The Birmingham age-herald., 1921-07-10
RAILROADS TRAVEL. AT HIGH SPEED BACK. ID NORMAL. TIMES {.
Since Wage Reduction It Is Expected Entire System of Country Will Earn An
 nually 5 Per Cent
By HARDEN CoLFAX
 Special to The Age-Herald Copyright, 1921, by The Age -Herald)


 Washington July 9.--The railroads of the United States are travelns at high speed back to financial health and happiness Their prog ress is the brightest light in the business situation, today and augurs for a general revival of all industry in the days to come-days that are on the nearer side of next year than most folks imagine. On the basis of past performances in recent months and the new wage reduction put into effect nine days ago, it seems reasonable to expect that the entire transportation system of the country will earn somewhere in the neighborhood of annual rate of per cent on investment during the present month.
 More than that, the governments tentative plan to make available half a billion dollars for pressing needs will relieve the roads of their imme- diate financial pressure, give them a breathing spell, enhance the value of their securities, and enable some of the more favorably situated lines to go ahead with contemplated i'm provements and betterments. Such action, in turn, would give employ ment to workers in steel plants car foundries, and the thousand and one other industrial enterprises whose products flow to the carriers and whose prosptrity is dependent on them.
 Increase in Business
 It looks, therefore, as if there would be an increase-raising busl- ness, revival of industrial plants supplying railroads during the next few months--a revival that would be reflected in the industries supply ing those plants with their raw ma terials. In ordinary processes or business, a loosening of the tight buying situation on the part of the roads would be reflected and multi piled many times with, a resultant Ieaven to industry and that, in turn, would result in more traffic and thus enable the roads, through their increased revenues, to finance to Q still greater extent the pur- chase of their necessities. The per cent annual earnings figures are based on returns on all Class l roads with one exception throughout the United States.
 There are POI such roads-those whose annual revenues exceed S1,00o,- 000--and 200 of them have reported. The 200 show the following encour- aging raises:
 Operating revenue for the month s444,566, 900. Operating expense Ter the month s379,715,o00.
 Net operating income after the de- duction of taxes and joint rental charges, s37,246,00o.
 Income for May
 The net income for May, shows above, best of the year. is at the annual rate of 2.41 per cent on the invested capital of S1s,0oO, ,000,o00. In cidentally the net income shows an increase over May, 1920. of 779.s per cent. for in May, 1920. the roads piled up a deficit of $5,519,000. The rates are responsible mainly for the better showing Other factors are the rigid economies put into effect and the curtailment of working forces. Where the roads employed five men in May, 1920, they employed but four, by act ual count. a year later.
 Most significant is the fact that the showing in May was made on the basis of the old wage scales, the highest ever known, and that the national agreements were in force. Both are in the discard now by vir- tue of the labor boards decision That means saving of not less than sS5 ,0O0, 900 a month to the roads, or, to turn the equation the other way around, QeCTeaSe OI Soo,VuotVVV o month in operating expenses and a corresponding incease In net income.
 Preliminary June figures show the roads standing up as well in that month as they did in May. Undoubt- edly they will show as good results in July, but with the added impetus of sS5,000,000 cut in operating ex- penses. Assuming that operating revenues in July are as great as they were in May-and there is every in- dication they will be as high or high er--net income, therefore, would De ss7 ,o00, ,000. the May figure, plus $35,- 100000, tho July saving in wages | or a total of $72,o00,000.
 In considering the $5oo,ooo,0oo to roads from the government, it should be borne in mind that that sum would not be in the form of loan 1t will be payment of debt in- cured duing the days of federal con trol. True, the roads owe the govern ment an equal amount or thereabouts, but the government will accept secu- rities in payment. under some scheme which would enable the roads to Day off the principal by installments.