The New York herald., 1922-05-25
ORDER SURPRISES
RAIL EXECUTIVES
Also Received With Little En-
thusiasm and Some Misgiv-
ings Regarding Effect.
ATTACK RATE OF RETURN
Kruttschnitt and Loree Doubt
Whether So Per Cent.
Is Sufficient.

The Interstate Commerce Commits
sion's rate decision was received with
little enthusiasm by local railroad
executives. most of whom had hoped
that the commission would wait until
the Railroad Labor Board had reduced
transportation wages or else would con-
fine any reductions made in advance 10
basic commodities, such as coal, IRON
ore steel, coke and building materials.
Some surprise was expressed that the
announcement was made prior to the
conference of a committee of railroad
executives and the commissioners. which
was arranged for to-day, following
President Harding's dinner to railroad
executives on Saturday.
Frederick d. Underwood. president OF
the Erie Railroad. said 1t was lmpos-
sible prior to the receipt of the full de-
cision to estimate the resulting loss In
the annual freight revenues OF the
railroads, and that the Association OF
Railway Executives. in which more than
95 per cent. of the countrys railroad
mileage Is represented, would probably
call a meeting of its members before
May 81 to determine this point and
decide whether the carriers would
voluntarily effect the cuts proposed
NNA
by the commission.
Julius Kruttschnitt, chairman Of the
Southern Pacific, said 1t was difficult to
conceive of the railroads voluntarily
curtailing needed revenues and thereby
shifting from the commission to the
railroads the responsibility for a pro-
gram which would be forced upon the
carriers IL they do not accept volun-
tarily.
Regarding the fixing of 5% per cent.
as the rate of return on railroad prop
erty investment! Mr.. Kruttschnitt said
that "in comparison with what other
corporations are permitted 20 earn 1t Is
a question whether this figure Will at
tract additional investment capital as
the Transportation act intended" He
added that the conclusion could not be
escaped that IL the railroads cannot at
tract capital they will not be in POSI-
tion to give good service.
I'VE must necessarily compute the
difference between the rate cuts whicn
we already have instituted and the
amount contemplated by the commits
sion's announcement before an estimate
can be made as to the ultimate effect"
he said.
L. F. Loree. president Of the Delaware
and Hudson Company. expressed doubt
~
of 5% per cent on their property valua-
tior under the existing freight rates and
was certain they would not be able to
do it under the reductions decided upon
by the commission. He declared that
even per cent. WOULD not be a high
enough return on the tentative property
valuation of the country's roads, since
that figure represents their value in
1914.
II. e. Byram, president of the Chi
cago. Milwaukee and st. Paul Railway,
expressed the opinion that announce.
ment of the commissions conclusions
ends the usefulness of the committee
headed by Daniel Willard. president of
the Baltimore and OHIO. which is to
meet the commission to-day.
"We hope and expect that the labor
board will grant material reductions in
pay and to the extent that body does
grant these reductions will depend how
much the loss in revenue by freight
rate reductions Is offset" said Mr..
Byram. There have been some state
ments that a rate reduction would in
crease the movement of>traffic The
fallacy of this has been proven in the