Evening star., 1937-01-17
RAILS SEEK PERMANENT
BASIS FOR PROSPERITY
Carriers Look to Congress, Public and
Own Selves to Evolve Way to Keep
Income Increases.
BY ]. A. FOX.
= UST about getting heads above
water and able to take a deep


~ the depths. the railroads are
looking about hopefully for something
better to use as life preserver from
here on in.
The past IL months have been pretty |
good to the industry that not so long |
ago was displaying moribund tenden-
cies. The upswing that started in
1888 has been maintained and gives
every sign of continuing. There has
been some help from without, and
the roads have done much on their
own account. But there also have
been some Setbacks, and there could |
be more.
The problem facing the railroads
Is the ve15 common one of getting
money. In the darkest days Of the
depression. leaders were insisting that
the industry was not suffering from
any ailment that a pickup in busi-
ness could not cure: in other words,
that rail transportation had not been
outmoded. But even with increas-
ing revenues, the financial position as
a whole leaves much to be desired.
This was very pointedly brought |
out by Interstate Commerce Commits
sioner Frank McManamy in dissent
ing last month from the commissions
refusal to continue emergency freight
surcharges, which had been netting
the railroads about $120,o00,000 an
nually.
He said:
THE records show that more than |
28 per cent Of the total railroad mile |
age in the United States is now in |
the hands Of trustees or receivers, |
1t is also shown that during the first !
eight months of 1886 almost one-half |
OF the total class l railroad mileage |.
in the United States failed to earn
fixed charges even by including the
emergency charges. and that without
the emergency charges class l rail-
roads would have failed by more than
S60000,000 to earn their fixed charges
during the first eight months of
1886"
Freight Rate Raise Asked.
That source of income, of course,
Is gone. and, while the commission
has under consideration an applica-
ton to raise basic freight rates, the
proceeding will take some time before
any decision is reached-and it NAV
be unfavorable then. The best, there
fore. that the industry can hope for,
in the meantime. is that the reduced
tariffs will bring corresponding traf-
nc boost. Jesse Jones, head of the
Reconstruction Finance Corp, which
has a $3.50, 100000 stake in rails, is one
who thinks that will happen.
While reports for the year are not
yet available, preliminary studies in
! dicate that the railroads had net
operating income for 1886 of S645 .O00.-
600, a return of 2.51 per cent on prop
erty investment, according to John j.
Pelley, president of the Association of
American Railroads. This is approx
mately Sl45, 900 900 over the 1885 net
and nearly doubles that for the low of
1882. 1t represents, however, only
about rs per cent of the operating in
come in 1880, the first year of the
depression, and is slightly more than
half of the record breaking billion
and-a-quarter return of 1929 That
drop represents the inroads of COM
petition, and has been ACCOMPANIED
by more pronounced reduction in net
income, which is put at Sl50,000, 900
4 for 1886. This latter. however, COM
/ pares with less than $4,000. 900 in 1885.
and deficit nearing sl7,0O0,0oO in
| 1884, and illustrates how far along
the carriers have progressed on the
! comeback trail.
Estimates Unavailable.
| Because of the many factors that
must be taken into consideration. any
estimate Of rail income this year
would seem to be no more than a
guess. Far more definite is the pros
pect that the industry is to be called
on for larger expenditures.
/ There is move afoot among rail
workers for a general pay increase.
The Big Four" train brotherhoods
and the Switchmen were the first to
start turning over the idea, and more
is going to be heard about it from
others.
There are. too, several pieces of
expensive legislation supported by the
organized workers through the 81
unit Railway Labor Executives Asso-
citation. Principal among these are
the sixhour day bill, whose cost is
variously estimated from S400 900 900
to $600.000,0 900 annually; the train
limit bill, to prescribe length of trains,
and the full-crew bill to require as
signment of additional trainmen un-
der certain operating conditions. The
combined price tag of the last two
runs around $225 900 900. bringing
the trio within hailing distance of
the billion dollar mark. These latter
measures are designed more to make
work" than anything else, for rail Ia
Dor has been badly slashed in the past
few years, although employment now
is moving up.
1t is hardly conceivable that legis-
lation of such sweeping character
would get by. unless the Government
is ready to give thought to nation
alizing the railroads, and the BROTH
erhoods themselves are cool to this
principle that they once supported.
But, anyway, the threat is there.
Joseph B. Eastman, ultra-lberal
member of the Interstate Commerce
Commission, argued strongly against
the make work" theory in a recent
address to the Academy Of Political
Science in New York. And though
his leanings are pro-Government-
ownership. Eastman contended it was
! inadvisable at this time.
Hope for Employees.
1.-THE best hope that employees can
have for a transportation system that
will continually employ men lies In
one which will. through better service
and lower costs and prices, contin-
ually build up the volume of busi- |
ness" he said. 1T does not lie in
artificial means of making more work,
I