NEWS & EDITORIAL COMMENT
edited/DAVID P. MORGAN
SUBSIDIES: THREE CHOICES
1 IN a surprise opinion issued last
summer, the Interstate Commerce
Commission recommended Federal sub-
sidies to railroads to "preserve essential
passenger services." The Commission
would disburse the money which could
total 52 million dollars a year. It would
do so under a formula geared to mainte-
nance of way expenses on track, signals,
and other fixed plant required for pas-
senger schedules, thus leaving manage-
ment a "strong incentive" to cut costs
since subsidies would not be related to
deficits which totaled 485 million dol-
lars last year. Citing the bankruptcy of
New Haven as its Exhibit A, the I.C.C.
says other roads may follow; deficits of
Eastern roads, especially, look "ominous,
deep-seated and endemic" to the Com-
mission.
Said the Commission: "A nation that
is serious about propelling a man to the
moon should be able to solve the mun-
dane problem of moving its citizens de-
pendably and comfortably some 50 miles
or less from home to work without multi-
plying ribbons of concrete and asphalt
that would strangle the central cities they
are supposed to serve."
Reaction to the regulatory agency's
proposal, which is expected to reach Con-
gress as a bill in early 1962, was split
both in Washington and among the rail-
roads. Frowning were Santa Fe (“A first
step toward eventual nationalization of
all transportation"); Rock Island ("We
don't favor any subsidies”); Sen. George
Smathers, Dem., Fla. ("Poorly timed and
poorly expressed"); Sen. Frank J.
Lausche, Dem., O. ("I'm not going to go
along with giving out the taxpayers'
money"), but pleased were Pennsy
("Gratifying"); Reading ("Highly en-
couraging"); Erie-Lackawanna ("Heart-
ening"); and Sen. Prescott Bush, Rep.,
Conn. ("The thought of Federal subsidy
to these railroads does not upset me so
much as it does some other people").
As for the rails, the Wall Street Journal
observed dryly in its news columns that
"their reactions jibed with their financial
health." That is, commuterless Santa Fe
with a net operating income of 21.1 mil-
lion dollars for the first half of 1961 was
opposed, but commuter-conscious Pennsy
with a deficit of 12.3 million for the same
period was very much in favor. The
Western position was summed up by Il-
linois Central's Wayne A. Johnston who
declared, "A subsidy is an expensive way
of hiding a problem, not of solving it. . . .
Allow the railroads the freedom to com-
pete, and they will need no help.” For the
East, Pennsy's Allen J. Greenough re-
plied, "While the Commission uses the
word 'subsidy,' what they plan, we be-
lieve, will not subsidize the railroads but
will subsidize the people who are using
and need rail suburban and through
trains. . . . Everyone knows that the
Government is currently subsidizing
farmers, home builders, airlines, shipping
lines, and truckers, and yet we have
heard no talk about nationalizing these
important functions in our economy. To
my mind, the I.C.C. proposal is a big step
in the opposite direction from nationali-
zation."
Insofar as commuters are concerned,
TRAINS believes along with former New
Haven President George Alpert that they
do not constitute a business at all since
it is patently impossible for tax-paying
private enterprise to make any profit
hauling them. Example: North Western,
which cleared a tiny but much publicized
profit on commuters in 1959-1960, lost
more than 1 million dollars on them in
the first half of 1961 alone. Indeed, only
the political and social implications of the
commuter deficit have prevented its abo-
lition. If a Western line dropped huge
amounts of money on a long branch to a
played-out mining area, it would apply
for abandonment and doubtless win ap-
proval. The loss is just as real in the East
but a road just can't abandon, say, 30,000
riders a day no matter what. Again, free-
dom to compete isn't the issue. Businesses
compete but not public services such as
police and fire departments, sewage sys-
stems, schools, and if you adopt the
East's viewpoint commuter movers.
In any event, there are but three al-
ternatives to the dilemma:
1. If Government forces the commuter
railroads to treat the service as a busi-
ness, they will either raise fares to cover
costs and taxes until the riders are driven
to expressways, or they will go bank-
rupt trying, as New Haven did.
2. If Government subsidizes commuter
railroads by direct aid and/or tax for-
giveness, it will save much more money
by thus resolving the automobile problem
than is ever allocated to the rails. How-
ever, the railroads will still be handi-
capped by owning plant and equipment
for and devoting management attention
to a traffic which is but a break-even
proposition at best.
3. If the commuter issue is faced
squarely, Government (directly
through an authority) will do the job
itself by buying the track (or trackage
rights) and cars required to move X
number of people to and from work.
If commuters are indeed a community
responsibility, then the third alterna-
tive of authority ownership and operation
of rail suburban systems is an answer
both Eastern and Western railroads
should be able to agree on without cav-
Continued on page 10
WHAT, NOT ALREADY?
OUR regular waiter downtown at
Deutsch & Graun, a gentleman by name of
Everett, has a happy habit of calling out,
"What, not already?" whenever we depart
this commendable bar-restaurant—whether
it's 6 p.m. or after midnight. Which is the
way feel about concluding our round-
the-world articles in this issue. One re-
ward of a writer is that he gets to relive
his journey as he turns notes into maga-
zine copy, but more satisfying than that is
the chance to say -
in word and photo-
Kalmbach Publishing Co. 1961. Title reg. Pat. Off.
Published monthly by Kalmbach Publishing Co., 1027
N. 7th St., Milwaukee 3, Wis., U.S.A. BRoadway
2-2060. Western Union and cable address: KALPUB
Milwaukee. A. C. Kalmbach, President. Joseph C.
O'Hearn, General Sales Manager. Ward Zimmer, Ad-
vertising Manager. TRAINS assumes no responsibility
for the safe return of unsolicited editorial material.
Acceptable photographs are held in files and are paid
for upon publication. Second-class postage paid at
Milwaukee, Wis.
Printed in U.S.A.
YEARLY SUBSCRIPTION, $6; 2 YEARS, $11; 3
YEARS, $15. For life, $60. Outside the Americas,
50 cents a year additional (for life, $5 additional).
FIFTY MORE GP-20's Ordered by the
SANTA FE
Fifty more General Motors 2000-hp GP-20's are joining the Santa Fe fleet of twentyfive GP-20's at work pulling the freights between Chicago and Kansas City. By turning in fifty 1350-hp freight locomotives, the Santa Fe is exchanging 67,500-hp capacity for 100,000-hp-a gain of 48%. This added capacity enables the fifty new GP-20's to do the work of seventy-four older FT's.
This is the essence of the General Motors Locomotive Replacement Plan.
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