The New York herald., 1922-01-08
Physical Condition Permits
Operation for Half Year on
Reduced Upkeep.
NET EARNINGS PICKING UP
Chief Anxiety Caused by Doubt
as to Strength of Labor in
Wage Contest.
II AIRING unforeseen contingencies

- and looking forward for year
during which railroad traffic,
wages. freight rates. charges for con-
Quoting transportation and expenditures
for upkeep OF roadway and equipment
underwent substantial reductions, there
holds greater promise for the steam
transportation industry in the United
States than did 1921.
Despite deferment of more than
$1,000, ,0OO, 900 worth of maintenance, the
physical condition of the railroads gen.
orally is good enough to permit of
operation for another half year If nee
essary on reduced expenditures for
upkeep. A few exceptional properties
are known to be in better condition
physically than ever before in their his
tory.
Although the losses in traffic incl
dent to the general business depression
have been heavy and the low level to
which tonnage fell in November may be
expected TO continue throughout the
early part of 1922. cheapenng labor
costs in transportation and other in
dustries and the prospect for revival
OF business warrant the supposition that
the gross and the net earnings of the
railroads will be better than those of
1921. particularly in the second half.
year.
Yet the transportation situation Is
not without it's uncertainties. 1t re-
mains to be seen. for example. how stout
Will be the resistance of labor to fur
;her liquidation of its wages. Arrival Of
that dispute at it's climax before the
United States Railroad Labor Board
about March 81, 1922, the date on which
the wage agreement of the coal miners
will expire, might set the stage for a
walkout in two of the nations basic in
dustries
Rates may prove another source of
insecurity. viii demands for lower
rates follow every sign OF Improvement
In railroad earning power or will the
cry for decreases subside with a better.
ment in general business? Certain it is
that some rate readjustments will re-.
suit from the fact that slack business
has permitted agents of industry and
commerce to give extraordinary atten.
ton to such small items of operating
costs as transportation.
Roads Gain in Year.
The pressure to cut rates is greatest
when the carriers most need revenue
because of their failure to pile up sur
p'uS III tHico VI plenty. IHdt Tie Tdll-
roads are thus without means to tide
themselves over lean periods Is due
mainly to Governmental regulation and
its delays
In broader aspect it Is increasingly
apparent to the unbiased student OF
railway affairs in this country that
there will be no return to anything like
the great profits of bygone days unless
II distinct public reaction sets i'm against
strict Governmental supervision. AT
present few important steps affecting
the users, employees or owners of rail-
roads can be taken by transportation
officials without Federal sanction.
The war and the period Immediately
following brought Federal management
OF railroads and subsequent expansion
OF the powers of the Interstate Com
merce Commission and tho creation Of
the United States Railroad Labor
Board. accelerating a movement in that
direction even then under way. But
it Is established historically that in
flated Governmental power is an after
math of war Perhaps it is not too
much TO hope that that power will yield
to deflation along with more obvious
clements i'm the economic organization
As for the more Immediate aspects
OF the situation, ii is seen that rail-
roads bettered themselves In 1921 in
nearly all respects except physical con-
dition. Their wage bill, the largest item
Of operating cost. was about S2,750,-
900 900 for the year. in marked contrast
TO s3.69S, 100000 in 1920. On the nor
NAL scale of employment it Is esti-
mated that the annual railroad pay
roll was cut $700.000,000 in the course
Of the year just closed. OF that
amount $375,000,O00 represented the IL
per cent. wage cut effected July and
the balance in savings through revised
working rules and increased efficiency.
In contrast to 62.264,421 in net earn
ing in 1920. net operating railway in
come to be reported for 1921 probably
win reach a total slightly exceeding
5000. 900. 200. applying to fixed charges
of about s475.00o,000. Owing to the
large carryover of grain from the pre-
ceding years crop, the so-termed
Granger roads generally Jared much
better in point of net earnings than did
those carriers the major traffic cf
which was I'm coal. steel. coke and manu-
featured products.
Merger Plan Not I'm Effect Yet.
The drawing up OF the Interstate Com
merce Commissions plan for consolida-
tion of the country's railroads into nine
teen systems has not developed any
tnlnE OI DnpOitdhtC. ibS oiSOuooioh
scarcely can result in a final plan until
tho transportation act OF 1920 shall
have been given fair trial under normal
conditions and until the earning power
oe the several railroad properties shall
have been proven. Before these things
arc accomplished most railroad execu-
tives will remain reluctant to have the
financial structure Of their properties
disturbed through mergers.
Designed to relieve the drain on rail-
road working capital the Townsend bill,
permitting the funding Of debts owed to
the Government for capital expenditures
made during Federal control. did not
rass the Congress in time to be OF bene-
Mt. and so has been scrapped.
The turn OF the year finds the rail-
roads preparing to effect an average re-
duction OF 1914 per cent. in the rates
on shipments OF hay, grain and grain
products In tho trans Mississippi ter
ri.ory and voluntary reductions OF 10
per cent. on many other farm and
orchard products in practically all sec
tions OF the country.
Further rate revisions VIII be made
r. as and when the United States Rail-
road Labor Board grants new wage re-
auctions. The machnery necessary 70
bring before tho board applications FOR
wage cuts averaging 10 per cent, cal
culated TO pare down the yearly pay
roll between $500, 100000 and $500. .ooo.-
II