STRIKE AVERTED

Evening Post, Volume CXXVI, Issue 138, 8 December 1938, Page 5

STRIKE AVERTED

AMERICAN RAILWAYS

STATE LOAN OFFERED

NO WAGE REDUCTIONS

(From "The Post's" Representative.)

NEW YORK, November 9,

Faced with a complete cessation of railway traffic throughout the country, President Roosevelt intervened, and succeeded in forestalling the strike on the eve of the Congressional elections. He has offered the railways financial aid in return for their withdrawal of their order reducing wages by 15 per cent.

The railways complain that they find it increasingly difficult to meet competition by buses, lorries, inland waterways, automobiles, and aeroplanes. Their revenue, over the past eight years, is one-third of the revenue of the previous eight-year period. A net operating surplus of nearly 1,000,000,000 dollars in 1929 contrasts with a deficit of 200,000,000 dollars last year. A new pension law added 100,000,000 dollars to the pay-rolls. Since the business recession that started a year ago, traffic has declined, deficits have continued, and investments have shown a meagre return. Many railroads have gone into receivership or trusteeship. President Roosevelt's "fact-finding commission" advised him, after inquiry, that wages of railway labour were not high compared with wages in parallel industries, a horizontal "cut" on a national scale would not meet the financial emergency, since the saving would not be distributed merely to needy railways, wage reduction would run counter to the trend of wage rates in industry generally, and the recession was a short-time situation and could not be regarded as ground for wage reduction in view of present indications of improvement in the business of the carriers. "Rehabilitation" loans, totalling 1,000,000,000 dollars, on easy terms, are offered by the President. * These loans would be part of the 6,000,000,000-dol-lar national defence programme, in which utilities, automobile and aeroplane factories, chemical plants, and heavy industry generally, were intended to participate. The railways rejected a previous similar offer. "Why," they asked, "should we borrow more money when we have trouble meeting our present commitments, with our industry generally in its old age, operating costs outdistancing revenue—especially if the suggested loans might serve to throw into reorganisation those of us who have kept going?" Railw,ay executives, however, have changed their attitude, because of the prospects of improved business, leading some railways to believe that their revenues might show a substantial increase in the coming months. Another reason for a change in outlook is the conceded fact that the railways, generally, are not in shape to meet maximum national defence requirements; furthermore, that they cannot reasonably, refuse to co-operate with any Government programme that would include bringing the railways up to a state of military preparedness.