Evening star., 1931-04-04
HUGE SUMS SPENT
TO IMPROVE ROADS
Pennsy's President Explains
Efforts to Overcome
Business Slump.

In his general remarks in his annual
report to the Pennsylvania Railroad
stockholders, Gen. w. w. Atterbury,
president, said:
, Notwithstanding worldwide depres-
sion, the railroads during the past year
havee actively endeavored to protect
the countrys welfare against the un-
wholesome effects of disturbed financial
and business conditions by proceeding
actively with programs of large capital
expenditures to improve and expand
their facilities and equipment, and to
establish higher standards Of service
! and safety.
These expenditures amounted to ap-
proximately $9o0,000,000 in $780, and
for the eight years, ended 1880, in
volved the large sum of almost $1,000
/ 000, 900. The net return to the rail-
roads for 1880, however, was only about
3.4 per cent upon their investment in
road and equipment less than in any
year since 1921, and contrasting with
per cent In 1929.
During this eight-year period the
average return was approximately A.
per cent per annum, which Is far below
the moderate return of 5A per cent
fixed by the Interstate Commerce Com
mission for rate-making purposes under
the provisions of the transportation act.
These low returns are clearly inadequate
If the railroads are to have that sound
basis of credit necessary to attract suffi-
cient capital to enable them to con-
tinue and expanding their plant and
facilities.
Railroad Service Kept Up.
"The railroads are among the largest
customers of the industries the mines
and the farms, and occupy most inn
portant place in our social and economic
structure. BY extraordinary efforts, in
the face Of the keenest competition,
they succeed in rendering the best
transportation service the country has
ever enjoyed.
"It is of paramount Importance that
the Nation and its industries receive
the best and most economical forms
of transportation. The railroads have
no complaint as to any form of service
that Is a legitimate and natural
economic development, but intelligent
consideration of the railroad situation
should result in such legislation and
regulatory relief as will assure them
economic equality Of opportunity to
profitably engage in all kinds of trans
THE railroads are doing their part
to meet the situation as it exists and
will continue to do 80 with undimin-
ished vigor and vision. They are the
fundamental and basic transportation
agencies Of the country, and all other
forms of commercial transportation on
the highways, airways and waterways
should be co-ordinated with them to
provide the maximum Of service.
Operation Expenses Cut.
"The worldwide industrial depres-
sion, with its large reduction in pro-
duction and consumption and conse-
quent unemployment, severely affec led
the traflc and earnings Of your COM
pany. The downward trend in busi-
ness became more pronounced as the
year advanced, with no improvement
at the close Of 1880, and the financial
results were In sharp contrast with
those of the preceding year. The oper-
ations, however, were conducted with
efficiency and economy. and substantial
reductions were affected in operating
expenses.
'There is a vast difference in the
extent to which operations of railroads
and industries can be curtailed. In
times OF depression many industries
can close improbable plants to reduce
expenses to balance more closely de-
creased revenues, thus adjusting pro-
duction to consumption. It was i'm
possible, however, to reduce railroad
expenses to Offset fully such decline
in revenues aS was experienced during
1880 without detriment to the property
and impairment of the service to the
public, since the railroads are frequent
ly required to perform service known
to be Improbable, and it is essential
that the roadway, track, equipment and
other facilities be adequately main
tanned, so that the flow Of commerce
may be uninterrupted when business
again becomes normal. The property
has been so maintained and your rail-
road is prepared to handle q large in
crease in traf1c."
Operating Ratios Compared.
The report showed q return of 379
per cent on the investment in road
and equipment of the Pennsylvania
Railroad system in 1880. This Is the
lowest return earned on the railroads
property investment since 1924.
The operating ratio of the Pennsyl-
vania Railroad, which Is the percentage
OF operating revenues required to pay
operating expenses, has shown a pro-
gressive improvement through the
eight years ended 1929.
while the ratio for 1880 is higher
than in 1928 and 1929, it is lower than
All any VI bnc otIIcI seven years, deu4
Atterbury said. This Is regarded by
your management as a satisfactory ac-
complishment in view of the unusual
conditions that prevailed during the
past year.
ITO illustrate the savings effected
through reduced operating costs during
this 10-year period, 1921-1930, the
largest gross operating revenues of
your system were in 1923, when they
amounted to $775,000, 900, or $159, ,000,-
600 greater than in 1880, but the oper-
ating expenses were $634,000, 900, or
SITS 100000 greater than in 1880, so
that the net revenue from railway oper-
attons in 1880 was S16, 100000 greater
than In 1928, Notwithstanding the de-
crease OF $159,o00,oo0 in operating
revenues !"