Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-29

siderable loss in net operating income
as compared to April of last year. The
Baltimore 81 Ohio road, for example,
has reported that its net operating in
come for April was $l,954,587 as COM
pared with $3,132,732 for April year
ago, or a decrease Of $1,l78, 14o.
In the face of these conditions 1t is
I'D to the railroads and to the Govern
ment, which regulates the roads, to con-
slider what steps may be taken to re-
lieve the situation for the roads as lar
as possible.
The whole country Is interested In
the fate of the railroads. AS an in
dustry they are second only to agrl-
culture. What affects the railroads af-
fects scores Of other industries. They
buy. for example. IS per cent OF the
coal output of the country, and APP
proximately the same proportion OF
steel and forest products. In round
numbers the railroads employ directly
800 900 workers throughout the coun-
try. though the number has been cut
now because of the depression and the
need for curtailment. There are about
a million owners of railroad stocks and
another million owners OF railroad
bonds.
When it was reported that the rail-
roads were about to ask for increases
in freight rates all along the line as
step toward rehabilitation, there was
immediate reaction, most Of which was
unfavorable. The argument was ad-
vanced that the proposed increases In
freight rates could only injure business
and the farmers at such time. 1t
was argued, too, that the roads instead
of increasing their business would lessen
it and actually their returns might be
lower than If the present rates were
maintained.
The railroad executives the country
over have by no means been unit 10
support of the proposed freight rate
increases. Many of them have been
cutting rates where they thought 1t ad-
visable to meet the constantly 1ncreas-
ing competition Of other forms OF trans ans
portation, including moor trucks, pipe
lines, air carriers and Water transpor-
tation. They felt that to reverse Their
policy Of making cuts to meet this com
petition would be silly to say the least
Protection Is Sought.
However, with greatly decreased reve-
nueS. the railroad companies ana tneu
executive officers are fearful that rail-
road securities may take q furtnei
tumble. In such event, not only woulo
it be difficult for the railroads to re-
finance and to issue new securities
when necessary. but there would be a
question whether the big insurance
companies and trust companies could
continue to hold or to buy railroad
securities. In some quarters, 1t Is said,
the present demand for increases In
freight rates has been urged upon the
railroad executives, particularly by the
holders of railroad securities, includ-
ing the insurance companies.
In 1890, net operating income OF the
railroads showed q decline OF 500 per
cent from the net operating income
for 1929. Big reductions in operating
expenses prevented the reduction In
net income from being far greater. The
total operating revenues Of the roads
fell OF in 1880 more than billion
dollars. The total operating revenues
they had shrunk to S.. 1887, 046.
This was a decrease of Is per cent.
The roads cut their operating expenses
from $4,460 1886, 432 in 1929 to $685.
781, 785, or $685., 054,697, and the total
net operating income shrank from ST.
274, 595, 403 to $685., oil 1926.
Decrease Is Large.
The figures for the first three months
al 1891 SklOW corresponding 0CNASccOo
as compared to the first three months
Of 1880. In the first quarter Of 1881,
the total operating revenues were ST.
078,680,914, as compared to $l,332,555,-
118 in the same quarter Of 1890. The
total operating expenses, however,
dropped from $1,038,845,711 to $751;
779,852. The net railway operating in
come for the first three months In 1881
was SLOT, 1906, 44S, as compared to $176,-
542,8 for the same period in 1890, a
decrease Of 393 per cent. The rate Of
return on capital investments for the
railroads of the United States for the
year 1929 was 4.95 per cent, in 1890,
$3.50 per cent. Comparing the rate of
return to the first quarter In 1880 and
1881, It IS found that in 1880 the rate
was 3.48 and In 1881, 2.07. This ire
mendous reduction in earnings of the
railroad explains clearly the agitation
now underway among security holders
For an increasA n 6eight Tat6R,