Evening star., 1932-02-27
SHR|NKAGE IN RAIL
PROFITS IS LARGE
Operating Figures for Jam
uary Reveal Extent of
Revenue Loss.
BY CHARLES F. SPEARE

Special Dispatch TO The Star
NEW YORK, February 27.-Had the
operating figures for the month of
January been available to the Conn
mittee of Railroad Executives in their
conference with labor leaders in Chi
cago last month, the argument for the
10 per cent reduction in pay would have
been even more impressive than that
which finally won decision for the
carriers.
These statistics are now available in
the monthly reports of gross earnings
and net operating income, published
this week, and supplemented by those
of a number of important systems. It
must be confessed that they are dis
couraging to operating officials and to
those who hold railroad securities. The
net losses in many cases run well be-
yond the preliminary estimates.
For the entire year 1881 there was
a drop in all railroad gross earnings Of
about 20 per cent. The decrease in net
revenues was 80 per cent. AS business
fell OF in the second half of the year,
the monthly drop in both gross and
net increased over the average for the
II months. In October, net was off 36
per cent from the same period in 1880,
in November 81 per cent and in De-
cember 40 per cent. This last ratio of
decline has been carried into January.
The car-loadings figures that month
foreShadowed substantial gross losses.
The net results, or the amounts appllc-
able to interest charges and to divi-
dends, have been below the supposed
figures.
Under normal conditions many rail-
roads cover only part of their monthly
of fixed charges and dtW-
dends in the first quarter of the CAL
endar year Traffic Is then light; oper-
ating expenses, especially where
weather conditions influence them, are
heavy. Seldom, however, do roads in
this period show deficit after charges
This year, however, deficits are COM
mon in carrier reports. They nave
been shown for January by such lines
as the Southern Pacific, st. Louis-San
Francisco Lehigh Valley, Boston d
Maine, Texas Pacific, Mobile & Ohio,
Western Pacific, Pittsburgh & West Vir-
ginia and New Haven, those so far re-
ported. Practically all of these sys-
tens In January 1881 were able to show
a surplus, even though the amount OF
this after fixed charges was small.
During February carloadings have
been well below those of this month
last year, though percentage Of decrease
Is less than it was at the same time In
1881. Consequently, the nature OF the
final February statements will depend
largely on the effect on operating costs
of the reduced wages which began on
February l and which should subtract
about $17,o00,000 from this months
transportation costs. 1t Is probable
that this amount of monthly cut may
not be fully realized, as there have
been offsets to it due to additional
maintenance of equipment and the
agreement between the carriers and
their employees that they would return
to work as many of the unemployed as
conditions warranted.
The low volume Of traffic since the
new freight rates went into effect under
the December ruling Of the Interstate
Commerce Commission has limited the
amount Of additional compensation to
which the carriers were entitled. 1t is,
therefore, a question as to how far the
Railroad Credit Corporation will be able
to collect funds to aid the weaker sys-
TENS in paying their maturing obliga-
tions. From present indications this
burden will fall chiefly on the Recon-
struction Finance Corporation, to which
most of the applications for loans by
the carriers are now being made.
Copyright, 1922