Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-24
RAIL CHIEFS BOW
TO RATE DECISION
Carrier Interests Declared
Optimistic Over Verdict of
Government Agency.
BY CHAS. p. SHAEFFER,
Associated Press Business Writer,


An unmistakable air of optimism
seems in some instances to be gradually
replacing the keen disappointment first
expressed by railroad men and bankers
after the recent decision on railroad
freight rates handed down by the Inter-
state Commerce Commission.
Sufficient time having elapsed tn
analyze the decision, there is found
much in the edict promising h~nef7ts 70
the carriers. Foremost in this cJrrec-
ton Is what they see as an unspoken
promise for better times for the to.us
in the future.
Broader Policy Expected.
One railroad official declares that the
fact that any increase allowed by the
commission at time of such low in
dustrial activity and price levels as the
present is an admission by it that rail
carriers are an indispensable factor in
the economic life of the Nation. This
beng true, 1t was argued that a broader
administrative policy with respect to
the transportation act of 1920 would
possibly result from the present emer-
gency to enable the rail carriers to
build during prosperous times surplus
10 1au back upon during the periods of
lean activity.
Under the transportation act railroad
officials aver, the carriers are not nor
mltted to share in prosperous times
with other industries, beng restricted by
law to a fair" return. It is held sig
nlncant that at no time since passage
OF the act have the roads, as a group,
been able to earn this return. Cur
rently, they are operating at an annual
return OF slightly more than 2 per cent.
one OF the purposes of the act was
70 protect railroad credit Yet the
present rate Of railroad return. railroad
men contend, makes it impossible for
the carriers to offer prospective in
vestors the necessary degree of safety.
In New York, Massac husetts and other
States the law does not permit the in
Vestment OF funds of savings banks
and trustees in rail bonds unless the
earnings of such companies have. for
consecutive period of time, been
sufflclent to meet the amount of fixed
charges with certain definite margin
OF safety. Under this law failure of
any carrier to earn the fixed charges
for two consecutive fiscal years auto
matically makes its bonds ineligible for
a period Of at least six years even
though the earnings record is maintain
ed without interruption, both before
SAA3 oACCA lAIc lNO-yedT lapse.
Rate Increases.
AS for the decision itself, certain rail-
road officials believe the rate increases
allowed on petroleum furniture and
other class commodities will return the
carriers considerably in excess of the
500 100000 to S125,000,000 estimated
by the commission. They place this
excess as high as S750000O0 a year.
Another official said the roads would
undoubtedly pare their operating costs
through elimination of duplicate pas
senger train service and by cutting down
on the frequency of Improbable pas
senger schedules between important
cities. The run between New York and
Washington was cited as an example
It was estimated by this official that
an additional s1OO,00O000 could be
saved through this channel without
impairing passenger traffic efficiency.
Contrary to first expressed opinion.
there seems little doubt in well-informed
circles here that the carriers will &C
cept the pooling phase OF the decision.
1t would be good business in the first
place, it was said. and secondly. it is
believed banking interests affiliated with
the roads will insist on it.