Evening star., 1932-02-18
HUGE SAVING SEEN
IN RAIL MERGERS.
Finance Expert Says Roads
Would Benefit at Least
$500,0OO, 900 a Year.
~ the Associated Press.

Dy the Associated Press.
PHILADELPHIA, February Icon
eolidation would save Americas rail-
roads not less than $500,000,000 a year.
DR.. Edward S. Mead, professor OF
corporation finance at the University
of Pennsylvania, told the annual
Wharton Alumni Institute OF Business
today.
ber of the Interstate Commerce Com
mission, and F. j. Lisman of the IiSman
Corporation, New York, also informed
the institute huge savings could be
made by consolidation and cO-opera-
ton. and urged action to that end.
Dr. Mead presented the results Of
research of DR.. Julius Grodinski OF the
department of corporation finance ana
investment of the Wharton School.
which predicts the eventual necessity
of consolidation if the railroads are to
continue as corner stone Of the finan-
cial system.
Estimates Made.
The research lists specifically $284,-
100000 possible annual savings, and
estimates other savings not now
susceptible to accurate statements at
sufficient to bring the total to $780,
100000 and probably more.
Dr. Mead said tna laI.l = S. va
had been built on the thesis that it was
q transportation monopOly. IN Tie 4e.--
of the automobile, truck, waterway,
airplane and pipeline competition, the
railroads are not a monopoly and stand
to lose still more business to these new
competitors if steps are not taken to
cut costs incurred through inter-
railroad competition and duplication.
Fostering of railroad competition, DR..
mead said, has probably been made
obsolete by these other industries
Among the savings listed with some
Hegree Of accuracy" to total 1884 600, 900
were the following:
Fifty million dollars through the
Abandonment of small roads with light
traffic volume, now existing because OF
the competitive anxiety OF the strong
roads to obtain a profitable haul on the
long lines.
One hundred and seventy million
dollars through the abandonment OF
23,Oc0 miles of road maintained by large
system branches for competitive rea-
sons.
Five million dollars through elimina-
tion of leases on 10000 miles, passing
the title of the leased roads directly
to regionally consolidated system.
Fourteen million dollars through as
signment of $1,000 miles of small roads
TO large rOaQS, eliminating otpdidtc
corporate structures.
These savings" said DR.. Mead, Tex
tensive as they are. are not the most
important. The major savings, arising
from the elimination of unnecessary
and extravagant competition, would be
obtained through the union of terminal
facilities and the movement of traffic
over the direct non-congested and the
lowest cost rail routes of the country
If we add to these known savings
other economies, whose precise amounts
cannot be estimated, but which are
known to be large-such as the more
effective utilization of equipment, the
consolidation of terminals. the eliml-
nation of circuitous routing, the con-
solidation of passenger and fast freight
services. the elimination of freight and
passenger solicitation, the co-ordinated
distribution of equipment and malnte-
nance, and so on-the total saving Will
easily reach the estimated s500,000, 900.
which amounts to per cent OF
S1O,0O0,0O0,000
Sees Rate Reductions.
"If it could be realized. all question
of the solvency of American railroads
would be removed. The railroads would
be placed in a position where they
could finance the many necessary i'm