The Yale expositor., 1921-10-27
RATE OF RETURN EARNED
BY RAILROADS OF THE
UNITED STATES ON THEIR
PROPERTY INVESTMENT

1916 (fiSCal year, ................ 80 Pct.
1915 tcaiendar year, ..............GI - ,tt
l9ll.. ........... ............... .o.2b lct.
Observation-Disclosures. - l'ct.
.5l9. ..,....,... .......... ......... : 10 lIct
''-"'' ''''''''. .''''''..'' ....... .'."% e.
1t will thus be noted that during
the years when other industries were
making very large profits, when the
prices of farm products and the wages
Of labor were soaring TO unheard-of
heights the earnings upon railroad
investment i'm the United States were
held within very narrow limits and
that they have during the past four
years progressively declined.
Reads Handicapped More Than Other
Business.
2-The railroads are responsible to
the public for providing adequate
transportation. Their charges are
limited by public authority, and they
are in very large respects (notably
for labor compelled to spend money
on a basis fixed by public authority.
The margin within which they are per-
mitted 10 earn a return upon their in
vestment or to offer inducements to
attract new capital for extensions and
betterments is extremely limited.
However, much the railroads might
desire, therefore, to reduce their
charges in times of depression, it will
be perceived that the limitations sur
rounding their action do not permit
them to give effect TO broad and
elastic policies which might very prop.
erly govern other lines Of business not
thus restricted.
1t has been urged upon the railroads
that reduction in rates will stimu.
late traffic and that increased traffic
will protect the carriers from the loss
incident to a reduction in rates. The
railroad arrangements cannot disguise
from themselves that this suggestion
is merely conjectural and that an adj
verse result OF the experiment would
be disasterous not only to the rail-
roads, but to the public, whose SUI
preme need is adequate transporta.
ton.
Consequently the railroad manage
ments cannot feel justified in placing
these instrumentalities. so essential
to the public welfare, at the hazard
OF such an experiment based solely
upon such a conjecture.
Farmers Especially Need Lower Rates
1t is evident however, that existing
transportation charges bear in many
cases disproportionate relationship
to the prices at which commodities
can be sold in the market and that
existing labor and other costs OF trans
portation thus imposed upon industry
and agriculture generally a burden
greater than they should bear This
is especially true of agriculture. The
railroad arrangements are feeling SEN
sitive to and sympathetic with the
distressing situation and desire to do
everything to assist in relieving it
that is compatible with their duty to
furnish the transportation which the
public must have.
AT the moment railroads in many
cases are paying 40c an hour for un-
skilled labor when similar labor is
working alongside the railroads and
can easily be obtained by them at zoe
an hour. The railroads OF the country
paid in 1920 total of considerably
over $1,300,000,000 to unskilled labor
alone. However, desirable il may be
to pay this or that schedule of wages,
1t is obvious that it cannot be paid
out OF railroad earnings unless the i'm
huolilSS Wultu use the IdllTOduS are
capable of meeting such charges
The railroads. and through them
the people generally, are also hamper.
ed in their efforts to economize by a
schedule of working rules and condi-
tons now in force as a heritage from
the period of federal control and up.
held by the railroad labor board.
These conditions are expensive, UNI
economic and unnecessary from the
point OF view of railroad operation
and extremely burdensome upon the
public which pays the bill This
schedule Of wages and of working con-
ditions prevents the railroads from
dealing equitably with their variety
of local considerations which ought
to control wages in different parts OF
the country. The railroads are seek
ing to have these rules and working
conditions abrogated.
The railroads will seek reduction
in wages now proposed by first re-
questing the sanction of the Railroad
Labor Board. The railroads will pro-
coed with all possible dispatch, and
as soon as the Railroad Labor Board
shall have given its assent to the re-
duction of wages the general reduction
in rates will be put into effect.