Still Sliding

"To carry commuters such as these it costs your railroad $2 for every $1 received." So read the caption under a photograph of anonymous commuters in the New Haven railroad's annual report, which sadly totted up a $2,363,702 deficit in 1957. Last week, reporting an even steeper deficit of $3,018,169 just for January-February, the New Haven unhappily discovered the identity of the costly "commuters" pictured in its annual report. Names: Boston and Maine's President Patrick B. McGinnis--who was dumped as New Haven president after a 1956 commuter revolt against late trains--his wife, and the New Haven's chief engineer, Pete Poison.

Other railroads had some equally embarrassing reports for stockholders. The Pennsylvania reported that February produced the line's fourth straight monthly loss, plunging it $11.3 million into the red in the first two months of 1958. Last week the Pennsy turned to a harsh remedy: an "indefinite" 10% pay slash for all employees earning more than $10,000 annually, the first since 1934 except for a brief cut during the 1956 steel strike. Included in the slash, which will still save only about $200,000, is President James Symes, who made $129,808 last year. With carloadings down 24.3% so far in 1958, Symes foresees no Pennsy dividend this year, the first such omission in 100 years.

Things were even worse for the New York Central, which passed its second-quarter dividend after a January-February loss of $13.8 million. To economize, the Central will drop its fiveyear, $500 million modernization program, complete only about $20 million worth of projects under construction. The Baltimore & Ohio in February suffered its first monthly deficit since 1951, lost $990,000. Though still in the black, the Chesapeake & Ohio reported a decline in first-quarter earnings on common stock from $1.75 last year to $1.02.

Only the Western lines felt relatively chipper. Their dependence on high-cost passenger traffic is far smaller, and many also operate profitable sidelines. Hard hit was Santa Fe, with a January-February drop in net from $8,900,000 to $3,700,000 because of slack freight traffic in petroleum products and durable goods. But Union Pacific's January-February railroad net slipped only 1%. Also in good shape was Southern Pacific. With rising income from pipelines and trucking affiliates, S.P. expects roughly the same earnings of $27.2 million in the first half of 1958 as in the same period last year.

Ten weeks after it began trying to diagnose U.S. railroad ailments, the Senate Surface Transportation Subcommittee wound up hearings last week with 2,356 pages of symptoms. Indicated cures: repeal of the wartime 10% passenger excise tax and 3% freight levy; a possible new Government emergency loan fund to help the roads meet soaring maintenance-labor costs; a faster tax write-off period on new equipment by cutting present depreciation rates from 40 years to 20. The subcommittee feels that these changes are politically possible, hopefully expects legislation to bring them about by July 1.

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