The New York herald., 1922-03-12
satisfactory Improvement in
Earnings Predicted for Years
Second Half.
EFFICIENCY INCREASING
Restoration Of Fair Relation
ship Of Rates and CommOd-
ity Values Needed.


the financial community in the latter
half Of last week to contemplation OF the
business outlook for the carriers and
furnished evidence of the growing con-
viction that 1922 was not without prom
ise for that branch OF industry.
Backward views of a year OF shrunlSen
1rosS receipts, postponed maintenance.
partial liquidation OF labor and lowered
and passed dividends are still to come
IN the publication of annual reports for
1921, the probability being that the
Pennsylvani Railroads report will lead
off In two or three weeks. The dis
position of bankers and railroad exec
utives, however. is to regard last years
results as water over the dam, and be-
cause Of the helpful attitude evinced by
the Administration and other Govern
mental agencies to find in problems con-
fronting the railroads no essential diff
ference from those facing industrial and
commercial corporations.
Slow speed business recovery and the
seasonal fluctuation of freight tonnage
make it practically certain that the first
six months of 1872. will be a period of
lean railroad earnings, but there is ex-
celent basis for the prediction that inn
provement in its second six months will
render the years net railway operating
income satisfactory as a whole. In
creased efficiency on the part Of labor
and operating economies, effected
through reduced costs for labor, fuel and
materials. VIII contribute to that result.
Many roads of course face difficulties
peculiar to themselves through restricted
crops, curtailed industrial operations
and making up of deferred expenditures
for upkeep of roadway and equipment.
New EngIand's Struggle.
With trunk lines wagng legal battle
against the Interstate Commerce Com
missions order, the financially pressed
New England carriers face a lively
struggle in their efforts to obtain an
increase of revenues from interchanged
freight. Only q few more fortunate
transportation companies have been able
to keep their rolling stock and tracks In
adequate repair and their tonnage at
fair levels because of widely diversified
traffic Probably the greater part of
the country's transportation system,
however. will experience no serious diff
ficulty in struggling through another
half year on reduced maintenance.
Substantial issues affecting the roads
operating incomes and expenses are to
be settled. Virtually all competent and
unbiased authorities now recognize the
need OF restoring fair relationship be-
tween freight rates and values OF COM
modities. Pending applications OF car.
riers for q 10 per cent. reduction in
wages of their employees represent the
view OF roads that carrying charges,
now admittedly too high, should be re-
duced. with corresponding cuts in rail-
road payrolls.
Railroad executives hope that at the
conclusion OF the rate hearings in prog
ress before the Interstate Commerce
Commission the Natter will find itself
in accord with that view. Meanwhile
the collapse of regional conferences
held in the attempt to negotiate agree
ments with national union leaders. in
sures that the wage dispute. embracing
all classes OF railway workers, ulti-
mately will be decided by the United
States Railroad Labor Board In Chicago.
Wage situation.
Evidence in support OF the contention
that lower living costs and going rates
of pay now being paid by non-transpor-
tation industries justify the elimination
OF the remainder OF the 22A per cont.
general wage increase awarded in 1920.
about 12Ja per cent. of which was wiped
out as of July ], 1921, Is being
placed before that body. The granting
per cent. asked for would cut between
$500. 100000 and s4oO.0Oo,OoO off the annual
cost Of railway operation. That the
board will authorize a general decrease
averaging or 6 per cent Is the pres
ent guess of certain authorities at least
two or three months in advance of the
time when announcement of the decision
may be expected.
The danger that the railroad wage
controversy would come to head before
the board around the time the coal
miners wage agreement expires, thus
setting the stage for possible walkout
in two basic industries on April /, has
passed. Unusually large purchases OF
coal by the carriers within the last six
weeks indicate that in the event of a
minevs' strike the roads would be sup
piled with extra fuel enough to provide
motive power for fifty or sixty days 1t
Is now certain, moreover, that the pre-
sentation OF evidence in the dispute be-
fore the board will consume another six
weeks at least.
There are other questions besides
those of wages and ratos which win play
q part in the effort to renabilitate the
railroads. Not the least of these is the
effect of that clause in the transporta-
tion act of 1920 requiring carrier
than per cent on its property valua-
tion TO give up to the Government half
Of that excess. sums so obtained 10 form
a contingent loan fund for the benefit
OF weaker roads.
The recent acquisition OF control OF
the Glover Leaf by the Nickel Plate in
terests and the reported opening of ne
gotiations looking to a merger OF. the |
Ann Arbor Railroad with the Pere Mar |
uuette Indicate that 1922 may see i'm |
portant railroad consultations. Major
moves In that direction, however |
scarcely can be looked for until the In |
terstate Commerce Commissions tenta-
tive merger plan be translated into final !
terms. probably not without important |
changes, and until various carriers have /
had opportunity to prove their earning |
power under the transportation act or I
1920 and more nearly normal business /
conditions.
The long view Of the Transportation /
situation brings other facts into bold |
relief: namely. that railroads are not l
keeping abreast Of growth IN other in /
drstrics, that there is less railway mile /
age IN operation than there was five I
years ago. that q car shortage would re- \
suit NJ the event Of sudden upturn \
In business, that tracks, rolling stock \
and terminal facilities, not to mention /
new extensions, require an expansion or /
will soon demand 81 and which roads
have not the money or credit to provide. 1
That the easement OF money has somc- /
what bettered their positions is appar-