The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1923-06-19
reflect
PROSPERITY
Of TRADE
Have Shown Pre1-
erence Recently for Road
Securities.
By MERYLE 8. RUKEYSER,
Copyright, 1919. by Star Company ana
Disfributed by Cosmopolitan News

by MENxLE y. HOhEACss
Copyright, 1919. By star Company ana
Distributed bys . cSs%oD0li'an S'"'
NEW YORK, June 19.-The grow
ing prosperity of the railroads 10
phase Of good business.
Railroads earnings and loadings
reflect current trade in Its last
phases. They indicate what Is occur
ring rather than what lies ahead.
The recession in trade since the
peak DAYS of March has been prl-
marily in forwards buying and III
prices, rather thanfin current activ-
ity. In May, for example. according
to recently published figures, the De.
mand for workers-the human eie-
ment in manufacturings-was at the
maximum.
Spectators have recently been
showing q preference for railroad Sc
curities rather than industrials-and
for good reasons. However. after
the long neglected railroad securities
have been brought In line, It VIII be
well to remember that industry and
transportation prosper concurrently
and that the essential test In the
future status OF the nation 10 trade.
AAANp00 AOGNSN<S 0NA~pS
In the statistics Of railroad earn
ings and expenses for April the
latest available, the roads al O whole
earned 81 per cent on their property
value. April was the most prosper
GUS month since the war.
The good times were shared some
what uneQually. The strong car
riers prospered more than the weak.
The systems OF the East and South
Jared better than the roads Of the
West.
The key which explains the dis
parity 10 primarily In business cen
ditions. As the Railway Age points
out, trade in the Central West ana
Northwest has not been az favorable
as in other parts Of the country,
because grain products have been
cheap In terms OF general commodity
prices. The purchasing power Of the
wheat farmer has been curtailed.
Another factor, with which western
roads have had to confront, has been
the competition Of the Panama
Canal, especially In products NOV
ing westward. To meet the situation,
western roads, during q time OF ris-
ing costs, found 1t necessary to make
successive rate reductions.
at the rate of 4.52 per cent annually
on property value, and 4.13 per cert
for the first four months. Eastern
carriers earned at the rate of 7.03
per cent in April and 6.31 per cent
during the first four months. The
southern roads earned 7.18 per cent
in April and sos per cent for the
first four months.
So IL Fair Return
In the first third OF this year the
Eastern and Southern roads earned
more than the fair return which
congress authorized in the Transport
tation act OF 1920. The Interstate
Commerce Commission at present de-
fines So per cent on property value
as fair return. All earnings in ex.
cess of six per cent must be divided
equally with the government. If the
present rate of earnings continues
through the year some of the strong
eastern roads will have to divide up
with the government. For the most
part, the question Of division of ex-
cess earnings has been held in abey-
ance because the Interstate Com
merce Commission has only placed
official valuations on a handful OF
the roads.
Persistence Of high earnings will
lead to discussions Of rate reductions.
Good earnings have not yet Of course
lasted long enough to offset the In
adequate profits from the time Of the
passing OF the Transportation act up
to the present day. In 1922, the
roads as whole earned Ala per cent
on their DroDeYfv valIIa