RAILWAYS OF U.S.A.

Evening Post, Volume CXVI, Issue 70, 20 September 1933, Page 9

RAILWAYS OF U.S.A.

EFFECT OF DEPRESSION

SAVED BY THE GOVERNMENT

CONTROL AND DIRECTION

(Written for ".The Post" by T.C.L.—

No. 14.)

The railways o£ 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, despito all tho economies made, most of them are in a bad way financially. In the past they made big profits, and railway shares had como to bo regarded as safe as any trust security, heneo they were a popular form of investment. Unlike many other businesses, cost of running of railway systems cannot bo reduced in proportion to the drop in transportation and revenue, for overhead chaTges 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 m the form of unpayable freights and rates. There was only one end to this insane form of competition, and it soon came. Tho companies' financial position became very shaky, and appeals to the Federal Government wero made tor assistance in order to enable them to carry on and do the transportation for the 'nation so essential if it wero to properly function. ' PUBLIC .■UNSYMPATHETIC. The public were not very sympathetic, ■with the railway companies over the plight they had got themselves into, for they had a lively recollection of the exactions and out-and-out plundering that had marked their operations in tho past. They also remembered how the capital of the companies had been •watered from time to time by .the various rapacious interests in control and of tho 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 tho railway companies of the States, by their lnck of consideration for the public in the past, had lest their confidence and goodwill. So the companies found themselves •without public sympathy in the hour of their trial and tribulation. It was quite obvious, however, that without railway transporation a huge country like '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 tho suspension of the anti-trnst laws for one year, and the appointment of a. Federal co-ordinator to effect economies in cooperation with, three regional railway companies. The Bill also placed railway holding companies (designed to evade tho operation of tho Anti-Trust laws) under Federal supervision. A new basis was established for tho arranging of rates that took into consideration the effect of rates upon traffic service and the provision of revenues to support the systems. The Bill further made provision for the retention of employees affected by consolidations or elimination of services, and for the organisation of labour committees in each of the three regional groups to confer with the carrier committees on working conditions and wages. The Bill also provided for the scaling down of the capitalisation of the companies, boosted, as previously explained, by financial manipulators in times of prosperity to serve their own selfish, ends. RATIONALISATION. Under the Co-ordinator, one Joseph B. Eastman, a strong and capable ndminis^ trator, three regional railway groups are to bo created, for the East, West, and South, and they are charged with the responsibility of working out ecoDomics. 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 pint 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 nse 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 ■co-ordination 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 in connection with vital public utilities .and the ushering in of another order in which the people through the Federal Government 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 tlo stupid things. A ease- 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 employees of their intention to reduce their wages by 12J per cent. The President was very annoyed, for the railways' action cut right across his general recovery proposals, and he made it clear that the "cut" would have to bo postponed if not eliminated from their programmo altogether. This was done, to the relief of all concerned, and it is unlikely that the Co-ordinator, who henceforth virtually will be in the saddle, will agree to a further redaction o-f 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. REDUCING PRINCELY SALARIES. One of the first things Co-ordinator Eastman did was to serve notice on tho big companies that the cnermous salaries paid to railway executives must bo reduced. What princely remuneration they were enjoying is shown by the following list:—H. Holden, chairman of board .of the Southern Pacific Railways, ljpAO dollars a year; W. W. AtterJ>tng^«;.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, 90,000 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;:. Caul Gray, president of tho Union Pacific, 00,000 dollars; F. E. Williamson, president of tho New York Central Lines, 80,000 dollars; S. T. Bledsoe, of the Atchison, Topeka, and Santa Fo, 67,500 dollars.

The railway executives, of course, objected to those reductions, contending that if the officers bore their heavy responsibilities and performed satisfactorily tho herculean tasks with which they were confronted, tho results gained would be immeasurably greater than their total salaries. But the executives and the companies got scant sympathy from tho public and the Press, which agreed that at a timo 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.