Traffic Down, Rates Up

"The general public has substantially abandoned its use of trains for other modes of travel." So said Baltimore & Ohio Railroad President Howard E. Simpson last week as the B. & O. petitioned the public service commissions of Maryland, Delaware and Pennsylvania for permission to drop its Baltimore-New York City passenger service, once esteemed as the "prestige run." Simpson, himself one of the few top railroaders to rise through the passenger department, had good reason to request a cutback. Of the B. & O.'s $34 million passenger deficit last year, $5,000,000 came from the six daily Baltimore-New York round trips.

The B. & O.'s move, said railroaders, is part of a gentlemen's agreement with the Pennsylvania Railroad, which runs 20 Baltimore-New York round trips daily. In return for B. & O.'s stepping off the tracks, the Pennsy will pare down its own passenger service on the Baltimore-Washington and Cleveland-Detroit routes, where it is a major competitor of the

B. & O. The New York Central also wants to cut its passenger runs. "If we could eliminate our passenger trains now," said President Alfred E. Perlman last week, "our net income would be $80 million a year higher."

Carloading Crisis. That kind of radical surgery would not cure all the railroad ills. The rails are also being hurt by the drop in freight, which supplies 85% of their income. Last week carloadings dipped 5.4% from the previous week--the sharpest week-to-week drop in three years--and were 12.6% under the same week of 1956. The overall picture was not quite so dark as the week-to-week statistics made it appear. Carloadings have been dropping from the 1956 level for most of this year, but the gap between loadings in 1957 and 1956 has remained steady. For the first six months, loadings were down 5.7%, and for the 4½ months since, the decrease is no greater. Railmen hope the year ends off only about 5%.

But to make the railroads' financial position worse, railway workers last fortnight got a 12¢ hourly wage increase. The boost will cost rails some $300 million in the next year. To pay their higher bills, railroads last week were getting ready to request their 15th freight-rate hike since World War II (total freight-rate increase since then: 107%). The Interstate Commerce Commission will look kindly upon the request. When the rails got their last rate raise in August, the ICC conceded that it was not enough, and invited them to come back for "further moderate increases." But ICC stipulated that this time the rails must ask for rate increases item by item, rather than an overall boost.

Most trunk lines will ask for increases on all but about 30 of 256 commodities. Coal will probably get hit, and the Western roads want higher rates for their eastward shipments of farm goods, lumber and lumber products. Even the 25 Class I Southern roads, which have traditionally rebelled against stiff rate increases for fear of losing business to trucks, plan to join in the request, even though they may not seek boosts for pulpwood, tobacco, alcoholic drinks. Finally, all the rails are expected to petition for higher charges for loading and unloading export-import freight, and for permission to charge extra for switching, weighing and unloading domestic freight.

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