Evening star., 1941-08-17
Rail Prospects
Declared Best
Since 1880
Freight and Passenger
Coins Indicate Big
Rise in Earnings
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, Aug. l6.-Railroads
continue to show the wide traffic
and earnings gains expected OF them
under war conditions. according to
a survey just completed by the
Standard & Poor's Corp.
Freight traffic in the first 80 weeks
was almost l8 per cent above that
for the corresponding 1910 period,
and passenger business was SINH
larly improved. Although the rate
of gain will narrow somewhat later
in the year, 1941 carloadings will be
the largest since 1880, and traffic as
measured in ton miles Is expected
to establish a new high record.
Cost increases will be small until
the wage rise now under negotia-
ton is established. While taxes are
up substantially, the increase is not
enough to prevent a much wider
average earnings gain this year than
will be recorded by most industrial
groups.
Parallels Industrial Rise.
Rejecting the industrial boom,
in heavy goods indus
tries, freight traffic this year has
given a true wartime performance
the experience Of the
railroads in the last World War.
Gains, of course, have been most
conspicuous in industrial and
building materials. Grain, livestock
and less-than-carlot shipments have
been relatively stable. and the rise
in coal loadings for the first &c
weeks was held to about per cent
by the miners strike in April
Miscellaneous traffic, however, was
up 81 per cent, ore rose AZ per cent
and forest products gained 26 per
cent. For all commodities COM
bined, the rise was 18 per cent.
Gains of better than 20 per cent
have been shown in recent weeks
They will continue to be wide for
some time ahead. but will probably
tend to narrow toward the close OF
the year.
Not only will comparisons be made
then with extra-seasonal improve
ment year ago, but the fact that
many industries are now operating
at effective capacity limits their
possibilities of seasonal expansion
in the fall.
Ton Miles Up More.
For the full year, nevertheless
the rise in freight carloadings should
amount to 16 or II per cent. The
gain in terms of ton miles carried
will be considerably more, rejecting
longer average haul and heavier
average loadings.
Thus, the rise in freight revenue
should be somewhat greater than ir
carloadings, despite a further DROP
in average revenue per ton mile
For the first six months freight
revenue was up 221a per cent, as
against a 17.3 per cent gain in load
ings.
Passenger business is likewise ex-
panding, partly in reflection of more
active business, partly increased
pleasure travel, and partly the move.
ment of draftees. A rise of more
than 20 per cent was scored in pas.
senger revenues for the first half.
Despite rising fuel and materia
costs and a determined program Il
get equipment in good repair il
preparation for handling the fal
traffic peak, the rise in expense:
has been relatively moderate. OF thu
s428 900 900 increase in revenues fol
the first half of 1941, S188, 900 900
or A per cent, was carried through
to net operating income.
Assuming that present basic wage
rates remain in force during thu
remainder of 1941, full year railroad
net may well exceed $500 ,000, 900, ap.
proximately that of 1880. Gains will
be most spectacular in the cases o.
the borderline roads that art
accumulating cash in order II
strengthen their credit position!
and least in the cases of prosperou.
roads that would be vulnerable tt
excess profits taxes.
Wage Negotiations Deadlocked.
Railroad labor's demands for wage
increases, variously estimated Al
from $500, 100000 to 5000, ,000, 900
have been negotiated unfruitfully
between committees representing
management and labor.
A strike vote is being taken in tht
wage dispute; it will merely au'
thorize union officials to call a strike
The Mediation Board has inter.
vened.
If mediation fails and arbitration
is not reSorted to, national emer.
gency will be declared and the Presi.
dent will appoint an emergency
board A 30-day interval would bt
allowed for its fact-finding investi.
CATION and report, and strike actor
could not be taken for another 81
days--during which time the con-
testants would doubtless agree tt
the boards recommendations, par.
ticularly under the war emergency.
The entire process could well con-
sumo the rest of the year, SO that
unless retroactive agreement
should be made, little or no effect OF
1941 profits is likely. 1t is a foregon'
conclusion that a wage rise vii
eventually be granted, although
much less than the 80 per cent de-
manded.
A 10 per cent increase of all rail
(see RAIL PROSPECTS, Page E-3.,