The Yale expositor., 1921-10-27
Propose to Reduce Wages and
Return All The Saving BY
Reduction in Charges.
FULL TEXT OF THE PROPOSAL
Statement by Thomas Dewitt cuyler,
Chairman of the Association of
Railway Executives on the
Situation.

country. Mr. Thomas Dewitt Cuyler,
Chairman OF the Association OF Rail-
way Executives. made the following
statement:
At meeting OF the Association OF
Railway Executives today IL. was
determined by the railroads OF the
United States. to seek to bring about
IL reduction in rates. and as means
to that end to seek reduction in
present railroad wages which have
compelled maintenance of the present
rates
An application will be made imme-
diately to the United States Railroad
Labor Board for a reduction in wages
of train service employees sufficient
to remove the remainder OF the in
creases made by the Labor Board
decision of July 20, 1921 (Which would
involve further reduction OF approx
imately ten per cent? and for re-
duction in the wages of all other
classes of railroad labor to the going
rate for such labor in several terri
tories where the carriers operate.
To Reduce Rates AS Wages Go Down.
The foregoing action is upon the
understanding that cOncurrently with
such reduction in wages the benefit
Of the reduction thus obtained shall,
with the concurrence of the Interstate
Commerce Commission be passed on
10 the public in reduction of existing
railroad rates. except in so far as this
reduction shall have been made in the
meantime.
The arrangements have decided up
on this course in view of their realiza-
ton Of the fact that the wheels of in
dustria activity kave been closed
down to a point which brings depres-
sion and distress to the entire public,
and that something must be done to
start them again in operation.
The situation which confronts the
railroads is extremely critical, The
railroads in 1920 realized net rail
way operating income of about S62,-
600, 900, upon property investment Of
over S19,000,000,000 and even this
amount OF 100000 included back
mail pay for prior years received from
the government OF approximately S64,'
100000. Thus showing, when the OPP
erations OF that year alone are con
sidered, an actual deficit before max
ing any allowance for either interest
or dividends,
The year ended in serious depreS.
sion in all branches of industry and
in marked reduction of the market de.
mand for and the prices of basic COM
modities, resulting in very serious
falling off in the volume of traffic.
Roads Forced to Defer Maintenance.
In this situation. a policy OF the
most rigid economy and of postponing
and cutting to the bone the upkeep OF
the properties was adopted by the rail
roads. This was at the price Of neglec-
ting and for the time deferring work
which must hereafter and in the near
future be done and paid for. This is
illustrated by the fact that, as of Sep
tember Is, 1921, over 16 per cent or
374,431 in number, of the freight cars
of the carriers were in bad order and
needing repairs, as against normal
OF bad order cars of not more than
160 900 AS is further illustrated by
the deferred and inadequate mainten-
ance of other equipment and OF road
way and structures.
Even under those conditions. and
with this large bill charged up against
the future,-which must soon be pro-
vided for and paid If the carriers are
to perform successfully, their trans
portation duties,-the result of opera
tons for the first eight months of this
year. the latest available figures, has
been at a rate of net railway opera
ting income, before providing for in
terest or dividends, amounting to only
&c per cent, per annum on the valua-
ton of the carrier properties made by
the Interstate Commerce Commission
in the recent rate case, an amount not
sufficient to pay the interest on their
outstanding bonds.
Roads Earnings Far Below Reasonable
Returns.
Ii is manifest, from this showing,
that the rate of return OF 5h or per
cent for the first two years after
March 1, 1920, fixed in the transporta-
ton act as minimum reasonable re-
turn upon railroad investment, has
not yet been even approximated-
much less reached; and that the pres
ent high rates accordingly are not due
to any statutory guarantee of earn
ings, for there is no such guarantee.
In analy1ing the expenses which have
largely brought about this situation
il becomes evident that by far the
largest contributing cause is the labor
cost
Today the railroads pay out to labor
approximately soc on the dollar they
receive for transportation services
Whereas in 1916, 4Oc 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 ex
ceeded the sum of about 81 1853 900 ,00C
annually. In 1920, when government
| authority made the last wage increase
| the labor cost OF the railroads was
about $3,69S, 100000 annually, or, II
continued throughout the year instead
OF for the eight months during which