Evening star., 1939-08-10
Six-Month Deficits
May Be Erased by
Railroad Gains
Bright Prospects
Held for Carriers
In Coming Months
BY CHARLES F. SPEARE,

<'S' ~eAA, &ANo' Ao' 4AoAoSA .
Of railroad securities should not be
too discouraged over the outlook
for the carriers even though the
last session of Congress did not pass
legislation that would strengthen
them at their fundamentally weak
points. 1t has been stated, time
and again, and forms part of the
argument of the reports of the
Interstate Commerce Commission
against radical changes in pro-
cedure, that most important to rail-
road credit is recovery in busi-
ness, and with it. higher earnings
That is now taking place.
For July the net operating in
come of the class systems is ex-
pected to be between S45OOO, 900 and
S50000,000 This compares with
net loss of about $4,000,000 in the
same month of 1898. In June the
loss was $3,000,000. On the basis of
all deductions for fixed charges
such as interest and rent for leased
lines downward adjustments are
now pending in the latter, this
would not quite cover the monthly
proportion of such charges. 1t, how
ever, narrows the gap that has
been wide for months.
Promises of Improvement.
The season of largest gross and
net returns is now approaching with
heavy movements from the farms
and OF products of the mines as
well as Of general merchandise
| Altogether, there are promises of
sufficient improvement in net oper-
ating income in the second half of
1899 to erase the deficits of the
period from January to June 30
Typical of the gain over the lean
half of 1898 is that of the three
Eastern trunk lines, namely, Penn
| sylvania. New York Central and
Baltimore & Ohio, for the first six
/ months Of this year. The compari-
sons indicate how quickly the car
i rlers can recover their losses given
/ even a moderate return to normal
/ conditions in general business. Fig
| ures prepared by the Wall Street
Journal show that. for the Janu-
ary-June period, the Pennsylvania
! had a 80 per cent increase in net
/ operating income, that of the New
York Central reached the sensa-
tional figure of about 5000 per cent
and Of the Baltimore & Ohio of
nearly 207 per cent. Translated
into terms of possibilities for Sc
. curlty holders, this suggests a larger
/ dividend on PENNSYLVANIA Railroad
stock this year, for Baltimore &
Ohio ample and to spare to meet
! It's adjusted interest charges. and
for the New York Central a credit
recovery that may lead to financing
deferred during seasons of deficits.
S2000O,O00 Spent.
II should be stated that the final
/ result of these three roads were
achieved after hey had spent total
| of S200000 900 maintenance of Way
and maintenance of equipment IN
excess of the first half of 1888. This
required adding to their mainte-
nance forces and to the purchase o.
materlals-more employment, more
spending.
The improvements noted in the
trunk lines have been duplicated ir
degree in other sections of the coun.
try where railroad net operating in.
come in the summer of 1888 was g
cause of worry among many security
holders. Conspicuous in the i'm.
provement of solvent roads is that
Of the Southern Pacific notably
the Illinois Central. Southern Rail.
way, Lehigh Valley, Delaware &
Hudson and Lackawanna: also that
OF stronger systems, such as Great
Northern and Louisville & Nashville
The last named has recently in
creased its dividend. Another pay
ment on Great Northern this year is
| being discussed in Wall Street.