
alogous situation. The Southern Rail-
road spent $6,951, 900 for repairs, re-
newals, etc, of cars and lccomoties in