Rail Rates Down
Because it feels "immediate extraordinary measures are imperative in order to enable the railroads to continue in the passenger business," the Interstate Commerce Commission last week announced its most drastic decision since 1920. It ordered all U. S. railroads to reduce present basic fares of 3.6-c- a mile in coaches and 3.6-c- a mile plus 50% surcharge in Pullmans to a maximum rate of 2-c- a mile in coaches and 3-c- a mile in Pullmans. Pullman surcharges are to be abolished. Effective date: June 2, 1936.
Unlike the recent revision of classes on transatlantic liners, which was a change in name without much effect on rates (TIME, Feb. 17), the new railroad fares will make a tremendous difference in the cost of travel. A salesman scooting about the nation in trains now pays $32.70 for a day-coach ticket or $41.70 in a Pullman from New York to Chicago. According to the new rates, he will pay only $18.17 in a coach or $27.24 in a Pullman. To ride from Chicago to St. Louis in a sleeper will cost not $11.17 but $8.83. A day coach next afternoon to Indianapolis will cost $5.04 instead of $8.87.
Based on a two-year study, the ICC decision was handed down by a 5-4 vote, with two Commissioners absent. Bitterly contested by the minority, the 80-page decision declared:
1) Railroad passenger traffic and revenue have declined steadily since 1923. While rail passenger-miles fell from 47 billion in 1920 to 16 billion in 1933, high-way passenger-miles rose from 28 to 191 billion.
2) Only lines since 1933 to show improvement in passenger traffic and revenue are the Southern carriers which have tried an emergency rate of 1-c- a mile, the Western carriers which have tested 2-c- a mile.
3) "The passenger market . . . looks as promising as at any time in the history of the country," but the railroads cannot share it unless they cut rates to meet the cheapness of highway travel and the reduced economic condition of the U. S.
4) Improved service and facilities, such as streamlining and airconditioning, have brought only "modest" success. Principal remaining remedy is reduction of fare.
5) The Pullman surcharge is so distasteful to the public it causes more harm than good to the lines.
6) Extra fares on de luxe trains are still desirable.
7) In the South and West, improved traffic and revenue are due to reduction, not to better business conditions.
8) Circumstances in the East are substantially the same.
No one really knew last week what the effect of the new rates will be. In general, the railroads welcomed the reduction. Only the New York, New Haven & Hartford, Pennsylvania and New York Central actively opposed it. Greyhound Corp. stock dropped six points. Almost everywhere present bus rates will still be lower than the new rail rates.
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