The New York herald., 1921-08-29
GAINS ON RAILROADS
BY CUTS IN EXPENSES
-
Many Cuts Made That Could
Not Be Avoided if Busi- \
ness Were Normal.
REPORT 1921 HALF YEAR
Economies Included Defcrring
Maintenance - Next Six
Months Likely Better.

The increased net earnings OF railroads
of the country in the first six mouths OF
1921, compared with the same period last
year, have been attained by decreasing
such expenses as would have TO be =
suned il business were to revive toysfH
normal, according to an analysis oS fX&r
road operation just completed by TIE ~
reau OF Railway Economics. portions Of
which were made public yesterday.
Economies were especially noteworthy
during May and June. or the gain in
the latter month the report points out
that "45 per cent. (s44,74S.799) arose
from reduction in operating expenses
and 55 per cent. (s54,256,6Ss) from de-
ferring Of maintenance both Of right OF
way and equipment" In other words, in
the first half OF the year. because OF bust
ness conditions. fewer trains were run,
less coal was used and fewer men were
employed. Existing wage rates We're not
reduced.
With r wage reduction OF approSi-
mately IL per cent. effective July ], and
progress toward more efficient and eco.
nonaical working conditions, 1t Is ex-
pected that the latter half OF the year
will show an Improvement over the hrst
six months. Reduced transportation
costs necessarily follow a diminishing.
but reduction in maintenance Is merely
a postponement OF expenditures that
must be made later If the roads are TO be-
adequately maintained"
The salient features OF the analysis
are: )
l. The number of railway employees.
In March, 1921, was smaller than for
any period since the fiscal year 1916
During the first quarter the average
number was 1,691,471. This was 30a,-
053 less than during the same period
in 1920. reduction OF 15.2 per cent. Be-
cause of this reduction In force, the
companies were able to slash their pay
rolls for the quarter by $3S.29o,974. or
as per cent, at the same time paying
the scale of wages ordered by the Rail
road Labor Board in July. 1920.
.. Following the record breaking traf-
Tic of the fall OF 1920 camo business de-
preston. As affecting railroad traffic.
this was at its height in January and
February. The total number of cars
loaded with revenue freight in the seven
months ended July 81 was less than dur
ing this period last year by 2,60o.StA.
or 1914 per cent. The totals for the
period were 24.SS9,o5S in 1920 and a.
2S8,214 in 1921. ,Set tons miles during,
this period showed an average decrease
OF 22.3 per cent. compared with 1870
Revenue passenger miles. with figures
Of decline steadily mounting. averaged
n decrease of 14.a per cent in the first.
five months January showed the'
smallest decline, 4 per cent; May the.
largest. &c per cent.
3. Revenues followed tra f1ic in q rela-
lively smaller decline. The difference,
is traced to an increased rate level, "but.
even the considerable increase in rates,
las not been sufficient, taking the first.
half OF 1921 rs whole, to offset the re-
duction in traffic" the analysis states
Freight revenue in the first six months
virtually held its own with 1920. an in
crease Of six-tenths per cent. being tabu-
lated. Passenger revenue increased
slightly These increases we're made
after advances OF so per cent. and 20
per cent. respectively in freight and
passenger rates in August, 1920. Boti1
tended to decline at relatively greaters
rates as 1921 advanced. Other reyen-
ues showed an almost unreiieyed ten
dency TO fall below 1920 levels, with the.
result that total operating revenues were
lower each month, except April--the
month in 1920 or the switchmen's strike
than in 1920.
4. Operating expenses. particularly
ma utenance. have been reduced Main
tenance OF way expenses were cut 2s.9
per cent. and 27.3 PEI cent. during May
and June: maintenance OF equipment
i2.l pcr cent. and 2a.1 per cent. during
the same months as compared with 1929.
! The average cut in maintenance Of way
in the six months was 11.3 per cent.
maintenance OF equipment 90 per cent.
Transportation expenses also we're
heavily cut, with May and June standing
in the lead. June showed a decrease of
1873 per cent. over that month In 1920.
The average decrease for the first half
year was 81 per cent. Total operating
expenses for the period averaged de-
cline OF 10 per cent. although the
figures for May and June, 1872 per cent.
and 2o.6 per cent. respectively. show
how drastic the total cuts were when
compared with 1920.
:. The rate of return on tentative
valuations. reduced to an annual basis.
has shown small increase. January
and February nre entered with deficits.
according to the analysis. The - for
the next four months, except e. ight
decline in April. moves from % cnt
70 81 per cent. IN June, an ave 40 for
the six months OF is per cent. During
this period the analysis continues TO
show that railways OF class 1 should
have earned s477.2 1885, 900 in net operat-
ing income to attain a 8 rer cert. hass-.
They actually earned s1es.9i2,ooe. u
shortage or approximately 73 per cent.
G. Comparing June this year with
June 1920. II appears that OF a net
saving Of nearly s100.000.o0o between
the two, virtually the entire amount was
made in curtailing expenses. About 20
PER cent. is charreable to reduction In
transportation, while the remainder was
gained i'm slashing maintenance or way
and maintenance of equipment. Ex-
pressed in even millions of dollars those
two latter expenditures showed respec-
tive decreases of 81 and 60 In the six
months.
In conclusion the analysis gays the
economies were brought about without
reduction Of wage rates or changes IN
rules and working conditions. ON the
strength Of the wage cut. already in
eject. and some prorrcss townrd work
ing conditions conducive to greater ef-
nc;encr and economy. ":he second six
months os 1927 shorid therefore show
an iraproveaert over tho first elk
mon this"