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Show CARL GRAY MAKES TALK ON RAILWAY SITUATION Kansas City, Mo., May 2S "The present announced intention to materially ma-terially amend the TranFportatlon act will throw the situation back to the realm of uncertainty which prior tn the world war had bo operated as to practically destroy railroad credit," cred-it," said Carl G. Gray, president of I' e Union Pacific system, today, tie-fore tie-fore the joint conference- of the 1 ankers associations of Missouri and Kansas. "Freedom from new legislation legis-lation during the last four years," he said, "has greatly rehabilitated railway rail-way credit and measurably reinstated reinstat-ed railway securities in the investors r: gard." Declaring that the outstanding problem of American railways is that of credit, and that this depended on an adequate return from operation, be pointed out that in no year since the Transportation act has been in effect have- the roads as a whole earned the "fair return of 5 3-4 per cent established by the commission. "Tn 1920, he said, "it was 33-100 of 1 per cent; in 1987, 3.3 per cent; in 1022, 4.14 per cent; and in 1923, approximately. ap-proximately. 5 per cent." Transportation rates cannot safely safe-ly be reduced, according to- Mr. Gray, fo long as the railroads' cost of living liv-ing remains at the present high level, nor does he believe wages are unduly un-duly high when compared with the w.-iges for comparable work in other industries. "In all railroad history," said Mr. Gray, "there is nothing so striking and satisfying as the signal discovery discov-ery of the railroads since the period of Federal control. This is the result of an improved morale and the in-xstment in-xstment of enormous sums of money. In the four years since the r-ilroads were returned a total of $2,667,184,991 has been expended in a 'ditions, betterments, extensions and new equipment, which equals 11.12 per cent of the tentative valuation val-uation of the railroads as found by the Interstate Commerce commission commis-sion in 1920. Expenditures authored author-ed during the first three months of this year, added to the carry over of 1923 for work authorized but not completed, aggregate $766,000,000.'" These expenditures, he declared, wore made under the encouragement of the Transportation act and in the face of the fact that in the last three y.-ars more miles1 of railroad have been taken up than have been built, although vast portions of the west v.ra in need of development. This development de-velopment can only come, he pointed out, by permitting the roads to earn a fair return and thus reestablish their credit. Taxes, he said, had increased in-creased from $135,572,579 in 1914 to $332,057,588 in 1923 whereas di- ' vidends for the same period had decreased de-creased from $396,098,785 in 1914 to' $283,000,000. In 1914 dividends wore 2.77 times the taxes; in 1923 they were 85.2 per cent of the taxes. Taxes for 1923 were $1412 per mile v operated, which represented a Gov- ernment priod lien, capitalized at 5 per cent on $28,240. The widespread ownership of rail- road securities was shown by quoting ' the Interstate Commerce commission TiTures, showing 777,132 stockholders stockhold-ers in class one railroads, owning an aggregate of $7,242,191,000 of stock or an average of 93.2 shares. No individual in-dividual corporation, or partnership, be said owned as much as 2 per cent of the capital stock of the Union Pacific Pa-cific system, which has 61.016 stockholders, stock-holders, with an average holding of R3 shares. Women comprise 4 3 per cent of the Union Pacific stockholders. stockhold-ers. Railroad securities form one ot the chief investments of life insurance insur-ance policies, and 21.414.0S5 savings sav-ings bank depositors. "It is a source of regret," said Mr. Cray, "that the public in this west ern territory does not own a larger , share ot railroad securities." Freight and passenger rates onj western railroads were shown to j have increased an average of only j about 40 per cent during the last ten years, while supplies, wages and , (axes had advanced an average of ' 100 per cent. He also pointed out that had not rates been reduced during dur-ing the last two years, the public would have paid a billion dollars more for transportation than it did pay. Mr. Gray quoted Herbert Hoover, secretary of commerce, as having calculated cal-culated the loss to the country's com rrerce of a billion dollars on account of the congestion and car shortage of 1920. and this. Mr. Gray said, "approximates "ap-proximates the entire net earning? of the railways of the United States, applicable for dividends, interest and surplus, for 1923. when the largest business ever offered to American railroads was handled without car shortage and without congestion." That the United States bad the best transportation system in the world is. in Mr. Gray's opinion, due o the fact that it Is privately operated oper-ated under governmental supervision. supervi-sion. Under government ownership, ha said, jobs would multiply person al Initiative would disappear, and ex- penses would greatly increase. Hei said he had no fear of government! ownership in the United States in! view of the results of government ownership elsewhere and of wartime federal operation in the United States. The railroads are barometers of prosperity, declared Mr. Gray, their purchases ramifying into every corner cor-ner of the business world. The railroads, rail-roads, he said, consume directly about one-quarter of the coal output, out-put, one-quarter of the lumber output, out-put, one third of the steel output, and one half of the fuel output. "We have good times and we have bad times in the this country," he said, "largely dependent upon whether the railroads are buying or not." Making a plea for "stability in the Governmental attitude," Mr. Gray said: "For years the railroads were in error because they were not frank with the public; that they did not explain their problems, and there was some justification for the criticism, but for some time now, the railroads have been carrying the facts of their business to the public through the press. It is, of course, not faid to ask a newspaper which is after all a business bus-iness institution, to disseminate this information without charge, and so there have been paid advertisements. Now we are confronted with rabid criticism and the railroads are charged with carrying on propaganda. propa-ganda. For over a generation, the public attitude has been antagonistic antagonis-tic to railroad consolidations, and so far has this attitude been expressed in law that a consolidation of two lines having any competitive features however remote, has been rendered practically impossible. There is an entirely changed attitude in this respect res-pect the railroads are not only being be-ing urged to consolidate, but there is in the background a seeming determination deter-mination to attempt to enforce consolidation. con-solidation. A nature fear in such circumstances, circumstan-ces, born of experience, is that the pendulum, having started to swing in the other direction, will swing too far." |