The Railroads and the Depression

August 26, 1932

Report Outline
Position of American Railroads in 1932
Effect of Depression on Rail Rates and Employment
Emergency Fiscal Measures to Aid Railroads
Proposed Long-Range Measures to Aid Railroads
Special Focus

Railroad stocks and bonds were frequent leaders in the rapid market advances which occurred during August, 1932. Both railroad and industrial stocks touched their low point for the year to date on July 8. The New York Times average of 25 representative railroad stocks stood at $10.34 on that day, and the average price of 25 representative industrial stocks at $57.62. By August 25, the railroad average had risen to $29.59, a gain of 186.17 per cent from the low point. On the same day the industrial average was $102.61, representing a gain of 78.08 per cent from the year's low. Increases in domestic railroad bond averages were similarly greater than increases in industrial and utility bond averages. The rail bond average, which touched the year's low on May 31, had risen 47.9 per cent by August 25. The average for industrial and utility bonds, whose lows were recorded on June 1 and May 31, had increased 32.24 and 23.45 per cent, respectively.

While statistics on railway operations are not yet available for this entire period, there has been little to indicate that the market advances in railroad stocks and bonds were based on any substantial increases in the amount of business actually done by the carriers. The decline in prices of railroad stocks from the high attained early in the year to the low touched on July 8 was considerably greater than the decline in prices of industrial stocks. This factor may have contributed to their more rapid rise in the general upward movement of stock prices. Various measures for improvement of the fiscal position of the carriers which railway executives made known in July and August may also have influenced the upturn in prices of railroad securities.

Unsatisfactory Financial Condition of the Railroads

Railroad operations during 1932 have been far below normal, with even greater relative reductions in earnings. Only six roads whose common stocks were traded in on the New York Stock Exchange August 25, 1932, were paying dividends on those stocks. The railroad situation as a whole has become so critical as the depression has continued that numerous carriers have been close to receivership. With their credit at low ebb, assistance has been given by the Reconstruction Finance Corporation to the extent of over $200,000,000. The future of the carriers is nevertheless still uncertain. Failing an early revival of business, it is doubtful whether some of them can remain solvent.

ISSUE TRACKER for Related Reports
Oct. 14, 2022  Passenger Rail
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
Economic Crises