The daily independent., 1937-04-01
Rail Roads Stage
Great Come Back
Freight and Passenger Business the Best
Since 1880. But Carrier Shares Are Still
Only 20 Per Cent Above 1888 High
By ROGER W. BABSON

Babson Park, Fla, March 81
1887. Railroad, freight and pas
senger business is today the best
since 1880. For the first time IN
six year.. this gigantic national
industry is operating N black INK.
Interest in rail stocks since the
New Year has lifted their value 20
to Is per cent. Yet. at these high
er levels. carrier shares are only
30 per cent above their 1888 highs
while industrial ctockS are nearly
double their peak of four years
ago. In view OF the current inter
est in rail problems, I have pre-
pared a "balance-sheet" OF the
industry:
CURRENT ASSETS" flavor
able short-term factors:
D BUSINESS EXPANSION.
Those pessimiStS who did not be-
heve the rails could ever come
back are amazed by todayS freight
and passenger traffic. There is no
miracle to it, however. General
business could not double in four
wears without the railroads ultl-
mately recovering good part OF
their traffic loSSec. Consequently.
carloadingS are now running 90
per cent above early Spring oi
1898. and 20 per cent above last
April.
~ CAPITAL GOODS BOOM.
SHIPMENTS of important freight
items such as coal, ore. and mis-
cellaneouS goods depend largely
upon the volume of business in the
capital goods industries. The lat
ter. after tagging for three years
of the recovery, have sprung Wig
orously to life. Poor crops would
offset these gains but the first
normal farm year since 1882 now
SEEMS III pIOSpSSI
81 LABOR PEACE. Walk-out-
at the steel mills and in the coal
fields could give the carriers q
rude setback. For instance, steel
operations are within shouting
distance of their all-time peaks.
Coal, the principal energy produc-
er for steel mills and other capi-
tai goods makers brings in 80 per
cent of the average roads reve-
nleS. Hence, the probability Of a
peaceful renewal of the coal-labor
agreement and the cleaning up Of
the steel-labor controversy are a
real boon to the carriers.
az NEW PENSION PLANS.
Fear of the heavy costs of the
Railroad Retirement legislation
enacted last year has been weigh
ing down rail securities for some
time. Recently. however. the
management got together with
Railway Brotherhoods. This agree
ment will save the carriers mil
lions every year through the
elimination of overlapping pri-
pate pension systems. Moreover,
the threat of new retirement leg
isiation and costly court reviews
seems to have ben avoided.
&C RENT LIABILITIES"
tunfavorable near-term factors) ::
ID SURCHARGE REVENUE
LOSS. The 10 per cent emergency
freight SurchargeS which the car
riers were allowed during the de-
preston were dropped off on jan
JIary l. This means that 1887
traffic will have to be more than
10 per cent above a year ago to
make up for the cut in rates. As
matter Of fact. the loadingS gain
for some roads so for during 1887
has more than offset the surcharge
loss. However, some of the lest
rates will probably be restored.
~ WAGE INCREASES. Labor
leaders are asking for an increase
of 20 per cent in wages. This ad-
vance would boost the carriers
annual labor bill by an estimated
S400.000.000. InaSmuCh as the
total net income CT the entire in
duStry in 1885 was only S17O,OOO.-
900. it is easy to see that such an