Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-18
DROP IN RAILROAD
EARNINGS is SEEN
Banker Cites Factors Tend
ing to Reduce Incomes
This Year.
Dispatch to The Star.


NEW YORK, August 18.-The rail-
roads of the United States will fail to
earn the statutory return-that is, 534
per cent on their valuation-by nearly
$500, 000, 900 during 1890, in the opinion
of F. j. Lisman, railroad banker, who
believes that the best that can "rea-
sonably be looked for by way of rail-
road earnings for 1891 is recovery of
one-half the loss of 1880 compared with
1929"
Elements in Picture.
Mr.. Lisman cites the following ele-
mentS of weakness and strength in the
railroad picture as it is projected today:
-. The constant whiting of the
rate structure, brought about to a large
extent by the railroads themselves for
competitive purposes.
p. The further loss of passenger
business. In 1929 there was some hope
that this loss was going on at a dimin-
ished rate; during 1880 it is going on
at an increased rate, although this is
partially due to the general decline in
business and pleasure travel.
%. Loss of profitable, as we'll as I'M
profitable !. C. !. and carload freight
business to highway competition.
a. In the on-producing regions the
loss not only Of crude oil, but also the
forthcoming loss of the much more
prontable traffic IN gasoline owing to
pipe line competition.
IS. The continuing consolidation and
coordination of various industries
which win gradually eliminate wasteful
competition among themselves and thus
reduce the amount of competitive cross
shipments. For example, the various
| manufacturers of meal and other cattle
feeds are endeaVoring less and less to
compete in territory not strictly tribu-
tary to their localities. Another ex-
ample Is the result of recent important
consolidation in the soap industry.
g. Further possible loss in certain
commodities or in reduced rates, owing
to Government subsidized waterway
competition.
-. Coal traffic is likely to further
! decrease with the growing competition
! not only from hydro-electric develop
| ment, pipe lines carrying oil, but pipe
lines carrying natural gas which are
under construction to practically every
city Of 100000 population or more, with
the exception of Boston, Rochester, N,
Y; Providence, Washington, D.. c.;
Minneapolis, Seattle and Portland, Greg.
g. With very few exceptions. rail-
| roads have not learned to merchandise
transportation. RailroaG. in general
and the traffic departments in particu-
lar have not drawn much new blood
| from the outside. and the traffic depart
mentS largely suffer from ingroWn men
talities. Most of the traffic men started
| railroading when transportation sold it
| self, To quote from pamphlet written
| by w. H. MansS, former railroad officer
now living in Chicago: Most traffic
men grew up when they had a sellers
/ market for transportation and do not
know how to adjust themselves to pres
ent conditions. where railroad transport
tation must be marketed or disposed OF
to consumers against various competi-
, tors: in other words to a buyers mar
ket.' Many traffic men do not even
! thoroughly know the geography Of their
| own country!
Railroad Solicitors
THE railroads have solicitors or,
| what in mercantile parlance are desig-
mated as order takers They do not
have statesmen. Very few Of these So
licitors' trouble themselves with the de-
tailed problems of the men on whom
they call: neither are they prepared tc
make constructive suggestions to them
They think they have done their duty
when they call frequently, ask whether
they are getting their share of business
whether the service Is good and leave 9
few cigars.
Work in the railroad traffic depart
ment should have big appeal to young
college men, because in such depart
nent, If properly run, they cannot only
learn about the movement of traffic
where the different products originate
and how they are distributed. but i
brings them into contact with practi
cally every line of business and tn,
problem Of every producer and distrib
utor. Somehow this appeal has no
been brought to the college men at all
| One wonders why.
-. The most important of ALL
/ fact, probably more important than al
/ the other items together-the railroad
suffer from coWardice in dealing witt
: the shipping public. They lack tn
1 backbone not only TO hold UP and :
5 raise rates wherever possible, but ais
to insist that the cost of large items Q