Evening star., 1949-01-02
Rail Outlook Better,
But Wage Proposal
Threatens Earninqs
BY the Associated Press

NEW YORK, Jan. 1.-The rail-
roads picture frightened perceptibly
in 1948.
Here's the way it looked to:
The traveller and man in the street
He could ride in the first new
postwar sleeping cars, there were
many new streamlined passenger
trains, and he noticed diesel
electrics hauling more and more
trains of all kinds.
Railroad managements - They
made more dollars on less business,
helped by increased rates and an
all-time record efficiency in moving
freight; new equipment began to
pay for itself.
Shippers-The severe freight car
shortage of 1947 faded, although
such types as gondolas and hoppers
still were scarce; higher freight
rates led to diversion of some freight
to highways and waterways.
4O-Hour Week Planned.
Employes-Many got third round
of wage increases, and it appeared
some might get a 40-hour work
week in 1949
The rail "fan'-For him (and for
potential "fans') the railroads put
millions of dollars worth of up-to-
the-minute rolling stock on display
at Chicago in great fair that will
be repeated in 1949. Also, some
roads revived excursion" trips at
special low fares.
More new freight cars were built
around 112,000-than in any year
since 1924. Passenger car output in
creased slightly, again topping 800
units
Order backlogs in December were
106,4 ,405 freight cars, 1923 passenger
cars.
There are some dark sides to the
1949 outlook.
Smaller Volume Expected.
The Association of American Rail-
roads expects business to be some
what lower.
Their measuring units are the
revenue passenger-mile (transport-
ing one paying passenger mile)
and the ton-mile (hauling a ton Of
freight / mile). AAR experts esti-
mate 1949 ton-miles will total 621,-
900 100000, 3 per cent drop from
l948, and passenger-mile at 36,900,-
100000 an 8.5 per cent decline
While the railroads spent $780,
100000 on added equipment and
plant improvement in 1948 and plan
TO spend more than a billion again
in the coming year, they are wor-
ried about ability to keep up this
pace in the face of higher operat-
ing costs.
William T. Farley AAR president,
in year-end summary estimated
the roads return on net investment
at AZ per cent in 1948
He said their future depends
upon their having an opportunity
to earn a return which will aver
age, over the whole industry, and
taking bad years as we'll as good,
not less than the per cent which
is commonly considered to be the
minimum on which business can be
successfully conducted"
Rates Lag Behind.
Increases in wages, payroll taxes
and prices Of materials, supplies and
coal have averaged 101 per cent
since 1889, Mr. Farley said, while
the, average level of freight rates
has gone up little more than 40
per cent. The latter figure does not
include the 13 per cent increase
asked by the roads late in 1948
One factor clouding 1949 pros
poets was the recommendation of a
Presidential emergency board that
the work week of incorporating"
employees be cut from 48 to 40 hours
without loss Of pay"-which means
a 20 per cent higher hourly rate.
The board proposed this be done
September /, 1949. and that an i'm
mediate 7-cents-an-hour increase
be granted.
Here's an example of what this
could do to rail earnings: For the
Pennsylvania Railroad to put both
proposals in effect would boost
costs by an estimated 500, ,786, 900 an
nually, based on 1948 payrolls. And
the Pennsys net income for the
first II months this year was $780,.
439,510.