Evening star., 1949-11-20
Hi0h Rates Hold Threat for Rails
in Danger Of
Pricing Themselves
Out of Market

lily, despite the decline in employ
ment, is the heaviest hair shirt
worn by the railroads.
Back ir( 1910, according to AAR
figures. the railroads had 1926
848 workers, who earned slightly
under $4,000. 100000 at an aver
age hourly rate Of 74.2 cents. In
1947, employment was 1851 .96l;
the wage bill was $4,35o, ,000. 900.
and the hourly rate, $1.175.. In
1948, with about $4,000 less en-
ployes, the wage total went to
$4.768, 900. 900, and the hourly rate
was $1.313. No totals have been
compiled for this year. but the
hourly rate is estimated at $l.54
($1.565 in the East) under the
impetus Of the recently established
40-hour week for incorporating
employees. Incidentally. the Sec
ond-round wage demands OF three
operating brotherhoods - engi-
neers, firemen and switchmen-
brought about Government inter-
vention last year to prevent a
disastrous tieup.
Costs and Wages Up
The railroads figure that their
wage bill has advanced 109 per
cent since 1889. The carriers, OF
course, face the same situation
as prevails in coal and steel. Con-
tracts are negotiated on national
basis without regard to the ability
of individual lines to pay. Even
though they are operating in the
red, and some are, the situation
is the same. More than a dozen
of the larger carriers right now
are in the hands of trustees or
receivers as they undergo reor-
ganization under Federal pro-
cedure. A group of similar pro-
portions, already has gone
through the wringer," with the
reorganization effected at the ex-
pense of their security holders.
Material costs are estimated at
1O8 per cent above those Of a
decade ago, and when fuel Is
Jumped in, the "all unit" cost ad-
vance is put at 104.
The material costs are of par
ticular interest right at this stage
because of the millions that the
roads are being forced to spend
to get their plant back in first
class condition. During the war,
new equipment was obtained with
difficulty because of the war de-
mands. Maintenance also Jagged
for the same reason. Now, there
is much deferred work to be done
although much is being done.
And the tax burden, OF course,
is always present.
The dividend situation speaks
for itself.
Out of 12s Glass I roads-the
big ones-72 were able to pay
dividends last year, with their
total outlay amounting to $780,
246,512. Some pay only a few
cents: a few offer a reasonable
rate of return to their investors,
but the average is somewhere
around per cent, the AAT re-
ports.
This serves to recall the warn
ing of the late Joseph B. Eastman,
nationally known transportation
expert of the ICC, that the rail-
roads would not have to worry
about Government ownership
until their securities were no
longer attractive to investors.
AS whole, the industry is not
and for many years has not been
a good investment.
Railroad management Is won't
to blame overregulation, discrim-
inatory practices by the Govern
ment as between competing car
riers, and continuing demands by
labor for shorter hours and more
pay as responsible for the uphill
battle for survival.
Whatever the factors the out
look is not one to give satisfaction
either to the industry or to the
country. Interest on Capitol Hill
since the fare hike indicates that
the next Congress may have a
look at the whole transportation
picture.