First Taste

With some hope of salvaging its industry, the Association of American Railroads three months ago voted a 15% wage cut effective July 1 (TIME, May 9). But so complex is the machinery provided by the Railway Labor Act that the A. A. R. realized it would take several months of bickering to put through the cut. Last week the industry got a taste of what might happen in the meantime. Rutland Railroad Co. (407 miles of track mostly in Vermont), which has lost $2,000,000 since 1931, went into receivership two months ago and Federal Judge Harland B. Howe granted an injunction preventing creditors from hindering the road's operations. Recently the Rutland has been losing $2,400 a day. This month the court directed that the receiver temporarily reduce wages 15%. After the employes rejected this plan Judge Howe last week handed down a new decision:

"The court cannot reduce salaries or wages--the railroad is too poverty-stricken to engage in a strike or a quarrel of any kind or wait for the Labor Board to decide what the wages shall be ... the decision must be theirs [the employes']. . . ." Simultaneously Judge Howe reversed his earlier stand, allowed creditors to sue. The ink was scarcely dry on his ruling when three banks (Central Hanover Bank and Trust Co., United States Trust Co. of New York, Old Colony Trust Co.) filed foreclosures on mortgages involving $9,250,000. This week Judge Howe is meeting with "all persons" interested to decide whether to abandon the line.

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