Evening star., 1932-07-10
Special Dispatch to The Star.

CHARLOTTESVILLE, Va, July g.
The railways can come back again,
and can and will aid greatly in our
economic recovery, if the American
people, through their National and
State Governments, will give them a
fair chance" declared Samuel o.
Dunn. editor of the Railway Age and
chairman of the Simmons Boardman
Publishing Co., in an address here be-
fore the Institute of Public Affairs of
the University of Virginia. IF they do
not come back and aid in ecofitS.s2
recovery. 1t will be because the Ameri-
can people do not show enough in
telligence to give them fair chance,
continued Mr.. Dunn.
After two years of ruinous wartime
yernment operation, it was pre-
dicted that they could not come back
under private operation. But they did,
and under great difficulties, during the
decade ending with 1880. improved
their service and increased the efficiency
and economy of their operations as
much or more as in any decade IN
their History. There are spokesmen Of
some other industries, the managements
of which are free from governmental
interference, who assert that one oil
the causes of the present situation OF
the railways Is that they have not
been well managed, but no other in
dustry in the country can show better
record in the decade ending with 1880.
The railways paid a slightly higher
wage per hour in 1880 than in 1920,
but meantime reduced their annual
pay roll S1,165 900, 900, and their an
nual total operating expenses S2,000,-
100000, or 80 per cent. The increase
during this decade In the investment
in railroad properties exceeded $6,-
000, ,000, 900, while the increase in out
standing capitalization was less than
2,100, 100000.
Effect of Depression.
THE railways are suffering with
other industries from the effects Of the
prolonged and profound depression; but
they are suffering worse than any
other large industry. and the condi-
ton to which they have been reduced
is one Of the principal causes Of the
prolongation of the depression. During
the depression in 1921 the lowest aver
age price of industrial stocks reported
by Dow, Jones g. Co. was $3.50 and
the lowest average price Of railway
stocks reported was 65.52 On June
27, 1882, the average reported for in
dustrial stocks was 4293, decline be-
low the lowest figure of 1921 Of "a per
cent, while the average reported for
railroad stocks was 1875, decline be-
low the lowest figure Of 1921 Of almost
30 per cent.
"The decline In the prices of railway
bonds has been comparatively as great
during this depression as the decline
in the prices of railway stocks. Bill
lions of dollars Of bonds and other
railway securities are owned by life
insurance companies. savings banks
and other fiduciary institutions, and in
consequence we see the Government,
through the Reconstruction Finance
Corporation, loaning the railway COM
paries hundreds of millions Of dollars
to save them from insolvency not,
however. for the benefit of the rail-
ways themselves, but to prevent heavy
losses to holders Of life insurance
policies and depositors in savings
banks.
"If the present condition Of the rail-
ways was due only to the depression,
like that Of most industries, they could
reasonably expect, on the revival of
general business, an increase in their
traffic which, with the economies in
operation they have effected. would
enable them to earn a fair return upon
their investment and thereby make
both their stocks and bonds valuable
again. The reason why the railroad
industry Is in worse condition than any
other Is that it has been for years sub
jected to stupid. unfair and economi-
cally unsound Government policies;
and the reason why it may fail to re-
cover as business begins to improve Is
that the threat Of continuance Of these
policies hangs over 1t like a pail. The
American people are today paying an
awful price for having for almost a
quarter century. and especially during
the last IL years, applied National and
State government policies which, If ap-
piled long enough, would ruin any IN
dustry however well managed, and
which at last have worked the virtual
financial ruin Of the railroad industry.
Couzens' Prediction.
"Some startling predictions regard
ing the railways have been made dur
ing this crisis. Senator Couzens Of
Michigan, chairman Of the Senate
Committee on Interstate Commerce, for
example, has predicted that when the
depression has passed 1t will be found
that railway common stock has been
rendered valueless and that $4,000
600, 900 out of the total of 26,000 ,000,- :
600 Of their investment will have been
lost because the equivalent Of that
amount in physical property will have
to be abandoned and destroyed That
there Is serious danger of this Dredic-