Montana labor news., 1938-05-26
By ELIOT JANEWAY

With the country lettering on the
abyss of depression, only one more
blow is needed to push economy
over. A wave of wage cutting would
bury all hope of revival in 1888 or
1889.
This blow the railroads are now
doing their level best to administer.
They are undoubtedly the chief suf-
ferers from the recession. There
fore, they should be the one group
interested in maintaining purchasing
power as the last defense against
depression. Instead, they have
served notice upon the country that
their million-odd employees are to
suffer a Is per cent wage cut in July
which will reduce their incomes by
some $3.50, 900, 1000.
At the moment, it does not matter
that the railroads are pleading for
wage cuts in order to be able to
meet their payrolls, while they are
simultaneously laying off their men
in droves. AT least 10000 men
have been thrown out of work since
Oct. l, and the day following the
wage cut announcement, the Santa
Fe road announced that further
layoffs are most likely.
Nor does it matter that the roads
are lining up in front of the RFC
office in Washington in order to
receive handouts so that employ
ment can be maintained"
What does matter in this immedi-
ate wage dispute is that there would
be no question of wage cuts if the
bondholders rel not bleeding the
railroad system dry, Admittedly,
there is a serious railroad crisis.
One-third of our rail mileage is
bankrupt and earnings have been
seriously injured by the recession
all along the line.
But let us look at the record for
the terrible first three months of
1888. 1t shows our leading systems
earning very satisfactory operating
profits. The Chesapeake g. Ohio is
in the black for the quarter to the
tune Of a million and a quarter, and
the Union Pacific to the tune of
nearly three-quarters Of a million.
Bankrupt lines like the Erie and the
Missouri Pacific show profits on
their operations. Even VIGOROUSLY
sick lines like the Nickel Plate and
the Cotton Belt are in the black.
Chief among the roads in the red
are the Baltimore & Ohio and the
Southern Pacific, and each of these
great systems would be easily able
to absorb its deficit if not for the
annual interest bill of 100000 900
with which each is saddled.
In sum, the operating profit situa-
ton is much better than that in the
auto and steel industries. Taking
only revenues and costs into account,
the railroads are doing at least as
well as any of our basic industries
and they have no justification for
pleading utter ruin as excuse for a
$3.50, 900, 900 wage cut.
1t is only after operating profits
are diverted into the payment of
bond interest that glazing deficits
appear in the railroad returns. Take
the case of the Erie, which went into
bankruptcy at the turn of the year.
Its 1887 earnings were over $13,000,-
900 and they were still insufficient
to meet the roads bond charges. In
what other industry would a cor
poration earning $13,000,000 from
operations have to go bankrupt?
Precious few steel companies made
$13, 900, 900 out of 1875 prosperity,
but almost every last railroad deficit
was a deficit caused by the wiping
out of operating profits by interest
charges. Cut the railroads yearly
interest bill of half a billion, and
there will be no need for wage cuts
because the roads will then be I'M
able to talk poor. Their profits will
| become evident for the world to see.