Railways Of America In Dire Plight

Northern Advocate, 27 October 1938, Page 12

Railways Of America In Dire Plight

So seriouc, is the financial situation of the American railways that a special session of Congress may be called to ccpe with it, states the American correspondent of the “Manchester Guardian.” It is often said that unless substantial relief comes before the end of this year perhaps three-quarters of the railway companies may be forced into bankruptcy. In some cases servic might even be suspended.

The history of American railways is not a pleasant one. In the beginning they were subsidised by the Federal Government with enormous grants of free land along the projected routes—in some instances running to square miles on either side of the right of way. Because of this and other inducements far too many railways were built duplicating one another needlessly. In many Western States the railway became and remained the chief political power, bribing legislators wholesale, giving secret “rebates” to favoured customers, and dealing ruthlessly with its own unimportant individual members of the public. Many lines were heavily cver-capitalised, and shares were sold to the public mililons of dollars in excess of reasonable earning power.

Retribution In recent years these early sins have brought retribution. Railway stocks have been deflated by vast suras. Excessive rates forced the Government to interfere and order reductions which the railway managers said were confiscatory. Mr Justice Brandeis, before taking his place on the Supreme Court, was famous for observing that with reasonable economies the railways could save “a million dollars a day”— a statement that is undoubtedly still true.

During the depression which began in 1929 the United States Government poured out millions of dollars to bolster up the weaker lines, most of which had been deliberately wrecked, in a financial sense, by their own managers.

As a result of subsequent defaults the Government now owns or control a number of lines.,lt did almost nothing however to reform the systems it aided, and as a result the conditions are worse tc-day than they were five years ago.

Opinion is divided as to the best solution of the railway problem. Some students want all the lines to be consolidated into a single system or a group of four or five, either under Government ownership cr with private ownership under strict public supervision. Others would see the present railway lines retained but their capitalisation scaled down to a reasonable sum and economies instituted, such as joint use of terminal facilities in the chief cities. Still others would like to sec the situation remain unchanged in general, except that the Government would lend the railways enough money to get them out of their present difficulty.

It seems clear in any case that the railways are over-equipped for future business. The population of the United States is increasing only slowly, and the curve will turn downward in about another decade. With 30,000.000 motor cars in use (one for each family in the country), millions of persons who formerly travelled by train no longer do sc. Vast quantities of goods once transported by rail now travel by lorry. Hydro-electrical power makes the carriage of coal less necessary, and oil for petrol is moved in pipelines.