Perth Amboy evening news., 1923-07-07

WELLESLEY HILLS NoSs'
| 7:-Roger w. Babson is optlmlstlc
over the condition of the raliroaos'
| even tho he is not bullish on ran
road stocks. He insists that the ran
roads are making more money tnan
they have made in a n tnae
business should get the penent VI
this money before long. Mr.. 5
authorized statement is as 1olloWs'
whatever may happen to the
stock market, the fact, neVertneless'
remains that the railroads are max
ing money, in fact, more money
than they have made for years. The
two hundred leading oad shoulo
report for the last month, tor wnlcn
we have available figures, about
$3.50, 900, 600 gross comparedG with
about s45O.0 900. 900 for the ncorres-
bonding month of last year, thus
showing an increase of over a nun
dred million. Two thirds or TINS
has been eaten up by operating ex-
penses, but about forty million Is
left as an increase of net. During
the month of May, 1928, 4,S7S,421
freight cars were loaded compared
with 3,841,6S3 freight cars during
May, 1922. The loading figures for
Iun SUOW d h1CalCI AAASA SSA9Ns
this is remarkable and a similar sit
Lation has seldom happened before
in the railroad world. This means
that over a million freight cars are
being loaded a week.. 1t therefore
sows that when the present area of
| business reimbursement is completed
and we are ready to enter a period
of real prosperity. the railroads are
liable to break down as they will
be unable to care for the country's
business. One wonders if the Inter-
state Commerce Commission or the
politicians of the country realize this
serious condition. The number of
freight cars should be increased as
the normal line of the Babsonchart
runs upward. The car loadings nat
urally huctuate with the hills and
valleys of the chart, but the num-
Der of freight cars in existence
should increase as the normal line
of the chart increases.
"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 oil
very bad weather conditions. Rail
road men tell me hat this is the
worst spring, from a railroad point
of view. hat the railroads have
ever experienced. Even during April
the northern part of the country had
severe snow storms, while the south
ern part suffered from floods. The
cold weather over the entire coun-
try, during April and May, greatly
reduced buying. OF course, the rail
roads had an increase in rates, but
this increase took place more than q
year ago. There has beer a de-
crease in rates and an increase il
wages since the blanket increase two
years ago. On July first, last year
the Interstate Commerce Commits
sion put into effect a cut of 10 pei
cent on most commodities except
grain, which was cut 16h per cent
January l, 1922. In addition to this
here have been many other reduc-
tions of rates. When comparing the
net earnings of the railroads witt
four years ago, we must allow fol
the increase in rates; but the forty
million dollars a month increase in
net earnings, which the railroad.
are now making compared with g
year ago, has developed with a de-
rease in rates.
Railroad stocks usually go with
the market irrespective of the earn
ings. When we are In a bull mar
ket, all stocks go up; and when we
are in a bear market, all stocks &C
down, irrespective of merit, althc
the better stocks go down less thar
the poor ones. Therefore, / do not
wish to say anything relative to the
future action of railroad securities
on the stock exchange. 1 do, how.
ever, wish to emphasize that the
railroads are having about forty mil
lion dollars a month more to spend
for labor, equipment and supplies
than they had at this time last year.
When n takes into consideration
the increased maintenance charges
this means hat the railroads should
have this wear five hundred million
dollars more to spend than they had
last year. Seven Fights of this
should go into general business.
cannot make the bears see this. They
point only to politicians and talk