Warning to Competitors

After World War I, U.S. railroads were lazy from lack of competition. Their idea of what-to-do-about-the-postwar-travel-boom was to see if the traffic would bear a 20% increase in passenger fares. They found out: the U.S. automobile and bus industries, then in swaddling clothes, grew up almost overnight, while the railroads started down the long toboggan toward the almost bottomless pit of 1932.* Last week Railway Age, in its annual Passenger Progress issue, published a survey of what railroad executives propose to do for the postwar passenger this time. Their "practically unanimous opinion":

> Passenger fares should be slashed as soon as war ends--perhaps even right away, for advance publicity. (Said one railroad big shot, in recommending a 1-c--a-mile coach fare--less than half present rates--at once: ". . . Nibbling at fares will do no good. . . . There's no use making our previous mistake of hanging on to high rates until our trains are empty." Also suggested: a nationwide, standard base rate instead of "the present impossibly complicated passenger tariffs," which have been an inviolate tradition of the railroads for generations.)

> Most passenger equipment is outmoded and should be completely replaced with fast, streamlined trains. (One railroad executive admitted: "One of the radical departures is to consider the comfort and convenience of the passenger." Another: "The open-section Pullman car is as extinct as the dodo." Another: "We will never buy another heavyweight car . . . car builders will be swamped with orders for [streamlined] equipment."

For the slow-footed railroads this was heady talk. But, for the first time since the last war, they are in a position to mean what they say. By the end of next year according to an Investment Bankers' Association estimate, railroad funded debt will be down to $8 billions, almost a third less than in 1932, when fixed charges were 30% higher than railway operating income. With this new financial freedom of action assured, airlines and bus lines full of plans for a postwar passenger boom could well ponder the warning words ot the jubilant railroad man who told Railway Age last week: "Our competitors who are anticipating a walkover in taking traffic from the railways are in for a most unpleasant surprise."

* Though passenger revenues normally amount to only 10% or railway gross on the average, to many a road they represent the difference between profit & loss

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