The New York herald., 1921-04-04
FINANCIAL NEWS
AND COMMENT
Railroad Middle Needs One
Clear Line Of Procedure to
Help Situation.
RAY OF HOPE DISCERNED
Carriers Crisis Reflected in
Operations, With Other Fac
tors Almost Ignored.
RAY OF HOPE DISCERNED
BY WILLIAM W. CRAIG.

=
of what is going on underneath, for the
trains run as usual. goods and passen-
gers are carried to their destination on
I familiar schedules. But railroad man
agements and bankers, looking outward
/ from the financial centre, see exactly
what is going on.
The new Administration, whose ef-
fectiveness is likely to be aided or ham
pered by the state OF general prosperity
of the country, entered last week into
earnest efforts to help straighten out a
dismal situation. An association OF Sc
curity owners, representing 1000, ,000,-
600 of railroad stocks and bonds, under
| took to bring labor into closer contact
with capital, the first results of which
will be seen in a meeting to-day. And
constantly throughout the week the task
and umpire on wage controversies was
increased by a procession Of appeals by
railroad workers against proposed re-
ductions OF pay.
come complete muddle IL single line
of procedure for the managements is not
soon decided upon in their effort to re-
duce operating costs The facts are
time to look for them, and they are
easy to summarize-the roads as a
whole are paying out 50 much of their
receipts that little. If any. money is
left to support railway credit and make
return to shareowners.
Comparison Shows Decline.
Looking back at 1920 one finds the
following record and comparison in a
compilation of railroad earnings and
outgo made by the Bureau OF Railway
Economics:
1920 1915.
enue -. 1925 ,4o2 .7e2 ss.e25. .252.s7i
sD penses se income Sses 43f Is Sss
Op. ratio. c.. $3.50 G5.55
The figures cover upward of 100000
miles of road. The ratio of gross to
more than 1914 cents OF every dollar
taken in was paid out in expenses and
taxes before any provision was made
for bond interest and dividends. The
greatest gross earnings the railroads ever
had, 20 per cent. larger than in 1915,
were whitfield down into the smallest
net income reported since the COMPARE
lively early days Of rairoadlng. Exam
ination OF the bureaus detailed tabu-
lation shows that nearly $4,000. 100000
OF gross income was absorbed in direct
transportation charges last year, chiefly
in wages, compared with s1.1S5, 100000
&. 1916.
| This. of course. is past history. but
| tho story OF results 50 far this year
is worse than in 1920 in respect to re-
| lation between income and outgo. A
ray OF hope. il it may be so called.
appeared in recent presentation Of
results in February in that costs were
lower than in February of last year.
yet this was OF a negative sort for the
promise OF profits remained as slight
as ever because fall of traffic had
reduced the railroad receipts
Costs were lowered by the drastic
expedlent OF cutting working forces to
the bone and by letting down on main
tenance wherever possible.
Economic Principles Needed.
tnf f.wx
worth argument whether the Transpor-
tation act has failed. The new railroad
law. with its theoretical provision for
minimum return upon railway invest
Inent as a whole, never had chance
to operate freely because OF the great
slump Of business. What is necessary
now is the application OF economic prin-
ciples which are vested in ways to
reduce expenses. And the necessity of
quick action is obvious on the face OF
weekly and monthly income reports.
When railroad wages were raised
from time to time during the war period
and last July. with its $500. 900. 900 ex-
pansion in lump tho measurement OF
advances was the rise OF the cost Of
living. reverse OF this application
ought surely. to be permissible now.
The Federal Labor Bureau reported last
I June, just prior to the last railway wage
rise. that prices were 172 per cent. more
than in 1918; last February the same
I bureau reckoned the average OF prices
as SO per cent. above the level Of the
prc-war year. The suggestion to be de-
I rived from the figures is clear enough.
but the outlook for much haggling over
procedure Is equally clear at this time
and meanwhile IL Is realized BY the Ad.
ministration as well as by public OBJ
servers Of railroad conditions that bust
ness is suffering from conditions which
make for extraordinary railroad ex-
pense and prevent a lowering or carry.
ing charges without a subsidy OF soms
sort.
The security markets last week re-.
fiected the railroad crisis TO tho practi.
cal exclusion Of other factors or domes.
tic and foreign origin. And there were
plenty OF others when one looked foi
them. There has been sufficient bust.
ness Improvement In some iires "a
warrant at least a constructive impres.
sion Of the Industrial future.
Stocks fortnight ago began TO dis.
count business betterment but the
movement was quickly checked wher
the dire straits OF the railroads were
reemphasized In movement and counter.
movement on tho part OF railway man