Evening star., 1937-11-07

statement said. including the period
OF great general prosperity, the net in
| come of the railroads, available for
interest on debts. dividends to stock
holders and improvements to their
properties. averaged less than 4 per
cent on their investment. There was
small chance, under those conditions,
to retire Indebtedness or to accumulate
reserves for the depression years which
were to come, even had the stock
holders during the good years fore
gone entirely any dividends upon their
stock. There was no boom for the
railroads"
Some will not agree that this is an
accurate picture of the carriers as a
whole, holding in instances that un-
wise financial policies were more 10
blame than adverse business condi-
tions for the evils besetting them.
About % per cent of the total
mileage of the country now is under
reorganization or receivership, and
but 40 Of 141 class roads are on
any sort Of dividend-paying basis.
The mortality has been particularly
heavy in the Midwest, but there are
defenders of those railroads who as
cribe this to the constant cutting in
rates on agricultural products.
Whatever the record of the lines
has been in the past, however, paying
interest and dividends on inflated
railroad capital need no longer be
feared" according to Jesse H. Jones.
head of the Reconstruction Finance
Corp, which in five years has loaned
to the railroads about s733 100000 Of
which 1881 100000 has been paid back.
THE water has all been squeezed
out" Jones told transportation meet
ing in Chicago this past week, when
he praised the forward steps the car
riers have taken but at the same time,
questioned the wisdom Of banker
domination"
Earning Rate Low.
The C. c. said practically the same
thing In the last rate proceeding, in
explaining that If the valuation of
the class roads was put at no more
than $18,000,000, ,000-and it believed
this too low-the carriers were earning
less than 4 per cent. The roads figure
the income rate even less than this,
calling 1t a little better than 2.5 per
cent.
The new rate case undoubtedly will
stir wide opposition and at the same
time bring about renewed agitation
for reconsideration of such economies
proposed in the past as consultations.
elimination Of duplicate services and
facilities, and coordination, despite
the fact that these have run into
snags because they always spelled but
one characterization in the manpower
that Is responsible for so per cent or
more Of railroad expense. That ave-
nue. for improving conditions was sug-
gested by Jones in his Chicago speech,
and more is likely to be heard on the
same subject.
But any remedies that are put for
ward will have to consider more than
commercial competition, for in the
long run the cost at which an indi-
vidual is able to furnish his own
transportation Is going to regulate the
price he will pay for the service.
Federal legislative policies haven't
been any help TO the carriers either,
taxation having been felt severely.
The levy on surpluses hit so hard
that the I. c. C. was moved to protest.
There always is the shadow too Of
labor-sponsored employment bills. An
outstanding example of these is the
measure to limit freight trains to 10
cars, which already has passed the
Senate. Railroads estimated the leg
islation would add $100,000,000 or
more annually to operating costs.
In seeking the new rates, the roads
described their plight as having
reached the crisis" stage.
That does not appear To be open to
Argument.