Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-27
CARRIERS SHOCKED
BY |. c. c. ATTITUDE
Commissions Stand Likely
to Result in Petition Being
Filed at Once.
BY CHARLES r. SPEARE.
patch to The Star.

Special Dispatch to The Star.
NEW YORK, May 27.-The rather
curt reply of the Interstate Commerce
Commission to the informal request
for a general investigation into the
railroad situation in the United States
on the initiative of the commission was
somewhat of humAiation to railroad
executives today. 1t does not, however,
close the door to direct application
on their part for a horizontal increase
in freight rates.
This is what is now likely to be
done The method of procedure was
under discussion today at a second
conference in the past week of the
committee of executives headed by
President Pelley of the New York. New
Haven g. Hartford, appointed to deal
with this most important of all rail-
road matters at the present time.
1t was believed that the commission
would be willing to proceed with an
investigation on its own motion, pre-
ferring this course of action to a di-
rect request from the carriers. Appar-
emily the attitude of the majority
members of the commission and some
of the minority. who exert a powerful
influence on the majority. was misun-
derstood There was at least no
equivocation in the statement just an
nounced by the secretary OF the COM
mission on one method Of procedure.
Petition Now Likely.
What the railroads are likely to do
now is to petition for horizontal in
crease in freight rates, which they deem
necessary in order to preserve their
credit and to prevent many Of their
y,,a,toona hov1dc dPOY1pinO ont IF the list
Of those legal for savings banks and
trustees 1t is believed that adjust
ments in rates could be made even on a
horizontally changed rate structure that
would not inflict injury to shippers
whose products have been greatly de-
preciated in value and also in other
cases where the imposition of higher
rate than now prevails would obviously
throw traffic into such competitive
channels as motor truck and water
lines.
1t was pointed out today that in the
crisis of 1920 the commission was able
to analyze the railroad situation and
come to a conclusion that an increase
in freight rates was a necessity within
two and one half months of the time
of the filing of the application. II
such a request Is now presented to the
commission, it weIlld be possible to reach
a decision late in the Summer. If an
increase were granted, the benefit OF
it would apply in part in the final
quarter of 1881.
The need for an increase is fully ap-
parent in the number Of railroad divl-
dens that were reduced last week. fol-
lowed by the omission of the dividend
on Pere Marquette common stock to-
day and the postponement for further
evidence of satisfactory earnings pc
fore additional payments are to be
made on Boston s6S Maine common
stock. The income of the roads that
have reported for April shows a net
operating decrease of about Is per cent.
This is rather more than In March. 1t
has been foreshadowed in the decreases
in car loadings in the past month.
Those OF the last two weeks have shown
20 per cent shrinkage compared with
a year ago and are now below the level
previously reached last November.
Significant Reports.
Some OF the most. significant April
reports so far published are those OF the
Pennsylvania, ST. Paul, Missouri Kan
sas-Texas: Chicago & Northwestern,
New Haven. Erie. Northern Pacific,
Frisco, Chesapeake & Ohio and Union
Pacific. The Pennsylvania last month
had decrease in net operating income
of about SIS per cent In the first four
months of the calendar year its oper-
ating income has fallen of more than
so per cent. Compared with 1929, the
reduction amounts to over So per cent.
The st. Paul has experienced so per
cent reduction in net operating income
in the past four months. Missouri
Kansas-Texas in April had deficit
after interest charges of $217,594. The
New Haven shows up much better than
other Eastern lines with a net operating
income loss last month of about IL per
cent.
Erie earnings were Gin the red" in
April. The Northern Pacific on gross
income Of S5.246.076 showed net of
less than $4,000. The Frisco had a
surplus after charges in April, under
$4,000 on gross business Of over
S4,800,000. Chesapeake & Ohio, which
has just declared its regular dividend,
had surplus, after charges, of $1,5l0,-
BIT, or % per cent shrinkage from the
year previous. The Union Pacific had
its April operating income cut down
about so per cent. However. neither it
nor Atchison, Norfolk g. Western and
Chesapeake g. Ohio, whose regular divi-
bends are at the rate of $40 a share,
need consider for some time any con-
cession in these rates to the present
period of low railroad net profits.
Copyright, 1912