The St. Johns herald., 1921-10-27

against the future-which must soon be provided for and paid if the car riers are to perform successfully their transportation duties-the re- suit of operations for the first eight months of this year, the latest avail able figures, has been at a rate of net railway operating income, before providing for interest or dividends, amounting to only 2.6 per cent per annum on the valuation of the car rier properties made by the Inter state Commerce Commission in the recentFrate case, an amount not Suf- ficient to pay the interest on their outstanding bonds.
 Roads Earnings Far Below Reason
 able Returns.
 It is manifest from this showing that the rate of return of 512 or per cent for the first two years after March l, 1920, fixed in the trans portation act as a minimum reason able return upon railroad investment, has not been even apprOximated, much less reached, and that the pres ent high rates accordingly are not due to any statutory guarantee of earnings, for there is no such guar antee. In analyzing the expenses which have largely brought about this situation, 1t becomes evident that by far the largest contributing cause is the labor cost.
 Today the railroads pay out to la bor approximately 60 cents on the dollar they receive for transportation services, whereas in. 1916, 40 cents on the dollar went to labor.
 On the first day of January, 1917, when the government took charge of wages through the Adamson act, the labor cost of the railroads had not exceeded the sum of about $1,468,- 100000 annually. In 1920, when governmental authority made the last wage increase, the labor cost of the railroads was about $3,6o8, 100000 annually, or. if continued through out the year instead of for the eight months during which the wage in- creases were in effect, the labor cost, on an annual basis, would have been largely in. excess of $3,900, ,00O,0 900, an increase since the governm-L took charge of railroad wages in the Adamson act, of approximately $2,- 451. 100000 annually.
 In the light of these figures, 1t is manifest that the recent reduction of wages authorized by the labor board, estimated at from 10 to F per cent, in no sense meets or solves the problem of labor costs and in no way makes it possible for the railroads to afford a reduction in their revenues.
 Thousands of Rates Already Reduced. Indeed during the past year there have been between four and five thousand individual reductions in freight rates. On some railroads the reductions in rates have amounted to more than the reductions in wages so fan made, and on many other railroads the reductions in wages allowed no net return on operations, but merely pro- vided against the further accumula- ton of a deficit.
 The point is often made that agri- culture and other industries are also suffering the same immediate difficul- ties as the railroads, why, therefore, do not the railroads take their medf- cine like anybody else? The answer lies in several facts:
 1. The railroads were not permit ted, as were other industries, to make charges during the years of prosper ity, making possible the accumulation of a surplus to tide them over the present extreme diversity. According to the reports of the Interstate Com merce Commission, the rate of return on property investment of the rail roads of the United States for the past several years has been as follows:
 RATE OF RETURN EARNED