Annual report of Hudson & Manhattan Railroad Company

(New York, N.Y. :  Hudson and Manhattan Railroad Company  )



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  1946: Page 1  

February 28, 1947


At your last annual meeting, an entire new Board of Directors of the Company
was elected. Since that time your new Board has applied itself diligently toward
a solution of the problems confronting your Company.

The real estate operations hereafter reported in detail show an upward trend in
revenue which, it is believed, will continue for some tiraie to come. Modernization of
the railway equipment has been initiated. The fare rate.has been stabilized, and we have
procured the services of Mr. Wilham T. Rossell, an outstanding expert in the transit
held, under whose guidance we hope to establish policies which will result in an increase
in the general revenues of your Company and to effectuate many substantial and im¬
portant economies, which it is anticipated will arrest the decline of railway revenues.

The following report deals with those problems and the action taken and planned
by your Board concerning them.

The Company's Railway Operations

Your Company renders an essential public
service, carrying 70,000,000 passengers annually,
approximately 26% of all persons crossing the
Hudson River between New York City and New
Jersey. Despite the essential and public nature
of its service, the Company has earned during
the past ten years an average of only approxi¬
mately 3% on its capital devoted to the public
use. In contrast, most other companies per¬
forming essential and public services in the
United States during the same period have earned
substantially more on their capital. The basic
reason for the inability of the Company to earn
a fair return lies in the fact that buses and auto¬
mobiles have diverted traffic from the Company.
This they have accomplished because they utilize
trans-Hudson facilities at less than the competi¬
tive cost of the service provided. The facilities
used by them are subsidized by various direct and
indirect means.

This subsidized competition has manifested
itself in the experience of the Company since
1927. Passenger traffic on the Company's lines
declined steadily since that year, when 113,100,000
passengers were carried, to 1941, when 65,800,000
were carried. A similar decline was experienced
by other railroads and ferries, non-subsidized
competitors of the Company. While this decline
was taking place the total trans-Hudson passenger

traffic remained practically stable—the traffic
previously handled by ferries and railroads,
including the Company, being diverted to buses
and automobiles, whose traffic increased from
27,000,000 in 1927 to 112,000,000 in 1941. This
increase was made possible by and coincided with
the construction and completion of the Holland
and Lincoln Tunnels and the George Washington
Bridge. Although the Company experienced a
slight gain in traffic during the war years, in 1946
the level approximated that of 1941.

During the period of decline from 1927 to
1941, despite a slight increase in fares, the loss
of traffic was so substantial that gross passenger
re\-enues declined from $8,461,954 in 1927 to
$5,461,858 in 1941. Moreover, operating expenses,
particularly wages, have risen materially with the
result that the Company failed to earn its interest
charges in full in any j^ear since 1932.

During the past year due to increased use of
competitive and publicly owned trans-Hudson
facilities, the use of which was curtailed during
the war, and a shut-down of the Company's
operations in May and June because of labor
difficulties, the number of passengers carried on
the Company's lines declined 10.8% from the
previous year. The major portion of this loss was
attributable to strikes and should not recur in
future vears.
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