Evening star., 1925-03-01
RAILROADS IN YEAR
SAVE S1,271,O)O,0(l)
Western Lines Point to Big
Economies Over Federal
Operating Expenses.
BY the Associa ted Press.

CHICAGO February 2S.-The West
ern railways committee on public
relations announced today that in the
five years ending today since the
Government turned back the railroads
to their owners from the wartime
administration, a saving in operating
expenses of $3,473, 900 a day, or total
saving OF 81, ,271 900, 900 in the year 1924
as compared to the year 1920 was
effected.
Rates have been lowered from the
high points of 1920 a total of $751;
600. 900 a year on freight alone, the
announcement said.
when the railways were returned
to private operation" the statement
said they were mourning a huge
deficit because. under Government
operation, their operating expenses
had Increased much more than their
rates had been advanced. Soon after
private operation was resumed a
largo advance in wages was granted
by the Railroad Labor Board. This
in turn was followed by large
advance in freight and passenger
rates which was Put into effect by the
Interstate Commerce Commission at
the end of August, 1920.
THE Government guarantees of
net return, which under the trans
portation act continued during the
first six months of private opera
tion, were then withdrawn and since
then the railways have been operat-
ing, as before the war, without Gov
erment aid.
The most important changes dur
ing these five years have been. first.
4 very large reduction of operating
expenses; second. large reductions of
rates from the peak reached in 1920;
third Improvement in the physical
condition of the properties and in the
freight service rendered, and fourth,
financial rehabilitation of most roads.
Total operating expenses in the
year 1924 were 81, ,271 900, 600 less than in
1920, a reduction OF S3,473, 600 a day. OF
this reduction less than 80 per cent
was due to reduction in the annual
wages of railway employees. which
averaged $3.50 in 1920 and $3.50 in
1924 About one-third of 1t was due
to reduction in the number of en-
ployes on the pay roll, which averaged
242 900 less than in 1920. The rest of
the reduction in expenses was due
TO increased efficiency in the consump-
tion of coal and decline in its price,
decline in the prices of materials and
age to freight, and SO on. Meanwhile
railroad taxes increased from S2S1,-
COO 900 in 1920 to $344, 100000 in 1924.
The reduction in expenses effected
ts shown to be even larger than the
foregoing figures indicate. if com
parison be made between the statistics
for the last four months of 1920, when
all railway costs were at their very
peak, and the last four months of
1924, when, as in the same period Of
1920, the railways were handling a
record breaking business. In the last
four months of 1920 operating eX-
penses were S16,900,000 a day, while
in the last four months of 1924 they
were sl2.600,000 a day, a reduction of
$4.3u0.G00 day.
The reductions of rates made since
they were advanced to the highest
level IN the latter part of 1920 have
amounted to 1857 900, 600 annually on
freight business and $26.00O,000 year
on passenger business. a total of
$3.50. 900, 900.
THE reason why the reductions of
rates have been less than the re-
ductions of operating expenses is to
be found in the financial results of
the carriers. 1t was assumed by the
Interstate Commerce Commission
that the advance in rates granted by
II in 1920 would be sufficient to en-
able the railways to earn enough to
pay their operating expenses and
taxes and have d net return of per
cent on their valuation. In the lat
ter part of 1920 and throughout 1921,
however, the net return earned was
only about as per cent, or approx
nately S1.500,o00 a day less than it
had been assumed the advance in
rates would produce.
Earnings Are Increasing
Meantime, the financial results
gained by the railways have been
petty steadily improving" the
statement continued. I'm 1921 they
earned about 3.33 per cent on their
valuation; in 1922, Ala per cent; in
1928. $50 per cent, and in 1924, sos
per cent.
In the first two months of the
present year, which concludes the
period of five years since the rail-
ways were returned to private oper-
alton, the volume of freight has con-
tinued, as in the latter part of 1924,
to exceed all previous records Car
loadings have averaged almost 90O,-
600 a week, or about $4,000 more
than in 1923. Encouraged by the
large actual and prospective busi-
ness, and by the more satisfactory
return being earned, the railway
arrangements have a program of i'm
provements which, if carried out,
will result in the investment of ap-
proximately $1,000, 100000 of capital
in their properties this year.