Evening star., 1947-07-06

New Wage Demands
Threaten Railroads
With Financial Crisis
By ChorIes r. Speore

ulolC tIldil ycdl dko AiuClISdh
railroad workers went on strike in
a body. For its rawness and its con-
tempt for the inconvenience of the
public, the episode set high-water
mark. 1t is not likely to be repeated.
Its sequel in legislative correction
may be found in sections of the
Taft-Hartley Act.
The railroads now are facing an
other of their financial crisis. Nom
operating and operating employees,
to the number of $50 900, are seek
ing a 20 per cent wage advance for
one group and changes in rules and
more cash for Others These would
erase any net income that may
have been earned in the first half
of 1947. Wage-advances on the rail-
roads normally precede rate in
creases for the carriers and gen-
orally exceed them. The time gap
between the two is unfavorable to
the carriers.
Stocks Cut Freight.
Prolonged strikes last year in
many of the industries from which
the railroads obtain a large per-
centage Of their revenue freight, a
sharp decline in passenger traffic
from the war totals, together with
higher wages and greater cost of
caused drop in railroad
net income to $28S. .534 900. This was
the lowest since 1910 and compared
with the annual average, from 1941
to 1945. of $722, 100000 For the rail-
road stockholder. however, the pic
ture is brighter since the May state
ments of earnings were published.
They build up very promising out
look for 1947 if continued in the
second half of this year and if not
too much of the net return is alb
sorbed in new wage allowances.
Since 1945 the Eastern railroads
have taken the hardest rap. In
1946 New York Central and Penn
sylvania ended the year with def
cits. In the first five months Of
that year the forcer had a loss
equal to S1.67 share, but in the
same period of 1947 it earned nine
cents a share. The Pennsylvania
net income in May this year was
81 ,069, ITO. In the year before q
loss of $10644,000 was incurred.
For the five months of this year
the New Haven reported a net loss
of 81 ,440,023 compared with a deficit
for the same 1916 term of S4,691 900.
Baltimore and Ohio made the best
relative showing of the trunk lines
as it's net income for the period
under review was over. $4,000000
whereas last year on May 81 it re-
ported loss of nearly $17,000000.
This turn in earnings has made B.
e. o. President White more cheerful
than for several years.
West, Southeast Fared Better.
All through 1916, the Western and
Southeastern roads stood up much
better than their Northern and East
ern connections. For the first five
months of 1947, the Atchison showed
5.36 per cent earned on its yearly
common stock dividend of per cent.
Union Pacific, for the same period,
more than covered the full IL
months common-stock dividend So
did Southern Pacific, Burlington
and Southern Railway. Illinois Gen.
tral earned S. share. 1t is placing
it's net earnings in reserve fund.
Northern Pacific did we'll and the
reorganized Rock Island and Frisco
made profits running we'll ahead of
those in 1916.
The railroads are seeking a Is
per cent freight-rate increase. Like
their employees they always ask for
much more than they expect to
receive This Is an accepted prin-
ciple in wage negotiations, part OF
the buncombe of such parleys. The
grant of the full amount sought
would realize more than $500, 600 900,
or an average of II per cent COM
pared with 176 per cent from the
1916 allowance by the Interstate
Commerce Commission. 1t would
keep the carriers going for some
time and possibly might prevent
some dividend omissions.
The unknown quantity, as 1t re-
lates to the claims of the operating
employees, is how far they will carry
their demands for changes in rules
or what concessions the final adjudi-
Gators will make them when they
take up the question of feather
bedding"
One spectacular demand Is that
the crew of diesel engine shall be
increased to 20 men, from the nor
NAL complement of four. Many sys-
TENS have invested large sums In
freight and passenger diesel engines
and have ordered new fleets of this
economical machine. If they are
compelled to enlarge the crews and
cut train-t tonnage ratings, much OF
the present savings will go up the
spout.
Government Ownership Asked.
Recommendation of Government
ownership and operation of the rail-
roads came from A. F. Whitney,
head of the Brotherhood of Loco
motive Engineers last year when ne
gotiations between the railroads and
their men were at their bitterest
stage. The same suggestion now Is
being heard in other quarters
American railroads were the mar
vel of all foreign transportation ex-
perts as they watched their opera
tions during the war 1t is conceded
that one Of the leading instruments
in effecting shorter war were our
highly efficient steam carriers. This
writer believes that their operation
by Federal body would be as dam
aging to our national economy as it
has been in Canada, as it will be in
England when it gets set fully there,
and everywhere in Europe except
Switzerland and Swe-
den. However, he foresees continued
pressure for the change as the diff
,ulties Of rapprochement between
and men increase with
each new battle over wages and
rules, such as they are now entering
upon.