Evening star., 1935-11-06
EXTRA COSTS ADD
. TO RAILWAY WOES.
$379,500,0O0 Imposed by
Economic Planning Hit
Roads and Patrons.
BY DAVID LAWRENCE.

Passengers on American railroads
Who wonder why the fares aren't re-
.cuced, shippers who frown about
freight rates and colleges and univer-
stiles and savings banks that own
railroad securities and wonder why
their interest charges aren't being met
will be interested in some figures just
completed that show something of the
new burdens that face rail transpor-
tation systems.
Here are the items which may be
attributed directly or indirectly to
economic planning" or in some re-
spects lack of it, artificial control.
and legislative interference whereby
the Government has encouraged costs
about to be imposed on the railroads:
Increased wage rates restoration Of
10 per cent deduction), $l60,000.000.
Increased prices of materials and
supplies go per cent?. S125.000,000.
Increased Federal income tax 1884
basis, S2O00.O00
Tax for unemployment insurance,
1886, S16,O0000O
Tax for special railway pensions,
$54,000,000.
Increased cost of coal (Guffey acD,
22.500,0Oo
Total, S379,50O 900.
The above bill will increase in 1887
to 1895, 100000, and to SAIL 500 900 in
1888, due to increases in the tax rate
for unemployment insurance.
The foregoing does not include the
cost to the railways Of their own
pension systems, which are not cred
ited to them in the new railway pen
sion bill and which cost them in 1884
about $36,200,000.
1t may be asked how the increase
in wages may be attributable to Gov
.ernment. The railroads are no longer
free agents in the negotiation of the
cost of labor. They are virtually COM
PEELED to accept demands of organized
groups or face the pressure of a leg
islative bloc which is already arguing
for Government ownership of rail-
roads.
AS for the pension legislation, this
Is distinctly the responsibility of a
Congress in which the labor men have
a substantial majority through their
pressure groups back home in the
election districts.
" The increased cost of coal due to
the Guffey act is another result of
pressure group legislation. The in
creases in the prices of materials can
be traced to the administrations en-
couragement of higher prices through
the N. r. A.
All in all it is not surprising that
an the first eight months of this year
"a out of 95 flrst-class railroads failed
by sl24,0o0,000 to earn their fixed
charges. The entire net income of all
the railroads is not enough to absorb
these increased burdens and pay the
security holders a fair return on their
investment, unless, of course, there
is some way of giving the railroads a
larger share of the freight of America.
The Government has subsidized
freight carriers on the highways
through furnishing the roads at no
cost to the motor carriers. So also
have the inland waterways and the
Panama Canal been a source of much
irritation to the railroads. because the
water and motor carriers haven't had
to face the same burdens. The latter,
of course, will have to pay unemploy-
.ment insurance. but they do not face
an increase in the fuel supply costs
such as do the railroads. Also the
special pension legislation, added to
already existing pension systems, pre-
sents tangle which Congress is going
to be asked to straighten out at the
next session.
The railroad problem grows worse
as the extra costs are added on from
year to year. The advocates of Gov
eminent ownership are happy because
the situation in a sense plays into
their hands. But the taxpayers of the
country who face the payment Of
these heavy annual charges and
others of political nature, if the
Government is compelled to take over
the railroads, may not be so happy
when they begin to learn what the ul-
innate cost of transportation is going
to be. Such costs will tend to rise if
minority blocs in the electorate ac-
quire further control Of a majority of
Congress in the one business which is
distinctly interstate and over which
= the Federal Government has by con-
stitutional Interpretation been given
jurisdiction.
: Already the railway labor organiza-
: tions have set up an Office in Wash
/. ington to lobby for Government own
: ership of railways at the coming ses-
= sion OF CAnQrPSS