Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-25
RAIL WAY EARNINGS
DECREASE SHARPLY
Further Revision in Dividends
Expected to Follow Slack
Business.
BY CLAUDE A. JAEGER,
Associated Press Financial rhitnr


NEW YORK, February 25.--A SURVEY
of railway earnings in 1890 together
with estimates of the results of the cur
rent year. give some palpable reasons
for the concern of railway interests over
increasing competition from other forces
OF transportation.
Three railways have already post
poned action on their current dividends
and considerably larger increase in
traffic than now seems in prospect will
be required to insure the permanency
OF dividends on the issues of more than
half a dozen others.
Carriers Have Large Reserves.
In fact. a statistical service recently
stated that of the major carriers. only
four seem sure to earn their dividends
In 1881. OF course, earning and paving
are different things and many of the
major systems are well enough fortified
with cash to continue regular payments
to their stockholders in a lean year.
While the carriers have recently at
tanned an operating efficiency better
than ever before experienced, there is
much that can still be done to mod
ernie equipment. Railroads have clear
~ not developed as rapidly in scientific
improvement as other utilities-for in
stance, the telephone This is attrib-
uted primarily to the vast expense of
replacing railway equipment.
Railways resorted to considerable new
financing and carried out a billion dol
lar-impl ovement program in 1880, In
keeping with the program of stabilizing
employment launched early in the year.
Expenditures this year are expected to
show marked contraction. Although
two of the three leading locomotive
manufacturers reported higher earnings
for 1880 than they did for 1929. they
reported that there was extremely slim
business in sight at the start of 1881
This is despite the fact that a surpris-
lngly large portion of the locomotives
now III use are over 10 years old and
engines of much greater operating eff
cheney are now. available.
Standard Statistics, in a survey OF
the railroad equipment industry. saws
severe contraction of railway traffic
and revenues during 1880 resulted in
rapid curtailment of equipment buying
Orders for several classes of equip
ment declined in the latter half of the
year to practically the lowest levels
since 1900. Aided by rather large UNI
filled orders at the beginning of the
year, shipments of railway equipment
were quite well sustained through the
hrst half of 1880, but were substan-
TALLY curtailed in the final six months.
Restriction Forecast.
Through the first four to six months
OF 1881, We anticipate that practically
all divisions of the industry. except sig
nal installation and car leasing, will
continue to operate on a greatly re-
stricted basis
Many rail heads believe that they
must greatly modernize both passenger
and freight service if they are not to
continue to lose traffic to the automo-
bile and the motor bus and truck. But
financing to pay for these improve
ments for roads which are forced to
omit dividends is diff1cult While bond
financing is a chief source of funds,
these obligations become less readily
marketable when dividends are not paid
on stocks.