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Show Washitigton. Much has been written and much more has been said concerning Railroads the complexities Face Crisis of modern civilization civiliza-tion and modern business. Many times have we heard how closely agriculture is re- , la ted to other industry; how general commerce and industry is interwoven interwov-en with every phase of our life. There can be no doubt of this condition. condi-tion. No proof is required. Nor is it necessary to argue that when one section or segment of business is on its sickbed, there is a resulting bad reaction upon every other phase of commerce and industry to a greater or less extent. With these fundamentals in mind, it becomes obvious that probably the most important development of 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 de-tails of their condition, as presented 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-eral government is the doctor in the case. They will live or die by the command of the interstate commerce com-merce commission. The case they have presented shows, for example, that they have had to cut thousands upon thousands of workers off of the payroll; that they have been unable to buy more than one third of the customary annual purchases from other businesses, busi-nesses, and that more than one fourth of all the railroad mileage in the nation is now being operated as bankrupt property that is, the property is in the hands of court receivers. So, adverting to the observations of the first paragraph of this discussion: dis-cussion: a gigantic industry can not run at a loss without resulting in a bad heart or partial paralysis in other industry. Higher rates are always opposed for the very human reason that none of us enjoys taking any more money out of our pocket than we must. Many lines of business busi-ness oppose rate increases on the railroads because of the fear that it will reduce their volume of sales. But it occurs to me that in consideration consid-eration of a question of freight rates and charges which the railroads make, we ought to think of their situation sit-uation 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 be, nor is the farmer going to continue to produce unless he gets a reasonable return from his work. The only difference dif-ference between these and the railroads rail-roads is that the railroads can not raise their rates unless the interstate inter-state commerce commission, a government gov-ernment agency, says they can do so. Further, there is a tendency on the part of a goodly number of persons 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 can't tell whether so-and-so's business busi-ness is bad off or not Big corporations corpora-tions can cover up and make black look like white." Indeed, while I was listening to one of the I. C. C. hearings in this case, a 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, com-mission, even if they were so inclined, in-clined, because the commission has access to every item of expense and income, even all actions of the management, of the carriers. It might be added in this connection con-nection that officials of the interstate inter-state commerce commission understand under-stand there is to be a request by the interstate truck operators for an increase in rates if and when the rail lines are allowed higher rates. The trucks are represented as slowly slow-ly starving to death but they can't and won't boost ratc3 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, as presented to Plight the commission, of Carriers tn:,n to include here some excerpts ex-cerpts ol tl e statement made officially offi-cially in the case by Dr. J. II. Par-rnclee. Par-rnclee. He Is director of the bureau bu-reau of economics of the Association Associa-tion of American Railroads and, as fcucb, knows the detail:). "Today," Dr. Parrrielee said, "the carriers are reducing forces and are curtailing their purchases of equipment, equip-ment, materials and supplies. They are forc.-d to do' this bccaur.e of the financial condition In which they find thfrrisHvcs. This retrenchment has a serious economic e(T"ct on urn-jiloyrnefit, urn-jiloyrnefit, on the manufacturers ol railway suppllci and their employ-: employ-: uri'l on all biuiinens activity Such a policy with Its unwholesome economic cjnn."iiiTices only partially partial-ly offsets the rlr.lng tido of costs. "The railroads in 1927 to 1930 installed in-stalled more than twelve times as many locomotives each year, nearly five times as many freight cars, laid nearly three times as many tons of rails and laid nearly twice as many cross ties as they averaged in the depression years from 1931 to 1936. "Capital expenditures for 1929 and 1930 averaged $363,164,000 a year. During the depression years from 1931 to 1936, the average of capital expenditures was only $206,813,000. "Similarly, the trend of railway purchases (of things they must use in operation) of fuel, material and supplies declined sharply during the depression years and never has returned re-turned to anything like normal. Railway purchases in 1929 and 1930 amounted to $1,14,017,000 in each of the two years. In the five years from 1931 to 1935, the average per year was about $559,000,000. In 1936, the expenditures in this direction were up to $803,421,000. (Figures for 1937 are incomplete but there has been another decline because of necessary curtailment of buying.)" Dr. Parmelee turned to the question ques-tion of 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 rail-roads have been barely getting by, and pointed out that at no time between be-tween 1931 and 1937 had they earned more than 2.57 per cent on their investment as it is appraised by the commission. In three of those seven sev-en years, the records show, the railroads' receipts did not amount to as much as their fixed charges, a term which includes interest on their debts, taxes and required amounts for paying off parts of their debts. In other words, all they 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 is predicated, therefore, upon rising ' costs, general ex- Rising penses, and the Costs dozen or so railway rail-way presidents who testified before the commission stressed the fact that these expenses are out of control by the railroad authorities. Dr. Parmelee figured that these higher costs of fuel, supplies, sup-plies, wages and taxes had laid a burden on the railroads that is greater this year by $604,739,000 than it was in 1933. The companies hope to get $367,287,000 of this sum from the 15 per cent increase in freight rates, and the railroads of the East are asking that passenger fares be increased from 2 cents to 2V2 cents a mile, which they think will bring in an additional $47,500,-000. $47,500,-000. From this it is seen that the carriers still will fall short of tho full amount needed, but their argument, ar-gument, as I understand it, proceeds pro-ceeds on the theory that they should not seek more of an increase than Is sufficient to keep them from going go-ing broke. If the new depression conditions subside, there will be a larger volume of freight next year. That will enable them to make a profit. That is, a greater volume of business with the new rates will provide a profit unless there are new government taxes and other burdens laid upon them. In this connection, I looked up the effect of the social security and carriers' taxing act. Commission reco-ds show the rail lines are paying $111,-000,000 $111,-000,000 in taxes annually under these 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-fronted on the one hand with mounting mount-ing costs of operation and on the other by declining receipts from the smaller volume of business. At the same time, it seems to me, the country has more than a passing interest in their plight. This is so because during the last two months, for example, close to 60,000 railroad employees have been laid off out of work, in the rail industry alone. With the decline of purchasing of supplies by the rail lines, other industry in-dustry has sufTered, has laid off men. Looking at the thing another way, one miflht call attention to federal appropriations for relief which have been in excess of three billions a year during tho last several years. The figures given above show that the railway purchases just one industry in-dustry have fallen off moro than 500 millions, or about one-sixth of the relief appropriations. If the appropriations ap-propriations to aid nil unemployed are only six times os largo ns the drop In railway expenditures. It Is eai:y to see what an Influence la wielded and why I have taken the position that It Is noce.'i.'iary to consider con-sider the railways' petition from the standpoint of the country os a whole. We, as citizens, have a burden bur-den to cany whether it la dono tiirouiih tho railways or through some other avenue. None of Uioko rail workers wants to bo without 11 Job, I am sure. 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