The Washington herald., 1921-03-21

way Economies
1t is no exaggeration to say that
the railways have passed through no
such critical period as the present
one since the Interstate Commerce
Commission undertook to regulate
their rates fifteen years ago. Inter-
views granted by railway executives
assert that the transportation sys-
tenn Of the country Is essentially
sound notwithstanding alarmist ru-
mors to the contrary. These state
ments, issued with one eye directed
toward railway credit. are Of course.
correct. The property value is there.
The country cannot live without
transportation. 1t must pay what Is
necessary to get the service. But
this does not dispose of the fear
that unless something is done and
done quickly. there will be a period
of acute financial strain and read
justment which will react widely
upon business in general.
Complete Figures Useless.
Complete figures Of financial con-
ditions are necessarily available SO
late after the event that they fur
nish little aid in analyzing the pres
ent condition or trend. ard many
factors in the situation cannot be
cleary analyzed because various in
separable influences combine to pro-
duce a particular result.
Many felt that the mmission
was overgenerous in its rate deci-
sion Of last August. II allowed q
property valuation that was only be-
low the aggregate of book accounts
that the railways asked to have ac-
copied. 1t granted the increases
asked for by the roads almost in
their entirety, in some cases gram
ing more than was asked. Railway
estimates as to revenue needs had
been based upon an expense budget
computed in prices when they wc-s
at their peak and upon a probable
revenue estimated from traffic con-
ditions in a period that was sub
normal.
Situation Grows Worse.
Yet in spite of all these favorable
initial factors. which were made the
occasion for optimistic predictions
on the part of railway executives
the situation during the last few
months has grown steadily worse
The increased rates have not pro-
duced the increased revenue. Frag-
mentary reports of individual roads
now being published for January
show in the majority of instances
an actual decline in gross revenue
as compared with a year ago, in
spite of increased rates. For 147
roads, representing rs per cent OF
the mileage of the country, there
is an operating deficit of 100000
as compared with an operating in
come a year ago of over $4,000, 600
The traffic simply is not moving. To
what extent this is due to the gen.
eral depression in business, to what
extent to the fact that the high
rates are a deterrent, are questions
that no one can answer with any
degree of accuracy for the country
as a whole. Both influences are un-
questionably at work, the former
probably being more influential than
the latter.
Could expenses have been reduced
proportionately with the decline in
gross earnings, all would have been
well, but no such reduction has been
possible. Maintenance costs have
long since been cut to the bone, and
all capital expenditures not abso-
lutely required for safe operation
have been postponed. This policy,
which has seemed so imperative, will
be and is now sadly regretted, for
when traffic revives, as revive II
must, the roads will not be in the
physical condition needed for the
most efficient service.
Wage Problem Present Crux.
The wage problem is. of course.
the crux of the present situation.
Increases aggregating over $780,
100000 annually were granted last
July just at the time that the down.
ward trend of prices was begin
ming. The Bureau of Railway Eco
-nomics estimates the average an
nual income of railway employees
in 1920 as $3.50, an increase of
s0.2 per cent over 1917. Nearly so
per cent of the total revenue for
1920 was consumed in wages and
the bill would have been larger