The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1930-08-04
Thriving by Economy, the New Evil

Thriving by Economy, the New Evil
The striking fact about railway finances these days IS
that the roads are trying to make money not by IN
creased business but by the Benjamin Franklin prlhclp'e
that a penny saved is a penny earned.
If the roads did not buy bigger locomotives as te
Northern Pacific is doing, cut the pay rolls by decreasing
the operating personnel as others are, discontinue small
stations and in other ways add to the general depres-
sion that loss of Jobs is inflicting on the country, their
balance sheets would probably very generally show IN the
red.
There was q time when the prosperity of the country
was measured by the prosperity Of the railroads and the
steel mills. The roads are not a barometer OF prosperity
at this time, rather they show the drawbacks associated
with efficiency, sterilization, overproduction ana the ne"
creed that the way to prosper is to put machines IN the
place of men and let the human element look out Tor
itself-a situation that is going to require a new code OF
economic and social philosophy and an adjustment which
is staggering the minds of industrialists and statesmen
trying to frame it up.
The Railway Age has been dealing with the facts of the
situation recently, without working out the problem
which presses not only on the roads but upon the entire
national industrial and business complexity. 1t has called
attention to the striking contrast between the staustlcs
of the railways for the two years 1921 and 1880, in which
they have suffered most severely from the effects OF bus
mess depressions since they were returned to private
operation.
Complete statistics of earnings and expenses OF Glass
1 roads for the first five months of 1880 show" says the
Railway Age, that during that period they had gross
earnings only IA per cent greater than in 1871, and MADE
the smallest percentage of return on their property in
yestment that they have in any year since 1921, although
they actually handled 81 13 per cent more freight bust
ness than in this part of 1921, and 26 per cent more than
in 1922. The very small difference between gross earn
ings in the two depressed years 1921 and 1880. in spite
of the much larger freight business handled in the latter
year, illustrates strikingly the effects upon gross earn
ings that have been produced during the last nine years
by losses of passenger business and reductions of freight
rates.
Excepting the difference in the volume of freight
traffic, relatively the greatest difference thus far between
the two years 1921 and 1880 has been that in operating
expenses. In the first five months of 1880 operating e-
penses were s245y 600, 900 less than in these months of
1921, a decline of 1913 per cent, in spite of the much larg-
er freight business handled. Operating expenses in the
first five months Of 1890 were also 1913 per cent less than
in 1923; 9 per cent less than in 1924; 81 per cent less
than in 1925; 9 per cent less than in 1926; go per cent
less than in 1927; So per cent less than in 1928, and 60
per cent less than in 1929. Total earnings were 1872 per
cent less than in 1923; 81 per cent less than in 1924; 6
per cent less than in 1925; 98 per cent less than in 1926;
1o4 per cent less than in 1927; 81 per cent less than in
1928, and ia per cent less than in 1929. Freight bust
ness was So per cent less than in 1923; 80 per cent great
er than in 1924; almost l per cent greater than in 1925;
54 per cent less than in 1926; 9 per cent less than in
1927; AZ per cent less than in 1928. and 101 per cent less
than in 1929. That the decline in total earnings since
1923 has been relatively much greater than the decline
in freight business has been, of course, due to causes
previously mentioned-namely, losses of passenger bust
ness and reductions of rates.
In the first five months of 1921, although total earn
ings were about the same as in the first five months OF
1880, the railways earned net return at the annual rate
of only about 2 per cent, and in the entire year 1921 net
operating income was hardly sufficient to provide for
total fixed charges. In the corresponding part of 1922 net
return was earned at the annual rate of about 3.75 per
cent, and in 1880 at the rate of 1868 per cent.
The outstanding fact which all these figures make
plain is that the railways are now being saved financially
by the great increase in efficiency of operation which
they have been making year after year, and which is now
enabling them, although they are paying the highest
wages in history, excepting in 1920, to operate with ar
economy that otherwise would be wholly impossible"