The daily times., 1921-10-18


TO perform successfully their trans.
portation duties, the result OF opera.
tions for the first eight months NJ
this wear. the latest available hrures
has been at a rate of net railway op-
Grating income, before providn4 tor
interest or dividends, amountilg Ia
only 90 per cent per annum or the
valuation of the carrier properties
made by the Interstate Commerce
Commission in the recent rent ease
an amount not sufficient TO PAY In.
interest on their outstandng bods.
..It is maifest. from this shuHinr
that the rate of return of u or i
per cent for the first two years after
March 1. 1920. fixed in the Trans
portation act as a minimum reason
able return upon railroad invest
ment. has not been even approNlmat
ed, much less reached, and thai the
present high rates accordingly are nor
due TO any statutory guarautcr Of
earnings, for there is no such guar.
antee.
In analyZing the expenses, which
have largely brought about this situa
ton. it becomes evident that by tar
the largest contributing cause is the
labor cost Today the railroads pay
out to labor approximately 60 cents
on the dollar they receive for trans
portation services, whereas in 1916.
40 cents on the dollar went to lnbor
.On the first day of January, 1917.
when the government tool charYc Of
wages through the AdamsoI act. tn.
labor cost of the railroads had not ex-
/ ceeded the sum of about 81, ,f6%.00u.-
| 900 annually. In 1920, when govern
me ntal authority made the last wage
| increase. the labor cost of the rail
roads was about $3.69S, 900, 900 an
lnually, or, if continued throughout
the year. instead of for the eight
months. during which the wage in
creases were i'm effect the labor cost
on an annual basis. would have been
largely in excess of $4,000, 900 900
an increase, since. the government
took charge of railroad wages in the
iAdamson act, of approximately 81
100000, 900 annually. In the light of
| these figures, it is manifest that the
recent reduction OF wages, authorized
by the Labor Board, estimated at 10
to 2 per cent, in no sense meets or
solves the problem of labor costs and
in no way makes it possible for the
ailroads to afford a reduction in their
revenues.
Indeed, during the last year there
have been between 1000 and 5000
individual reductions in freight rates.
On some railroads the reduction in
rates have amounted to more than
the reduction in wages SO far made,
land on many other railroads the re-
ductions in wages allowed no net re-
turn on operations, but merely pro-
vided against the further accumua-
tiOn of a deficit.
1.-The point is often made that agri-
lculture and other industries are also
suffering the same immediate Difficult
ties as the railroads. Why, therefore
do not the railroads take their medi-
cine like anybody else? The answer
: lies in several facts:
81. The railroads were not pr
mitted, as were other industries to
: make charges during the years Of
, prosperity making possible the accu-
imulation of a surplus to tide them ov-
ler the present extreme adversely. Ac-
cording to the reports of the Inter
state Commerce Commission, the rate
of return on property investment Of
the railroads of the United States for
the last several years has been as fol
} lows:
Rate OF Return Earned by Railroads
, of the United States of their
Property Investment
1Yoar par Cent