Too Much Candy

Like a doting grandfather who has fed the youngsters too much candy, the Interstate Commerce Commission was getting alarmed at its own generosity to U.S. railroads. Since war's end, it had given them six freight-rate boosts. Yet freight revenues were declining; in the first half of January, carloadings were 11.2% below last year. Last week, in its annual report to Congress, ICC guessed why. It thought that railroads might be pricing themselves out of business.

Because of higher rates, the railroads were losing more & more business to trucks, which were hauling 12% more than a year ago, and barges, which were carrying 20% more. "Rate increases," said ICC, "may be carried to the point where they are largely self-defeating." As an example, it cited the fact that while the Railway Express Agency, Inc. got three increases totaling 46% last year, its revenue decreased 4%.

Instead of higher rates, said ICC, U.S. railroads should step up efficiency and cut costs by "bold experimentation with new devices and methods . . . imagination and ingenuity . . ."

The advice was easy to give, but harder to follow. U.S. railroads, which last year spent $279,400,000 on dieselization and this year will spend as much more, had already gone a long way toward improving efficiency. But the diesels were more efficient partly because they required less manpower--and the unions did not like that. This week, the Brotherhood of Locomotive Engineers served strike warnings against 15 western roads to force them to "featherbed" an extra engineer on diesels.

Furthermore, one of the biggest drops in carloadings had been in coal, which provides the biggest single source of railroad freight (14%). Thus, the more oil-burning diesels the roads bought, the more they would cut their coal revenues.

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