Word: cunningham
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Dates: during 1920-1929
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...These preliminary statistics for January, as given out by the Interstate Commerce Commission," said Professor Cunningham, "show that out of fifty-one railroads which have annual operating revenues of $25,000,000, twenty-three had deficits in the net operating income. In other words, nearly one-half of the large railroads failed, in January, to meet their operating expenses, taxes, and rentals for joint facilities or equipment, and had nothing with which to pay the interest on their bonds. In thirteen cases out of fifty-one, the roads failed to earn even their operating expenses. The estimated returns for February...
...roads were returned to their owners after two years of Government operation," continued Professor Cunningham, "with depleted earning power and in deteriorated physical condition. During the period of Federal control wage rates and other expenses were greater than increases in revenues, and it was partly to remedy this circumstance that, when Federal control terminated, Congress enacted a new law, known as the Transportation Act of 1920. The law was designed to restore the railroad carrying power, and provided for a transition period of six months in which the railroads could put their properties and organizations on a normal operating basis...
...respect to the effect upon the railroads' net income of a substantial decline in traffic, Professor Cunningham declared that it is greater than is generally thought. "A simple arithmetical illustration," he explained, "will make the point clear. If the volume of traffic, upon which the rate increases were based, is taken at 100, the operating expenses at 70, the taxes at 5, and the interest, rentals and other charges as 15, the remainder of 10 is the surplus available for dividends, improvements or reserves. But instead of 100 units of traffic and revenue, the railroads are now offered...
...earnest effort to square the outgo with the income, the railroads are cutting expenses to the bone," continued Professor Cunningham. "Some of these cuts are real economies, such as those which come from increases in the efficiency of operating trains, stations, and yards. Others are not real--they are merely borrowing from the future. For example, the repair work on way structures and equipment has been radically curtailed. Locomotive and car shops have been partly or wholly closed, and programs for renewals of ties, rails and ballast have been reduced to a fraction of the requirements. Obviously this is deferred...
...reply to a question as what means for meeting the situation were at the railroads' command, Professor Cunningham stated that there were three expedients available for improving the situation. "The first, that of seeking authority to make further advances in rates, may be mentioned and then dismissed," he said. "For this expedient holds out no promise, as the rates, as a whole, have now reached a level above which certain commodities will not move, and passengers will not travel. The net effect would probably be to lose more through further curtailment in traffic than would be gained by higher charges...