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National Geographic : 1947 May
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Mirage on Main Street * A recent survey of public opinion indicated that lots of folks have been "seeing" a mirage of railroad profits that weren't there. Most people thought that 10% would be a fair profit for railroads-nine out of ten said 6% or more would be fair. But the fact is that the railroads don't come out anywhere near that well. In the years since 1938 - four of them war years of tremendous traffic--the railroads earned an average of only 4% per year on their net in vestment in tracks, cars, engines, shops, stations and all the things it takes to produce the rail service which the nation needs. In 1946 - with wages and prices of material and fuel up more than 50% above prewar levels - railroads still hauled freight at prewar rates. Even with a slight rate increase during the last half of the year, earnings on net investment dropped to an average of only 23/ %. Some rail roads earned more, but others showed no profit at all - were, indeed, in the red for the year of the heaviest peacetime traffic in history. At the end of 1946, the Interstate Commerce Commission authorized higher freight rates to become effective in 1947. These increases will help railroads meet their rising costs, and will give them a better chance to improve equip ment, roadways, and other facilities - improve ments necessary for continually better service. But even with these increases, in 1947 rail roads as a whole will probably average little more than 3 % on their investments - just about half the 6% which is as little as anyone would consider a fair profit. ASSOCIATION OF AMERICAN RAI LROADS WASHINGTON 6 D.C. IN PARTNERSHIP WITH ALL AMERICA
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