Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-13
PROMPT RELIEF FOR RAILROADS
DECLARED NATIONAL NECESSITY
Prof. Ripley, Authority on Transporter
tion, Analyses PHI ht of Carriers and
Explains Results to Follow.
BY PROF. WILLIAM z. RIPLEY.
.cial Dispatch to The Star.

BY PROF. WILLIAM Y. RIPLEY.
Special Dispatch to The Star.
NEW YORK. july 13.-The action Of
the railroads Of the United States in
asking the Interstate Commerce Com
mission for IS per cent increase in
their freight rates presents a many
sided proposition, with all sorts of lights
and shadows.
Such an increase would, of course,
place an added burden upon ship
pers. They would at once proceed to
shift 1t on to the consuming public
From every point of view 1t Is a matter
OF grave national concern
The livelihood of nearly 1000, 900
employees. including their families. de-
ponds upon it. Every holder of a life
insurance policy or savings bank
them-will be affected by the outcome
For life insurance companies and saw
ings banks have about four billion dol
lars invested in railroad bonds.
There Is evidently more to this than
merely taxing the general public to up
hold the. property of 1000 owners of
railroad shares.
Relation TO Prosperity.
The Immediately broader significance
of the proposal arises from its relation
to the revival of industrial prosperity.
Ing that respect it somewhat resembles
President Hoover's plan for a year s
truce in the settlement OF the war
debts.
The United StateS-the world, even
is begged in a dreadful economic mire.
This is in part an aftermath of the
war. But it is also psychological phe-
nomenon. And group of people. a
nation. an industry, once again SPEND
ing normally spreads its helpful infiu-
ence like the rings round a stone
thrown into q pool.
The railroad industry. second only to
agriculture, normally dispenses nearly
81, 900 000, 900 a year for current opera
wages. 1t is expended also for every
conceivable commodity, from steel rails
to stationery. Each of those things in
turn gives employment IN the making.
In addition, the railroads spend on
the average $750,000,0 01 a year for i'm
provement and extensions. Since 1920
they have paid even billions for such
additions TO their property.
But for the last two years these rail-
roads have had two-fold burden. The
general depression has nit them. along
with everybody else. And on top of
that they have been peste-ed with a
phenomenal set of adversit.es. Buses
and trucks, upon governnlentally i'm
proved highways, have made terrific
inroads upon their most lucrative traf-
fic-that valuable part which alone can
bear relatively high rates.
Waterways Competition.
Then along came State-sabsidized
waterways. These filch the loW-grade
heavy tonnage. the steady old standby
of the railroads.
Pipe lines then made their appear
ance These transport petroleum, ana
even gasoline, over long distances. This
was a profitable tonnage indeed. Coal
Yields fern a fifth of the revenue OF
some companies to more than nine
tenths of others. Yet every high
power transmission line and every nat
ural gas conduit displaces just SO much
coal tonnage.
Not even the sky remains clear above
the railroads. Who shall say what the
airplane may do in passenger Trans
portation in the years to come?
On land, by water, through the air
and bv the waters under the earth
come these troubles. seemingly with
out end. and almost overnight.
The upshot of it all is a loss of reve-
nue which is downright devastating.
The net operating revenue of the Amer
lean railway has dropped So per cent
within less than two years. But It IS
not dividends upon stocks which are
put into Jeopardy. They disappeared
some time ago in many cases. 1t Is now
the interest upon railroad oonos winch
is endangered.
ANY business may operate for time
without paying dividends. But the
failure TO earn interest upon borrowed
money means the utter collapse Oh
credit. Nothing in this world Of chance
and change stands still. Men. cor
porations. nations, grow from year to
year, or else they decline.
Transportation and Trade.
Especially in a rapidly growing COM
try like the United States, with its vast
extent. transportation must keep pace
with the growth of population and OF
business. This the railroads cannot
furnish unless they can raise new
moneys from time to time to finance
development.
Double tracking, identification, abo-
lition OF grade crossings, heavier equip
ment, oil-burning locomotives, all such
things press for adoption. And :he
employees have their demands. The
Brotherhood of Railway Firemen. for
example. is asking for mechanical
stokers to tighten the daily toll.
Not one of these beneficent and
necessary changes can take place
without raising new funds. Capital
does not grow on trees-it depends
upon credit That is another reason
why at this time breakdown OF serv-
ice must certainly result unless either
enc of two things is done.
Revenues must be increased; or the
costs of operation reduced.
But expenditure on materials is al
ready cut to the bone. There is only
one retrenchment possible-to cut
wages
And the cutting OF wages at this time
would lessen by just so much the spend
ing power of millions of our people.
The economic logic is seemingly in
escapable. Not selhshly then, in the
interest of the railroads themselves, but
as a matter of national welfare 1t would
appear that the permission for freight
rate increase must and ought to be
given What else can be done to save
the situation?
Crisis Is Acute.
The acute crisis in railroad affairs
evidenced by the pending application
of the railroads to the Interstate Com
mcrce Commission for an increase OF
freight rates due to the bus, the truck
and other competitions, is by no means
the first in American history.
More than one quarter of the mileage
of the country went into bankruptcy
during the panic of 1893-97. Early
this century there was another break
down, due to shortage of equipment
Grain rotted in heaps on the ground
cattle and sheep sickened and died at
the railway stations.
Service again collapsed at the out
break of the World War. The Govern
ment then took charge: but. with the
resumption of private operation In 1871
another crisis was tided over only by
the passage of the act OF 1920.
The present emergency Is different