Show 1 I- I I I I 1 A Aff ff l ct Cl J Z s 1 Washington Much has bas been written and much more has been beci said concerning Railroads the complexities Face ace Crisis of modern civilization civilization tion and modern moden business Many times have we heard how closely agriculture is re rev to other industry how general genera commerce and industry Is is' interwoven en with every phase of our life There can be no doubt of this condi condi- tion No proof is required Nor Is It II necessary to argue that when one one section or segment of business Is on its sickbed there is a resulting bad reaction upon every other phase of ol commerce and industry to a n greater or less extent With these fundamentals In mind it becomes obvious that probably the most Important development of ofa ofa a national character in the last few weeks is the appeal of the country's railroads for the right to increase their rates by 15 per cent The details details de de- de- de tails tans of their condition as presented tin in hearings before the interstate commerce commission show they are confronted with a crisis Since they are under the rigid supervision of the federal government the federal fed fed- eral oral government is the doctor inthe in inthe the ithe case They will live or die by bythe the command of the interstate e comI commerce com com- corn corn- I merce merge commission The case they have presented shows for example that they have had to cut thousands upon thousands of workers off oil of the payroll that they have been unable to buy more than one third of the customary annual purchases from other busInesses businesses busi busi- nesses and that more than one fourth of all aU the railroad mileage in inthe inthe Inthe the nation is now being oper operated as b bankrupt property that property that is the property is in the hands of court receivers So So adverting to the observations of the first paragraph of this discussion discussion discussion dis dis- a gigantic industry can not run at a loss without resulting in a abad abad bad heart or partial paralysis par in other industry Higher rates are always opposed for the very human re reason lson that none of us enjoys taking any more money out of our pocket than we must Many lines of business business business busi busi- ness oppose rate increases on the railroads because of the fe fear lr that it will reduce their volume of sales But it occurs to me that in consideration consideration consid consid- of a question of freight rates and charges which the railroads make we ought to think think think-of of their situation sit sit- as we do of other lines of business Our retail grocer Is not going to sell at a loss the druggist can not subsist unless he makes a profit however small it may maYbe be nor noris is the farmer going to continue to produce unless he gets a reasonable return from his work The only difference dif dU- di- di f ference rence between these and the railroads rail rail- railroads roads Is that the railroads C can ln not raise their rates unless the interI interstate interstate inter inter- I state commerce commission a government government gov gov- agency says they can do so Further there is a tendency on the part of a goodly number of persons persons per per- sons throughout the land to question the accuracy of statements made by business No doubt you have heard as I have the remark that you cant can't tell whether sos so's business business busi ness is bad off or not Big corporations corporations corporations corpora corpora- can cover up and make black blacklook blacklook look like white Indeed while I Iwas Iwas Iwas was listening to one of the L C C. C C. C hearings in t this is case a 1 man in a neighboring seat made something of the same observation as I have quoted My answer to him was In substance that none of the railroad officials would dare lie to the commission commission com com- mission even if they were so inclIned inclined in in- because the commission has access to every item of expense and income even all actions of the management of the carriers It might be in this connection con that officials of the interstate interstate interstate inter inter- state commerce commission understand understand under under- stand there is to be a request by bythe the interstate truck operators for an increase in rates 1 if and when the rail lines are arc allowed higher rates rateS' The trucks are arc represented as slowly slowly slowly slow slow- ly starving to death death but death but they cant can't and wont won't boost rates until their competitors the railroads charge more for their services I believe there is no better way to set forth the plight of the railroads I as presented to or L Plight flight the commission of Carriers Carrier than to include here berc some excerpts excerpts ex- ex excerpts ot of the U-c statement made om daIly in the case by Dr J. J H H. Par Par- r melee He is director of the bureau bu bureau reau of economics of the Association tion of of American America Railroads and as ns such knows the d details Today loday Dr Parmelee said the carriers are reducing forces and are curt curtailing liling their purchases of equip ment materials and supplies They are arc forced to do this because of the financial condition in which they find themselves This retrenchment has hasa a serious economic effect on employment employment em em- on the manufacturers of r railway supplies supplier and their employ employ- ces ees and on all business activity Such a policy with Its unwholesome economic consequences only partially partial partial- ly offsets the rising tide of costs j f.