Licking Valley courier., 1921-11-24

over NoU10O0O,OoO and even this
amount OF G2 million included back
mail pay for prior years received from
the .l,oSernment Of approximately
Sc OOC 300, thus showing, when the
operations Of that year alone are con
sidered, an actual deficit before max
ing any allowance for either interest
or dividends. j..
The year ended in serious depres.
sion in all branches of industry and
in marked reduction of the market de-
mand for and the prices of basic COM
modities, resulting in very serious
falling off in the volume of traffic.
Roads Forced to Defer Maintenance
In this situation, a policy Of the
most rigid economy and Of pOstponing
and cutting to the bone the upkeep
of the properties was adopted by the
railroads. This was at the price of
neglecting and for the time deferrine
work which must hereafter and at the
near future be done and paid for.
This is illustrated by the fact that,
as of September Is, 1921, over 16 per
cent, or 374, 4,431 in number, Of the
freight cars Of the carriers were in
bad order and needing repairs, as
against a normal of bad order cars
of not more than 100000 as Is fur
ther illustrated by the deferred and
inadequate maintenance of other
equipment and Of roadway and struc.
lures.
Even under those conditions and
with this large bill charged up against
the future-which must soon be pro.
vided for and paid IL the carriers are
to perform successfully, their trans
portation duties,-the result of opera
tions for the first eight months of this
year, the latest available figures, has
been at rate Of net railway operat.
Ing income, before providing for inter.
est or dividends, amounting to only
2.6 per cent per annum on the valua.
tion of the carrier properties made by
the Interstate Commerce Commission
In the recent rate case, an amount not
sufficient to pay the interest on theiI
outstanding bonds.
Roads Earnings Far Below Reason.
able Returns
1t is manifest, from this showing
that the rate of return Of 81. or {
per cent for the first two years aftel
March l, 1920, fixed in The TranspOr
tatlOn Act as Il minimum reasonable
return upon railroad investment, has
not been even approXlmated-
much less reached, and that the pre-
sent high rates accordingly are no,
due to any statutory guarantee OF
earnings, for there is no such guar
antee.
In analyzing the expenses whicl
have largely brought about this stu
alton, It becomes evident that by fal
the largest contributing cause Is thu
labor cost.
Today the railroads pay out /,
labor approximately 60 cents on tht
dollar they receive for transportation
services, whereas in 1916 10 cents o.
the dollar went to labor
On the first day Of January, 1917
when the Government took charge o
wages through the Adamson Act, tn
labor cost Of the railroads had no
exceeded tie sum of about Sl,4GS, 900
600 annually. In 1920, when govern
mental authority made the last wag
increase the labor cost of the raj
roads was about $3,69s,0OO,OO0 al
nually. ur, if continued throughout tn
year instead Of for the eight month
during which the wage Increases wer
In effect ,he labor cost, on an annua
basis, would have been largely in e,
cess OF So, y9O,OO0,00O, an increase, sine
tie Government took charge Of raj
road WAGES nj the Adamson ACt, oi
Approximately $2,lT00O0,O00 annually
Ii the iI-at Of these figures, it II
manifest .lat the recent reduction O
wages authorized by the Labor Board
estimated az FROM 10 10 - per cen
In no sense meets or solves The prob
lem OF labor costs Nnd in no wa!
makes il POSSIBLE for Tie railroads t,
afford reduction in their revenues
Thousands Of Rates Already ReducE.
Indeed, during the past year ther,
have been between four and ty,
thousand individual reductions Il
freight rates. On some railroads tn
reductions in rates have amounte'
to more than the reductions In wage
so far made, and on many other rail
roads the reductions in wages allow
cd no net return on operations, bu
merely provided against the furthe
accumulation of deficit.
The point is often made that ayr
culture and other industries are ais
suffering the same immediate diff
culties as the railroads, why, there
fore, do not the railroads take thei
medicine like anybody else? The al
swer lies In several facts:
1. The railroads were not PEI
mitted, as were other industries, I
make charges during the years c
prosperity, making possible the a,
emulation Of surplus to tide thel
over the present extreme adversely
According to the reports Of the Inte
: state Commerce Commission, the raj
Of return on property investment {
the railroads of the United State
: for the past several years has bee
as follows:
Rate Of Return Earned by Raiiroac
of the United States on Their