Rails & Reflection
Notwithstanding all the country's automobiles, buses, trucks, airlines, pipelines, waterways, lake and ocean shipping, the freight car remains the basic unit in U. S. transportation. And the number of freight cars loaded weekly by the U. S. railroad system remains a basic business index. When the railroads load less than 500,000 freight cars per week the country is depressed. When they load more than 1,000,000 a boom is in full flower. A few years ago when railroad finance looked its worst, statisticians used to put their feet on their desks and say that there was nothing wrong with the railroad that could not be cured by weekly loadings of 750,000.
Recovery has lately carried the magic figure to that level and more. Approaching the seasonal autumn peak, carloadings last week topped 800,000 for the first time in six years. The gain over the corresponding week of 1935 was 28%, but the comparison was distorted somewhat by the coal strike a year ago. So far this year carloadings have averaged 13.3% above the 1935 figure, though weekly gains last summer when general business was unseasonably good ran well above 20%.
Carloading for the whole year will probably not average the 750,000 per week supposedly needed to put the railroads on their feet. But the reasoning behind the axiom was demonstrated last week with the publication of the latest earnings for the railroads as a whole. Increased traffic boosted the net operating income of the 144 Class I U. S. railroads* from $42,000,000 in August 1935 to $64,000,000 in August 1936, a gain of more than 50%. For the first eight months of this year total operating net income was $364,000,000 as against $263,000,000 in the same period last year. Profits have become a reality for some carriers, are shortly expected by others. Even those in the hands of the courts--a classification which includes nearly one-third of all U. S. mileage --now have hopes of completing reorganization before the next depression. Brightly reflected in the price of railroad stocks has been this turn in the railroad tide.
Sample rises: Last Week Year Ago
Atchison, Topeka & Santa Fe 82 3/8 46
Chesapeake & Ohio 68 1/2 44
Erie 17 3/4 9 3/8
Great Northern 41 5/8 23 3/8
Illinois Central 28 7/8 13 7/8
New York Central 48 21 1/4 New York, Chicago & St. Louis 52 7 5/8
Pennsylvania 40 3/8 25 1/2
Southern Railway 24 1/4 8 1/4
Union Pacific 139 1/4 94 3/4
* Class 1 roads are all those wth operating revenues of at least $1,000,000 annually. They account for 93% of the country's 243,857 miles of line.
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