Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-30
RAIL DEPRESSION
SEEN NEARING END
Historical Record of Five
Other Slumps Shows Two
Years Is Term.
Continued From First Page.)

slant decrease. In 1880 the curve had
dropped until 1t correspondent to the
point reached in 1907. This decrease
in passenger trefiic has been traced
first of all to the privately owned au-
tomobile. and secondly TO the motor
bus operated between cities and towns.
But despite the reduction in passenger
trafic the volume of that trafhc the
it does not seem possible to visualize
the travelling public in this country
without the railroads. Indeed, the
roads are seeking by every means to
meet the competition afforded them
by the automobile and bus and even
more recently the competition al
forded by the air carrier-constantly
improving the service and speed OF
their trains.
Despite all the competition which the
railroads are now forced to meet, re-
turn Of business seems bound to relieve
the roads of most Of their present DIM
culties-difiiculties which they are seek
ing now to offset by huge reductions
In operating expenses. including curtall-
ment of labor and OUTLAWS for main
tenance, and more recently by demands
for increases In rates.
Rates Tend Down.
The railroads point out today, how
ever, that in the last decade there has
been a general tendency to lower rates.
The roads themselves have made volun-
tary reductions OF rates to meet compe-
tition of other carriers. But. on the
whole, the tendency has been toward
a reduction of rates fixed by the Inter
state Commerce Commission for the
railroads. In the year 1921 the revenue
per ton mile for freight was 1.215 cents.
This has steadily dropped until for the
year 1880 the revenue per ton mile was
1868 cents This may not appear TO
be a material reduction on hundred
tons, for example. But when 1t IS
applied to hundreds Of millions ana Dill
Hops of tons 1t becomes great.
The same reduction is found In the
revenue per psssenger-mile for that
period. Starting in 1921 with reve-
nue. of 3.086 cents per passenger-m1le
this has been reduced to 2.7l6 cents. SO
far as the freight is concerned, other
elements have entered into the lowering
return than tlle mere reduction CT
basic freight rates. There may have
been a shifting from high grade to low
er grade commodities, bringing In
lesser revenue, and there may have been
frightening of the distances the
freight was carried, bringing with 1t
reduction in the average revenue per
ton-mile. However. the railroad OF
ficials contend that there has been a
growing tendency to reduce their rates
at the instance Of the shippers, ana
that is one Of the matters they must
combat.
Taxes Are Heavy.
Another Of the factors in the present.
day situation of the railroads Is the
Federal. State and local taxes they pay.
Railway taxes in 1890 mounted to 1884,
900 600. This was decrease OF S49,-
900 900, or IL per cent, from the amount
paid in 1929, and reflects the reduced
net income Of the roads in 1880. De-
spite this reduction, the ratio OF taxes
to operating revenues rose to higher
level in 1890 than ever before, averag-
ing Sc per cent throughout the year.
This means that Sc cents OF every
dollar of railway revenues in 1880 was
absorbed by Federal. State and local
tax requirements. 1t indicates that
there was no tightening of the tax bur-
den in 1880, but rather that the bur-
den was increased.
In 1921 the railroads paid cents per
dollar of revenue in taxes. There has
bsen an almost steady rise in the ratio
since that time, and for the first three
months in 1881 the railroads paid Z
cents per dollar of revenue in taxes.
The ratio of taxes paid by the rail-
roads for every dollar of net operating
revenue shows far greater proportion
than the ratio for the gross revenue
lust given This year so far the roads
have paid 37.13 cents in taxes for every
dollar of net operating revenue. Last
year the figure was 1902 cents for
every dollar of net operating revenue
In other words, the revenues OF the
railroads have decreased, but the taxes
remain practically the same despite
the fact that there was reduction in
the amount paid for the Federal in
there is a tendency to increase local
and State taxes.
The rate of return on the property in
vestments of the roads rose gradually
from 2.84 per cent in 1921 to 4.98 per
cent in 1926, sagged to 4.29 per cent in
1927 and then advanced to 4.95 per
cent in 1929. This rate of return drop
ped off to $3.50 per cent in 1890 and
for the first quarter of 1881 1t has been
down to 2.07 per cent.
Expenses Are Cut.
Some of the railroads by drastic re-
QucClOOS III LElelT operating ChPCllsCH
have been able to show an actual in
crease in their net operating incomes
for the first quarter of this year as
compared with the first quarter of last
year. The Erie Railroad is one of these,
with a net operating income of $3,3a4,-
1863, as compared to $3,124,259 IN 1890.
The gross operating revenue, however,
for the first three months in 1891 was
only $23171 $50, as compared to $27,
229,537 in 1880.
The total operating expenses, how
ever, were reduced from $2l $685. 66 in
the first three months Of 1880 to ST.
629 ,449 in the first three months OF tn
present year. On the other hand, TIT
net operating income of the Pennsyl
vania Railroad. for example, fell from
$l9,935, 036 in the first three months o
1880 to $e,309 ,044 for the first quartz
of 1881. Here and there are a few
railroads, though not the larger ones
which actually have shown an lncreas
in both business and net income. a
| well as gross income, for the first quar-
ter of 1881, as compared with 1880.
| So far there has been no proposal Il
railroad circles for reduction in tn
wage scale. The labor charge Is tn
greatest single item in operation OF tn
| railroads, running somewhere from
| to so per cent of the total. Any ef1or
| to bring about a reduction Of wage
undoubtedly would lead to serious labe
trouble, perhaps precipitating genera