- f. The railroads in 1927 to 1930 In Installed Installed in- in stalled more than twelve times a amany ns as many locomotives ea each h year nearly five times as many freight C cars lai laid nearly three times as many tons o of rails and laid nearly twice as man many cross ties tics as they averaged in the thi depression years from 1931 to 1936 Capital expenditures for 1929 anc and 1930 averaged a year During the depression years from fron 1931 to 1936 the average of capital capita expenditures was only Similarly the trend of railway purchases of things they must us use useIn usein in operation of fuel material anc and supplies declined sharply during the depression years and never has returned returned returned re- re turned to anything like normal Railway purchases in 1929 and 1930 amounted to in each of ol the two years In the five years from 1931 to 1935 the average per pei year was about In 1936 the expenditures in this direction were up to Figures for Cor 1937 are incomplete but there has been another decline because of ol necessary curtailment of buying Dr Parmelee turned to the question question question ques ques- tion of r railroad receipts for their services He told the commission that the depression years had left the railroads without any reserves For seven years he said the railroads railroads rail rail- roads have been barely getting by and pointed out that at no no time between between between be be- tween 1931 and 1937 had they earned more than per cent on their investment as It is appraised by the commission In three of those seven seven sev seve en years ears the records show the railroads' railroads receipts did not amount to toas toas toas as much as their fixed charges a term which includes interest on on their debts taxes and required amounts for tor paying off parts of their debts In other wor words s all they e earned in those years was just enough to pay the people who work for them and buy the necessary fuel and operating supplies The argument to the commission commissions is s predicated therefore upon rising costs general ex ex- Rising and the Costs dozen or or so railway railway rail rail- way presidents who testified before the commission stressed the fact that these expenses are arc out of control by the railroad authorities Dr Parmelee figured th that lt these higher costs of fuel fuel supplies sup- sup plies alies plies wages and taxes had bad ad laid a burden on the railroads that is greater this year by than han it was in 1933 The companies hope lope to get of this sum from the 15 per cent Increase in freight rates and the railroads of the he East are asking that passenger fares be increased from 2 cents to 2 cents a mile which they think will bring in an additional From this it is seen that the carriers still will fall short of the full amount needed but their argument argument ar ar- ar- ar as I understand it it proceeds pro on the theory that they should not seek eek more of an increase than thans is s sufficient to keep them from goIng go- go Ing Lag broke If the new depression conditions subside there will be a larger arger volume of freight next year That will enable them to make a profit That is a greater volume of business with the- the new r rates will provide a profit unless there are arc new government taxes and other burdens laid upon them In this connection I looked up the effect of the social security and carriers' carriers taxing axing act Commission records show the rail lines are paying in taxes annually under these hese two levies alone a burden the companies did not have two or three years ago So it is evident that the rail lines are in a bad fix They are confronted con con- fronted on the one hand with mounting mounting mounting mount mount- ing ing costs of opera operation tion and on the theother theother theother other by declining receipts from the he smaller volume of business At Athe Atthe Atthe the he same time it seems to me the country has more than a passing interest in fn their plight This is so because during the last two months for example close to railroad employees have been laid off out off out of work in the rail industry alone With the decline of purchasing of supplies by the rail lines other industry industry in in- has suffered has laid off men t u Looking at nt the thing another way one might call attention to federal appropriations for relief relic which have i been In excess of three billions a year during the last several years The figures given above show that the railway purchases purchases just just one in industry in- in have have fallen off more than millions or about sixth one-sixth of the relief appropriations If the appropriations appropriations ap ap- to aid all unemployed are only six times as large as the drop in railway expenditures It is easy to see what an nn influence is wielded and why I have taken the position that it Is necessary to consider consider con con- sider the railways' railways petition from the standpoint of the country as a whole We as citizens have a n burden bur den to carry whether it is done through the railways or through some other avenue None of those rail workers wants to be without a ajob ajob ajob job I am sure 0 Western Newspaper Union Unton |