Railroad Subsidies

November 17, 1961

Report Outline
Worsening plight of american railroads
Government Operation of the Railroads
Railroad Efforts to Improve Position
Special Focus

Worsening plight of american railroads

Worry Over How to Rescue Hard-Pressed Lings

American railroads, with revenues declining and competition from other forms of transportation rising, are caught in a financial squeeze more severe than any since the Great Depression. As in the 1930s, doubt about the ability of the rail carriers to survive without public assistance is widespread. In fact, the outlook for the railroads is viewed more gloomily in many quarters today than it was & quarter-century ago.

Jervis Langdon, Jr., president of the Baltimore & Ohio, asserted recently that nationalization of the railroads could not be avoided unless there was “pretty rapid action by the government.” A joint statement on Nov. 8 by James M. Symes, chairman of the Pennsylvania, and Alfred E. Perlman, president of the New York Central, announcing their intention to seek a merger of the country's largest and second largest rail systems, said ominously: “Time to assure maintenance of rail transportation as a private enterprise is running out, and we have no choice but to try every means at hand to help our companies better their ability to compete more effectively in the transportation field and to avoid government ownership.”

Inadequacy of Current Railroad Earnings

The Association of American Railroads pointed out last spring that current railroad earnings were “not adequate to service the cost of the capital invested in them, let alone to provide the supplements to depreciation charges necessary for essential capital improvements.” As the table on the following page shows, the combined net railway operating income of the country's 108 Class I railroads—those with gross annual revenues of $3 million or more—exceeded $1 billion as recently as 1956 but had fallen below $600 million by 1960. Similarly, the average rate of return for Class I roads dropped in the same period from almost 4 per cent to barely more than 2 per cent. The figures for the first nine months of 1961 indicate continuation of this steady downhill march.

ISSUE TRACKER for Related Reports
Railroads
May 01, 2009  High-Speed Trains Updated
Oct. 18, 2002  Future of Amtrak
Apr. 16, 1993  High-Speed Rail
Mar. 10, 1978  Future of American Railroads
Mar. 07, 1975  Railroad Reorganization
Jun. 20, 1973  Railroad Nationalization
Nov. 17, 1961  Railroad Subsidies
Aug. 24, 1960  Railroad Mergers
Jan. 01, 1958  Condition of the Railroads
Jan. 31, 1951  Railway Safety
Oct. 04, 1944  Railroad Freight Rates
Jun. 12, 1939  The Government and the Railroads
Apr. 21, 1938  Government Ownership of the Railroads
Dec. 07, 1937  Railroad Rates and Revenues
Jul. 17, 1937  Advances in Railway Passenger Service
Sep. 27, 1934  Railroad Rates And Federal Regulation of Transportation
Jan. 11, 1933  Railroad Receiverships and Reorganizations
Aug. 26, 1932  The Railroads and the Depression
Oct. 13, 1931  Wages of Railroad Labor
Jul. 09, 1931  Railroad Freight Rates
Feb. 14, 1931  The Railroad Consolidation Controversy
Sep. 19, 1927  The Problem of Railroad Valuation
Mar. 30, 1927  Railroad Consolidation and Prospective Legislation
Mar. 26, 1927  Principles of Railroad Consolidation
Mar. 08, 1926  Railway Labor Disputes Legislation
May 04, 1925  The Baltimore and Ohio Cooperation Plan
Sep. 12, 1924  National Railroad Consolidation and the Van Sweringen Merger
Aug. 14, 1924  Automatic Train Control in Relation to Railroad Casualties
May 28, 1924  The Condition of American Railroads
BROWSE RELATED TOPICS:
Railroads
Regulation and Deregulation