Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-12
Expert Says Present Condi-
ton of Carriers Affects
Every Citizen of US.
BILLIONS ARE INVESTED
IN VARIOUS SECURITIES
Further Reduction in Earning
Power Would Be Calamity,
He Believes.
Special Dispatch to The Star.

NEW YORK, July 1.-THE depres-
sion in the United States cannot be
lifted until something is done to relieve
the railroads, declares F. j. Lisman,
New York authority on railroads and
railroad economics and securities. 1t
Is problem that touches the pocket Of
every citizen, he says.
II confidence could be restored among
the enormous number Of people who
hold railroad securities, so that they
would spend their current income, 1t
would make big difference in business.
AS 1t Is these people are conserving
their income for fear of what may hap
pen to their investments.
Railroad securities form the back
bone of America, being held by savings
banks, insurance companies, trust funds,
etc. Should these investors become
panicky and start serious liquidating
movement 1t would strike a disastrous
blow at the countryS financial struc-
ture. Mr.. I.isman pictures that should
the railroads be permanently placed in
a position where they cannot earn more
than they are earning today there
would be such Shrinkage OF security
values that railroad stocks would be
practically wiped out.
Extent Of Investment.
The railroad problem is OF even more
immediate interest to the American
public than the present involved inter-
national tangle. The railroads need
the public and the public needs the
railroads, Mr.. Lisman declares. He
continues:
AT the moment the international
| debt question looms large in the eye of
the public in all countries but the total
net amount involved is approximately
only one-quarter of the total investment
| in the railway system of the United
States-that is, in the neighborhood Of
S23 900 100000, on which during the
current year. possibly not over 2 per
cent will be earned.
While most people are confident that
the present business depression is tenn
porary, some seem to think that trucks
and BUSES are going to cut further into
railway earnings. At any rate. 1t is
certain that in order to conserve the
capital invested In railroads something
constructive must be done
If the railroads should be perma-
nently unable to earn not more than
the barely per cent which they are
earning now. after having earned about
5 per cent during the five-year period
ending with 1929. then the market ap-
praisal of the capital invested in rail-
road securities will be reduced accord
ingly; 1t will shrink to somewhere be-
tween $4,000, 900 900 and $4,000, 600, 900,
or perhaps even more which means the
wiping out of practically all railroad
stocks and the shrinking of bonds owned
by savings banks. insurance companies,
corporations. estates and individuals,
whose purchasing power will be i'm
paired accordingly.
Object Of Rate Plea.
1.-THE railroads have asked for IS
per cent rate advance not in the ex-
pectation that they will be able to en-
force such an advance on every COM
modify. The public seems to think that
the railroads will have smaller earnings
if such an advance were enforced. but
the public does not realize that the rail-
roads merely ask for permission to
raise the rates Is per cent on every
thing because in the meanwhile, as
promptly as possible, they want to study
the effect of a rate advance on each
separate commodity, because they Ger
tainly do not want to put on higher
rate than the traffic will bear.
But if the railroads cannot earn
fair return they cannot continue to
maintain their property to serve the
public as efficiently as they do. They
cannot transport the products OF Cali
fornia to the Eastern markets WITHIN
few decades ago would have oeen
thought of as preposterously low. After
people get used to modern 1aclntles
they take them as a matter OF course,
Just as the present younger generation
finds it difficult to imagine the Worlo
without telephones. not to mention elec-
trio light, gas, matches, steam tralns'
etc.
THE railroad system has developed
DC continuously
necessary, which Is evidenced by the Iact
that even in the poor year OF 1881 the
steam railroads are still carving ap-
proximately nine tons Of freight one
mile every dav for every man, woman
and child in the country for the sum OF
l cent per mile or about cents per gay
per person. If this traffic wer2 carried
on the highways it would take a very
long while to get the freight over tns
congested highways into the CUES ano
there would not be room Tor any Quiet
vehicles
"The bulk of our Eastern trunk lines
are carving approximately somewhere
over 10000 tons of freight every DAY
in the year for each and every mile OF
their main and branch lines at the nom
inal cost above mentioned. some maIiI
lines are hauling as much as l6u.UoO
tons each day per mile OF line, winch Is
equal to about l25 tons every s-coiio'
Public Needs Railroads.
Capital invested in railroads is equal
to one and one-half times the present
debt of the United States Government
Many people can visualize what wouio
happen to lots of investors II the oon-
cations of the United States Govern
ment were to become worthless; the re-
suit of railroad securities becoming
worthless for lack of nourishment woulo
be the same.
THE old talk about railroad securl-
ties bcing watered has been proven m
correct by the physical valuation which
the Interstate Commerce Commission
has carried on now for years; also ny
comparison of the capitalization per mile
of our railroad system with those OF tne
various countries in Europe-and IN
many other ways.
"The public cannot get on without the
railroads and the railroads cannot get
on without the public. Congress regu.-
lates the relations between the two and
has delegated this power to the COM
mission with a mandate that the rail-
roads are entitled to fair return, which
has been fixed at So per cent, and that
Transportation rates should be f1x1d &C
cordingly.