THE RAILWAYS OF AMERICA

Press, Volume LXIX, Issue 20987, 16 October 1933, Page 4

THE RAILWAYS OF AMERICA

, #— ■ EFFECT OF DEPRESSION SAVED BY THE GOVERNMENT (SPECIALLY WiUTTES I'OR THE I'HESS.) IBy T.C.L.] XIV. The railways of the United States are in the hands of public companies but are under a certain measure of Federal regulation as to services and freight charges. Like railway systems the world over, they have been hit hard by the depression, and, in spite of all the economies made, most of them are in a bad way financially. In the past they made big profits, and railway shares had come to be regarded as safe as any trust security, hence they were a popular form of investment. Unlike many other businesses, costs of running of railway systems cannot be r duced in proportion to the drop in transportation and revenue, for overhead charges are fixed and account for a considerable part of the costs. When the slump began to make inroads into the companies' revenue, competition between the rival systems became keener and more ruthless, and in a short time the systems were giving away their capital to the public in the form of unpayable freights and rates. There was only one end to this insane form of competition, and it soon came. The companies' financial position became very shaky, and appeals to the Federal Government were made for assistance to enable them to carry on and do the transportation for the nation so essential if it were to properly function.

Public Unsympathetic. The public was not very sympathetic with the railway companies over the plight they had got themselves into, for it had a lively recollection of the exactions and out-and-out plundering that had marked their operations in the past. They also remembered how the capital of the companies had been watered from time to time by the various rupacious interests in control, and of the combinations and consolidations they had effected in their aim to secure monopolistic powers over the communities they served. Further, they realised that in the past the companies had never studied the interests or the wishes of the public, their dominant idea ever being to obtain the maximum revenue without regard to value or quality of the service given. There were exceptions to this treatment, of course, but it can be fairly stated that generally the railway companies of the States by their lack of consideration for the public in the past had lost its confidence and goodwill. So the companies found themselves ; without public sympathy in the hour j of their trial and tribulation. It was quite obvious, however, that without railway transportation a huge country such as America could not carry on. and something had to be done to assist the companies. So President Roosevelt put through a Railroad Bill at his memorable first sessions authorising the suspension of the anti-trust laws for one year, and the appointment of a Federal co-ordinator to effect economies in co-operation with three regional railway companies. The Bill also placed railway holding companies ''designed to evade the operation of the Anti-Trust laws) under Federal supervision. A new basis was established for the Arranging of rates that took into consideration the effect of t rates upon traffic, service and the i provision of revenues to support the I systems. The Bill further made I provision for the retention of employees affected by consolidations or elimination of services, and for the organisation of labour committees in each i of the three regional groups to confer i with the carrier committees on work- | ing conditions and wages. The Bill ! also provided for the scaling down of ! the capitalisation of the companies, boosted, as previously explained, by financial manipulatory in times of prosperity to serve their own selfish ends. Rationalisation. Under the Co-ordinator, one Joseph B. Eastman, a strong and capable administrator, three regional railway groups are to be created, for the East. West and South, and they are charged with the responsibility of working out economies. Mr Eastman has submitted his programme as follows :—First, unnecessary duplication of service or facilities which could be eliminated by joint use of terminals; second, unnecessary passenger or freight-train service such as could be eliminated by pooling arrangements; third, use of unduly circuitous routes; fourth, extravagance in solicitation; fifth, waste in equipment repair expense .such as could be avoided by joint use of shops and passenger ticket offices; sixth, unnecessary allowances to large shippers for certain services, and unduly low charges for warehousing and like services; seventh, waste in the use of equipment such as might be avoided by pooling, change in car rentals, or other means of reducing empty return movement. Thus again the Government is taking an important, indeed a decisive, part in the reorganisation and conduct of "Big Business" that, left to its own unrestricted individualism, had, when the testing time came, almost run on the rocks of disaster. It remains to be seen how the experiment of Government intervention and coordination will work out, but business men affirm that the Government's plan is the only one to save the companies from themselves and that the new arrangements signal the disappearance of one order of things connected with vital public utilities and the 'ushering iin of another order in which the people, through the Federal Govern- | ment will play no unimportant part. The reorganisation of the railways along the lines authorised is regarded as a vital feature of the "New Deal." Alienating Support. Big corporations have "no soul to save nor body to kick," and often do stupid things. A case in point was their action at the time of the consideration of the new proposals designed to save them. At the time actually when their representatives were supplicants to the Administration at Washington, they gave notice to a million employceos <i[ their intention to reduce (heir wages by 12i per cent. The President was very annoyed, for the railways' action cut right across iiis general recovery proposals, and lie made it clear that the "cut" would have to be postponed, if not eliminated from their programme altogether. This was done, to the relief of all concerne and it is unlikely that the Co-ordinator, who henceforth virtually will be In the saddle, will agree to a further reduction of wages when, if the economy recovery endeavours bear fruit, the railways will be on an improved operating basis and thus be able to maintain wages at the old rates. Hcducing Princely Salaries. One of the first things Co-ordinator Eastman did was to serve notice on the big companies that the enormous salaries paid to railway executives must be reduced. What princely remuneration they were enjoying is shown by the following list: —H. Holden, chairman of board of the Southern Pacific Railways, 135,000 dollars a year; W. W. Atterbury, president of the Pennsylvania Railroad, 121,500 dollars; Daniel Willard, president, of the Baltimore and Ohio, 120,000 dollars; L. F, Loree, president of the, Delaware and Hudson, 90.00 C dollars; L. A- Downs, president of the Illinois Central, 90,000 dollars; J. J. Pelley, New York, New Haven and Hartford. 90.000 dollars; Paul Shoup,

president of the Southern Pacific, 90,000 dollars; Carl Gray, president of the Union Pacific, 90,000 dollars; F. E. Williamson, president of the New York Central Lines, 80,000 dollars; S. T. Bledsoe, of the Atchison, Topeka and Santa Fe. 67,500 dollars. The railway executives, of course, objected to these reductions, contending that if the officers bore their heavy responsibilities and performed satisfactorily the herculean tasks with which they were confronted, the results gained would be immeasurably greater than their total salaries. But the executives and the companies got scant sympathy from the public and the press, which agreed that at a time when all were suffering it was nothing short of scandalous that such immense salaries should be paid to men who could not possibly earn them even in times of prosperity, let alone in times of adversity.