Evening star., 1921-04-06
SERIOUS FINANCIAL SITUATION
/ CONFRONTS RAILROADS OFsU.;S
Occupy Different Situation From That OF
! 1920, When Government Guarantee
Ran for Eig ght Months

drSt eight months OF 19Z0-$200,UVU-
900 for the first two months when
and $500. .00O.0 for the following six
months after the roads had been
handed back to their owners. For a
time the roads were unable to obtain
any of this money. because it Vas
ruled that the settlements must be
long way off in the future. But the
passage of the Winslow bill made 1t
possible for the roads to receive such
part as was held due them by the In
terstate Commerce Commission. They
are getting this money today as fast
as they can. They are using the
money to pay back obligations. to pay
interest on their securities, and to
pay their operating bills.
The roads this year are faced with
the problem of financing outstanding
funded debts which are maturing. and
also with financing equipment obli-
cations and other temporary forms Of
indebtedness. There falls due, in 1921,
a total of $322.472.773 in mortgage
bonds. collateral trust bonds and mis-
cellaneous obligations. not including,
however. temporary obligations. This
is a very considerable amount of
money that must be raised in some
way to meet these obligations-or at
least new securities must be issued to
cover the old.
For time last fall things looked
much better for the railroads. The
granted the increases in rates re-
quested and everything had been fig
ured out 50 that the roads should
earn a fair return on the investment.
There was a reaction from the period
of uncertainty which had preceded
The Pennsylvania road put out a new
bond issue of $60.000.000, and they
were entirely subscribed Overnight
But today. II the Pennsylvania were
to put out similar issue of bonds
or any other road-there is consider
able doubt II they could be sold, ac-
amined the situation.
Enormous Decrease.
The transportation business has de-
creased enormously The country is
not producing or shipping the guam
titles of goods it was last fall. The
production and shipment of coal in
February dropped way down. for in
stance. The people are waiting for
lower prices before they will buy the
various commodities.
The total operating expenses Of the
roads during 1920 have been figured
at $5.S26.197,474. In 1919, the last
full year of government operation,
the operating expenses were $4.39s.-
40S. S.414. In other words. the roads
cost to operate in 1920-during which
they were for ten months under pri-
vate operation-$1,4 ,427, ,060 more
than they did during 1919. while they
were under government operation the
year through.
The proponents of government oper-
alton of railroads, and the men who
insist that the private management
of the roads has been wasteful and
inefficient. point to the great differ
Is.
justification of their positions. They
say that under the increases in wages
granted the men by the Railroad La
Dor Board last July. made retroac-
tive to May 1, the increase in wage
cost was only about $420,000,000. Why,
roads billion dollars more than the
increase in wages, as compared to
the cost of operation in 1919?
Railroads' Explanation.
The railroad executives have their
answer ready to this. 1t runs some
what as follows:
In the first place, the total wage
bill in 1919 was approximately ST.
soc, 600 600 and in 1920, 3.73O.0O0, 900,
or $S30; 100000 more in 1920 than in
1919. instead of being between $780,
100000 and $50o.0oo. .000 as estimated
in accordance with the wage increase
discrepancy, it is said. is due to the
fact that some of the increases in pay
granted by the railroad administra-
ton in 1919. were not really reflect
ed in cost until 1920. Then, too, the
number of employees in 1920 averaged
1,993,000, as compared to 100000 in
1919, or $4,000 more. Added to this
was the fact that the national agree
ments-of which the roads complain
bitterly as adding to their labor
costs-signed the latter part of 1919
feet during 1920 and not during 1919.
Fuel and Materials.
So the roads contend. after labor has
been taken care Of. the difference in
the cost of operating the roads in
1920 and 1919 amounted to about
$597. 900. 900. They explain this in
creased cost on the ground that fuel
and materials reached their peak in
1920. The average cost Of coal. to
the roads for instance. was 1892 a
or sS cents a ton higher in the latter
year. The roads purchase about 150,-
100000 tons Of coal a year. The diff
ference IN price, therefore, would
account for 1892, 10000 more. The
fuel oil used by the roads, some
1,626, $4,000 gallons a year, cost y
a cent more per gallon in 1920 than
in 1919. and this accounts for ap-
proximately $8.0O0.000 of the increase.
The cost OF steel rails. of ties, lum-
Der and all kinds of supplies was
higher in 1920 than in 1918, the roads
say. Then the switchmen and yard
SPECIAL NOTICES.