Show NO INCREASE ASE IN R R RATES HATES I Predict Greater I Effi-I Efficiency Effi Efficiency Good Business Europ Europeans Invest vest I I WELLESLEY HILLSt Ia Maa s 1 Jan 26 A A supreme deci decision sion alon a ft rapid Increase In Itt Idle carS card and rapid price advances In someI some railroad bonds during the last two weeks hl have base e tended to create much I confusion regarding regarding- the tho situation and te tort fortune uno of the Individual road roads during 24 Since w we are nil all affected by I somo omo phase of ot the tho railroad i s ac- ac ac activity rate rates purchAsIng purchasing- policy divIdends dIvidend or Roger profits profits Roger W Babson analyst of ot the situation I is ot of niece more than Interest In a summary ot of o his hie investigation Issued luned today the tho ho statistician sees lighter traffic lower ra rates tn but bet bet- bettor bet better tee ter net results for tor many of ot the railroads In 1924 1814 B II POT NOT GUARANTEED The recent ruling ruling- by the su- su supreme su supreme preme court on tl U e recapture clause ot of the act chane changes the Interstate commerce commIssion from a court of or ap- ap appeals ap appeal peals peale peal to a board of directors ac- ac according ac according cording to Mr BlObS Babac n Tho The In- In In Individual dl roads are no longer Inde- Inde Inde Unit units but l I arts of on one great grent transportation O The rates set by the tho commission are supposed to allow Lito the ro ds to toI nake G B Bt a t per cent which return I is h however hoe not guaranteed gu If the figure ot of 6 S per cent is ie e ca- ca ex exceeded one halt the th balance goes to the commission to be used a as a revolving fund for tor aiding aIding- weaker roads at 6 C per cent nt into Interest rest At Atthe Atthe Atthe the same time consolidations ha hae 0 been boen legalized leg chan change chance o the holo aholo aspect ot of the allro situ situ- situation situ situation I BUSINESS NORM ORf tL L It Is clear that there tier Is little o tor for the strong siron road rond to tomake tomake make more than sv 4 POI pel cent L Lt Letus t us see what Is likely to happen I General business Ity In 1924 promises to continue cOl about normal the the Babson hart sho s I actIvity at 6 G per cent above nor nor- norI normal I I InI so mel-so mal so there thero will be no great In- In increase In Increase crease creMO in freight tonnage Recent rapid Increases In iii Idle Idia car figures would suggest suggett t that we tie now non Ia nato 0 plent plenty of ot equipment and rolling stock rolling stock to handle present volume Tere Is certainly no need for tor fur tur- turI further fur further ther along t leo OO lInes I I lb CY both freight and passenger should pro Ira no higher and a few tew revisions downward ard may mayI maybe maybe maybe I be expected to the of ot those I affected These developments nill i reduce gross groas Income for tor t the rut rut- rail railroads road roads but the 10 loss will w bc be offset to toI toa toa toa a Considerable extent by the In- In In I efficiency ert The Tha cd condition resulting requIting f from t-orn orn expend expendi expenditure 1 I tur ture In 1923 will aid this till For till the past 18 month the railroads railroad ha hae 0 been spending at the tre rate of ot a billion dollars a year tor for repairs I and equipment Lost motion hll has II been done dono awa away with to a largo large extent and their ratio of or operating cot cost to Cro gross hould be bet bet- better better bet better I ter this year yar as a result TO n II Lr LI I 4 Having HatIng made le tho bulk of these tho necessary Improvements the tho he roads uil IH III be bo relieved ot of a pait t of this I expense In the future It is p piol ob- ob able able ble that not loss less than halt alion a n bil billion lion hon nor more snore than three three quarters of a billion will ill bo be spent on oh such nork ork this sear vear ear Practically all th thIs Is expenditure will wilt fro go o Irto In way of way rIght double t Hacking ox- ox tensions ox-tensions tensions and nt improve Improve- Improvements improvements improvements ments rather thin th ro hog stock use OF OP SL Roads making matting moro mora than the return allowed will be he Induced Ind to tod todo todo d do one of ot two tao t 0 things They will either plow the tho surplus back into permanent Improvements such euch as better terminal facilities or absorb weaker laker loads wherever re reer er such will be of tu future uro advantage Either way WILY the bonds bOld ot of the stronger roads are strengthened In Iii one case cae actual pi is Im- Im Im hun Improved proved and tangible tang security in- in increased in increased creased In the other othor a and d future earning 10 power er is gaind Such do- do do 1111 tho the new theory ot of o the trans tran- act augur well for tor the tho junior hand bond ot of othe the sounder roads road Put Gut I do 40 o not see ee where either the new nevI ruling ruling- or orits anticipated effects Ill help holp rail bonds bond already It ii the highly 0 group The Tho bankrupt toad load I Is still bankrupt untie under the new ruling It I is iq the solvent road III hI need of ot fu da to finance cur cur- current current cur current rent operations and permanent Improvements that will be tie helped mo most t Mr Babson Babeon I that thai recent strength In bon bonds s is la ie to fleeting heavy bu boing In by European rollan I In Ine e tors who vant tant ant to put th their lr money in something American tot loa Ire ter safety nety and who look 1001 upon our railroads as at 0 an Invest invest- Investment mentI ment Probable de developments during during- I 1924 concluded the Indicate slightly lIghtly lower rates and better len to the tha pu public Ill lOt possibly possibly bly but better profits for tor the roads rondo an aol J a hong hong- cr or cr position tot tOI to the tat vos S l ot of investors estors hl bonds |