| Show u Opportunities In Railroads Of US U S for Employment and Investment Are Discussed I Special r l I BT Dr w t D SOS BABSON PARK FARE Florida March MarchIS I This lS-This This week Hoier oger W Babson the opportunities offered today by br the th railroads both to young men seeking employment end and nd to older ones with irith money seeking investments This Thill Is la one of his series of ot ten articles ona on a ME Your Your Boys Bore Business Says 5 Mr Babson GOVERNMENT CONTROL Railroads like all other things In the th world orld have hav their advantage ta tage ages es and disadvantages The Th chief alvant advantage ce e held b by the railroads railroad Is that tf they are a natural monopoly monopoly oly 01 Since th advent of ot the au autI au- au vii tI and nj l truck n this Q t n Q oly la is 1 not 50 lo-creat lo great In connection with short paul haul aul business but It exists to a large larre extent Certainly Certainly the long Ions haul railroads have no com competition and n none ne Is In sight Even In the case ot of competing lines 8 1 as a la Ls illustrated by the Atlantic Coast Line and Seaboard Airline competing tor for Florida business there Is no rate cuttI The competition Is In service arid and nd salesmanship only The fare is th the the- same samo amo from New ew York rork to Miami whether hether one goes Joes Joeson goeson on the Coast Line or or on op the th Seaboard Seaboard Sea- Sea Seaboard board RaIlroads are aro ro a I natural monopoly but this very fact makes necessary su- su supervision supervision su supervision Hence we have the In- In In Interstate Commerce commission with its arbitrary rulings At the th pl sent present sent time tim the th rail rail- railroads rail railroads roads are ar not not- no suffering as In the put past from governmental go control Sino the tho Transportation Act of 19 0 by congress allowing th the o In S Der cu on u cu u earn o their valuation the Ibe Interstate Commerce Commission Commission- has been compelled in many cases to al- al alvance ad advance vance ance rather than lower rates ratas This pas has ia especially helped the strong atron roads and made mado them stronger goes roes In cy- cy cy cycles des cles and unless the Ibe politicians use all II their energies In attacking the telephone companies or some oth other oth- oth other er Cr new public utility they will gO gOback goback back to their old tool football ball games nd use the railroads for the ball bail Pl O 01 or OP The chic chief disadvantage antage facing the railroads ia Li that they are bound hand band and foot toot b by the labor unions and constantly by the farmers This bis Is not a criticism of or the unions or the farmers Both the fight of ot the labor unions and the Ole dil llon tion of the th ar signs that the people are ale struggling for bet bet- better better bet better ter conditions Moreover 90 0 per percent percent percent cent ot or all business depends upon agriculture and aud payrolls Hen e unless farmers and wage ware workers are arc 1 prosperous ther there Is little litti hope for tor manufacturers merchants and transportation companies When hen the railroad received an Increase last month amounting to annually this means that more mor will be spent pent In stores or for homes automobiles s and savings bank bankbooks bankbooks bankbooks books I think that It ft Is Inevitable inevitable Inevitable able that the employees ot of o the be unionized Moreover every other Industry with a a natural natural al at monopoly Is sure aure to be union union- unionIzed unionized some ome 01 day a Nevertheless the high hs-h state ot of union control existing today among railroad employees is a serious handicap to initiative Uve economy and discipline A young oung man with ambition and love lov of ot freedom must mUt think twice before sel selecting the railroad world In which to tomake tomake make a living llvine It I Is an old say Bay Baying iny ay-iny jog ing theres plenty ot or room at the top and this probably applies applis to toI I presidents general man man- managers managers man agers and other officials These men mostly are promoted from the ranks and receive princ princely ly salaries They J a have e private c cars n nand and beautiful offices but bt b t very little freedom They must be on call call 24 21 hours a 0 day 7 days das a a week and 5 52 wicks weeks a year ear Furth Furthermore their work Is circumscribed ed by the th labor u unions almost I as much aj as the work ork of ot conductors and brakemen hence I 1 do feel teel that the railroads today oHer much mu h to young oung men as a 8 life lifework lifework work vork Very seldom do I find a railroad official who wants want his boy to go so Into n It It n STOCK INVESTMENTS The control which union labor bas over the railroads ultimately harms the stockholders ot o the railroads Bondholders do not sot sut- suf suffer fer fee co so much because labor leaders dislike to throw railroads Into b bankruptcy and be b obliged to deal wIth receivers receiver Stockholders how how- however however ever ver get only what is left after the government the th amid the bondholders are ar satisfied stockholders The stockholders today t day get a small share labor gets more than halt bait while the government government collects in In n lh th n form v q of VL taxes c six A n v VL c A cents cent ot of every dollar that the railroads