Show B digest national topics by WILLIAM BROCKET iti washington much has been written and much more has been said concerning railroads the comp complexities yace face crisis of modern modem civilization and modern business many times have we heard how closely agriculture Is related I 1 to other industry how bow general commerce and industry Is interwoven 1 with every phase of our life there can be no doubt of this condition 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 is 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 count rys railroads for the right to increase their rates by 15 per cent the details of their condition as presented in hearings before the interstate commerce commission show they are confronted with a crisis since they pey are under the rigid sup supervision er vision of the federal government the federal government Is the doctor in the case they will live or die by the command of the interstate commerce commission the case they have presented shows for example xa mple that they have had to cut thousands upon thousands ol 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 and that more than one fourth of all the railroad mileage in the nation is now being operated as bankrupt property lt that is the property is in the hands of court receivers so adverting to the observations of the first paragraph of this discussion cus sion 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 tor 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 oppose rate increases on the railroads because ot of the fear that it will reduce their volume of sales but it occurs to me that in consideration of a question of freight rates and charges which the railroads make we ought to think of their situation 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 between these and the railroads is that the railroads can not raise their rates unless the interstate commerce commission a government agency says they can do so further there is a tendency on the part of a goodly number of persons throughout theland to question the accuracy of statements made by business no doubt you have heard as I 1 have the remark that you cant tell whether so and sos business is bad off 03 or not big corporations can cover up and make black look like white indeed while vaile I 1 was listening to one of the L I 1 C C hearings in this case a man in a neighboring seat made something of the same observation as I 1 have quoted my answer to him was vas in substance that none of the railroad officials would dare lie to the com tn deslon even it if they were so inclined cl ined because the commission has access to every item of expense and income even all actions of the management of the carriers it might be acciel in this connection that officials of the interstate commerce commission understand 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 starving to death but they cant and wont boost rates until their competitors the railroads charge more for their services i I 1 believe there is no better way to met forth the plight of the railroads as presented to plight the commission of carriers than to include here some excerpts ot of ti tte e statement made officially in the case by dr J 11 parmelee he is director of the bureau of economics of the association of american railroads and as as tsuch i such knows the details i 0 today dr parmelee said the carriers are reducing forces and are curtailing their purchases of equip merit ment materials and supplies they thes are forced to do this because of the financial condition in which they fine find themselves this retrenchment has a serious economic effect on employment on the manufacturers 0 of railway supplier and their employ lees ees and on all business activity such a policy with its unwholesome economic consequences only partial ly offsets the rising tide of costs the railroads r sa n 1927 to 1930 installed more than twelve times as many locomotives each year nearly five times as many freight cars laid nearly three times as many tons ol of rails and laid nearly twice as many cross ties as they averaged in the depression years from 1931 to 1938 1936 capital expenditures for 1929 and 1930 averaged a year during the depression years from 1931 to 1936 the average of capital expenditures was only similarly the trend of railway purchases of things they must use in operation ot of fuel material and supplies declined sharply during the depression years and never has returned to anything I 1 like ike normal railway purchases in 1929 and 1930 amounted to in each of the two years in the five years from 1931 to 1935 the average per year was about in 1936 the expenditures in this direction were up to figures tor for 1937 are incomplete but there has been another decline because of necessary curtailment of buying dr parmelee turned to the question of railroad receipts tor 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 have been barely getting by and pointed out that at no time between 1931 and 1937 had they earned more than per cent on their investment as it is is appraised by the commission in three of 0 those seven 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 benses and the costs dozen or so railway presidents who testified before the commission stressed the tact fact that these expenses are out of control by the railroad authorities dr parmelee figured that these higher costs ot of fuel supplies v wages ages and taxes had laid a burden on the railroads that is greater this year by than it was to in 1933 the companies hope to get ot 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 ak 2 cents a mile which they think will bring in an additional from this it is seen that the tha carriers still will fall fail short of the tha full amount needed but their argument as I 1 understand it proceeds on the theory that they should not seek more of an increase than is sufficient to keep them from going broke it 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 1 looked up the effect of the social security tv and carriers taxing act commission rean ils show the rail lines are paying 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 in a bad fix they are confronted on the one hand with mounting costs of operation and on the 0 other t h e r by declining receipts from the smaller volume ot of business s 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 ex example ample close to railroad employees have been laid off out of work in the rail industry alone with the decline ot of purchasing of supplies by the rail lines other industry has suffered has laid off men looking at the thing another way one might call attention to federal appropriations tor for relief which have been in excess of three billions a year during the last several years the figures given above show that the railway purchases just one industry have fallen off more than millions or about one sixth of the relief appropriations if the appropriations to aid all unemployed are only six times as large as the drop in railway expenditures it is easy to see what an influence inOue nce is wielded and why I 1 have taken the position that it is necessary to consider the railways petition from the standpoint of the country as a whole we as citizens have a burden to carry whether it is done through the railways or through some other avenue none of those rail workers wants to be without a job I 1 a am M sure a western newspaper r union |