Evening star., 1923-07-07
BY ROGER w. BABsoN.

Special Dispatch to The Star.
WELLESLEY HILLS, Mass, July Z.
-Whatever may happen to the stock
market, the fact remains that the
railroads are making money; in fact,
more money than they have made for
years. The 200 leading roads should
report for the last month. for which
we have available figures, about
S55o,o00,000 gross, compared with
about s450,o0o.000 for the correspond
ing month of last year thus showing
an increase of over $1Q0,0O0,000. Two
thirds of this has been eaten up by
operating expenses. but about $40,-
100000 Is left as an increase of net
During the month of May. 1929,
compared with 3.s41.6s3 freight cars
during May, 1922. The loading fig-
ures for June show a greater in
crease.
Truly this is remarkable and a
similar situation has seldom happen
ed before in the railroad world. This
means that over 100000 freight cars
are being loaded a week. 1t there
fore shows that when the present
area of business readjustment is
completed and we are ready to enter
a period of real prosperity the rail-
roads are liable. to break down. as
they Will be unable to care for the
countryS business. One wonders If
the Interstate Commerce Commission
or the politicians of the country
realize this serious condition. The
number of freight cars should be in
creased as the normal line of the
Babsonchart runs upward. The car
1oadings naturally fluctuate with the
hills and valleys of the chart. but
the number of freight cars in exist
ence should increase as the normal
line of the chart increases.
Railroad Handicups.
This improvement in the railroad
situation has developed without any
special reasons. The country has
been enjoying for the past few
months a small intermediate area of
prosperity AS this was not a real
area of prosperity. one can readily
imagine what will happen when the
real area of prosperity comes.
Furthermore, these earnings have
come about during a period of very
bad weather conditions.
Railroad men tell me that this is
the worst spring. from a railroad
point of View, that the railroads have
ever experienced. Even during April
the northern part of the country had
severe snowStorms, while the south
ern part suffered continually from
floods. The cold weather over the
greatly retarded buying. OF course.
the railroads had an increase in rates.
but this increase took place more
than a year ago. There has been a
decrease in rates and an increase in
wages since the blanket increase two
years ago.
On July last year the Interstate
Commerce Commission put Into effect
a cut of 10 per cent on most COM
modities. except grain. which was
cut 16ha per cent January 1. 1922.
In addition to this there have been
many other reductions of rates.
When comparing the net earnings of
the railroads with four years ago
We must allow for the increase of
rates; but the s40.0O0.0O0 a month
railroads are now making. compared
with year ago. has developed with
a decrease in rates.
Wall Street Viewpoint.
Railroad stocks usually go with
the market, irrespective of the earn
ings. When we are in bull market
all stocks go up, and when We are
irrespective of merit, although the
better stocks go down less than the
poor ones. Therefore I do not wish
to say anything relative to the fu-
ture action of railroad securities on
the stock exchange.
l do. however. wish to emphasize
that the railroads are having about
40.000.000 a month more to spend
for labor. equipment and supplies
than they had at this time last year.
When one takes into consideration
the increased maintenance charges.
this means that the railroads should
have this year 10000, 900 more to
spend than they had last year.
Seven-eighths of this should go
into general business. l cannot make