take in In this connee- connee connection tion It Is 1 Inter inte esting to n note not te that In the th last la t six sia SCars ears ear the th large railways of or the United States Slates hare paId PS-Id 10 more In taxes t than they paid In cash dividends by amounts amount varying from about In iio 19 0 to o in 1923 In 1925 th the exceSs s of ot taxes over cash dividends dividend amounted a to about e chanc-e Striking chang chang- cs have hav occurred In the 1 past pa ast t 15 years Cars In 1911 nil the year ear In which the Interstate I Commerce Klon Ion ailon adopted the present system y t ot of railway classification the Ui taxes es paid by the large larie railways railway amount amount- amounted amounted d ed dividends to while thile their divi I began becan to decline with the result that in 1125 x ss had In- In Increased Increased In-crea In creased d per cent cent over the 1911 level wAite wAil were U 14 per pel cent below the 1911 nil mark Recently railroad stocks Block have hae been very pOPular popular especially the lower 1 priced ones This Thill ThI has ha- been due largely to speculation peculation In n con con- connection con section with i It will VIII he be years year before some ome om ot of o these consolidation ever occur and even it even ft they should now take tak present present- pro nt- nt price 1 tor for IMme some from ot of these thes stocks tock lIre are re In Thy my opinIon unjustified On the other hand It should hould bo be b recognized that Mme Come om of ot the th large lane systems hue have been 1 plowing back huge hue stuns turn Into and Improvements Roads NewYork like the Atchison the New ew York Central the tho th Southern Pa- Pa Pa Pacific the Union Pacific th the North orth- orth I tern ern the the- rn Pacific the th Reading and nd the U New ew ew Jerrey erey Central 1111 ln v in dous assets asset Without doubt the I railroads are in better condition and have ha a greater earn earn- earnIng earn Ing power today than at any time during the tho 1 past ast 20 O 0 years year A 7 i per percent percent cent stock toda today however loWe er Is inot not worth what It St was 20 10 years ears ago aJo co owing to the th Income taxes l must be paid thereon b by ninny holders To the tho extent that taxes arc are passed on to the ulti- ulti ultimate ulti ultimate mate consumer so dividends ot of toda today should be discounted hen compared with Ith those of ot 1906 Tn TIO IN IV I CITIES Owing to the very ery hard times which street railways have had almost no ono one on today will buy traction stocks docks Yet people are riding today more mor than ever Of ot course cour e me tho ne hM been ne great gain cam nas been Deen DeenIn In private automobile riding which has greally affected street rail railway way way earnings earning Those companies companies o er ver which are re taking busses whenever hene possible are fast last getting back those rider rider riders The congestion ot of city streets And nd the Increased parking parkins- regulations are making travel by automobile less conven conven- convenIent convenient lent than b by street car or bus bu Young men to show In- In In Initiative illatIve can well afford to togo to go to Into the bus business it If properly back back- backed ed ad or what L Is b belter lter iter get employ employ- employment employment employment ment with some som discouraged street railway operator Here tero Is 15 a vir- vir virgin virgin vir virgin gin largely field field unorganized and Travel with great treat possibilities Tra Travel vel by coach will grow crow by leaps and bounds for lor many years ears to come Another most mose Interesting field for tor young men desiring de to move o transportation passengers Is air tation Some da day tho the helicopter I be developed and then tran tion by air will become become mor more mora n 1 n pop L L motor roaches and air transportation of- of of offer fer ter better opportunities today both for young young- men Then and for investors than do some of ot the cheap so rails now being bulled SI NOT UtIlITY The railroad Industry industry Is very dependent upon business condi condl- condition conditions tion hone Receipts from om both freight and passengers els Increase and de tie crease greatly with business con con- con Hall road receipts receipt are so affected much touch more mor than are arc re- re receipts re receipts cf of traction companies with bus auxiliaries nail Railroads roads discharge their very ruthlesSly when bU business iness becomes bad bid and when seniority discharging Ing senior senior- ity counts ts for more than thai abUit ability The last one employed is the tho first one discharged while the oldest In service Is tho the last discharged Just now the th shows I both railroad earnings and general business to be above normal Gen Gen- General General eral rat registers 9 S per cent above normal and railroad earn earn- ings earnings register er considerably cOI more above normal Hence If It history repeats Itself when the th next de- de d de decline dine cline comes railroad earning will decline at a more rapid rate than general business ss as railroad earn earn- big s carn have ha I recently advanced at a amore amor more rapid rate The railroads have havo man many advantages ad but other lines of ot business have ha many more Copyright Cop 1927 1327 Publishers Publisher FI- FI Fi Financial Bureau Dureau |
