"Out of the Question"

The Splawn report, result of Franklin Roosevelt's two months ago appointing a three-man committee of ICCommissioners, Splawn, Eastman and Mahaffie, to concoct a remedy for the railroad crisis, specifically said that the question of wages should be left to the railroads. Its other recommendations dealt with ways of lending money to the roads, increasing revenues, speeding reorganizations. Last week, after consideration by RFC Chairman Jesse Jones, Senator Burton Wheeler and representatives of railroad management and labor, these recommendations were out of the "conference stage," on the way to becoming legislative proposals.

Most railroad officials, however, feel that solution of the railroad crisis is not a question of complicated legislation but a simple issue of increasing income or reducing expenditures. The former was ruled out when ICC last March refused to raise freight rates more than 5.3%. So last week the Association of American Railroads, meeting 100-strong in Chicago, took the Splawn report at face value, voted to cut railway wages 15% as of July I. Estimated saving: $250,000,000 a year.

The A. A. R. vote was only the first step of a procedure which may take six months to work out under the complex machinery provided by the Railway Labor Act. And the unions might still strike when this arbitration period ended. Said Railway Labor's spokesman, Chairman George Harrison of the Railway Labor Executives Association last week: "Wage cuts are out of the question."

In 1932, in the depths of the last depression, the railway unions voluntarily took a 10% pay cut, which has since been restored and garnished with a further 7 1/2% rise. Now, as the A. A. R. last week pointed out, the railroad situation is even worse than in 1932. In January 1938 the railroad operating net was 32% under January 1932. Last week the first 37 roads to report March earnings showed an aggregate decrease of 80% from last year. First quarter earnings reports indicated staggering losses in almost every case. Samples:

Jan.-March Jan.-March

1937 1938

Norfolk & Western. . . . . . . . . . . . . . $8,202,934 $1,947,013

Chicago, Burlington & Quincy. 1,182,011 d 1,728,050

d=deficit

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