Business: Profits on Comfort

Last week Pullman Inc. reported a third quarter profit of $2,100,000—best figure for any quarter in four years. Pullman lost money last year and the year before but as late as 1930 it rolled up earnings of $16,000,000. Well-buttressed with cash ($36,000,000 at the end of September), with no bonds, no preferred stock, it paid a $3 dividend through the blackest years of Depression.

Pullman is a holding company controlling two distinct organizations. One is The Pullman Co., which has a practical monopoly on railroad comfort.* The other is Pullman Car & Manufacturing Corp., which is one of the biggest U. S. makers of railroad rolling stock. Lately Pullman’s equipment business has fattened on railroad orders financed with PWA loans. It built Union Pacific’s two streamlined, high-speed trains, has orders booked for two more. From Pullman, Illinois Central also wants an experimental five-car train.

Air-conditioning, as the latest wrinkle in U. S. transportation comfort, has helped keep Pullman’s great shops open. More than 1,200 Pullman cars have been equipped to date, and another 1,000 will be finished by the end of 1935. The company has developed its own air-conditioning machinery but a few railroads prefer to install other types. The 141 Pullmans used in Baltimore & Ohio’s crack trains are all fitted with York machinery. Atchison, Topeka & Santa Fe has 30 Pullmans equipped by Carrier Corp. However, Pullman has outfitted about one-half of the 1,400 air-conditioned diners, club and lounge cars owned by the railroads. Such special work accounted for no small part of the profits announced last week.

Pullman owns 8,500 cars with names ranging from Abbakon to Zurich. Of these only 4,900 are now in use. The company has not built a Pullman car since 1930.

In the eyes of the Interstate Commerce Commission if not of the traveling public, The Pullman Co. is a common carrier. In the first nine months of 1934 it reported to I. C. C. gross passenger revenues of $33,000,000 which was $4,500,000 better than in the same period of 1933. Average passengers per Pullman car dropped from 11.6 in 1929 to 8.6 last year. (Most cars will seat or sleep 28 persons.) Last year 9,000,000 people bought berths, 4,000,000 bought seats, a total of 13,000,000 Pullman passengers; in 1929 there were 33,000,000.

Yet Pullman fares have not been cut 1¢ to meet present price levels. Western and Southern roads have voluntarily dropped the notorious 50% surcharge on Pullman space which many a passenger wrongly held against the Pullman Co. instead of the railroads. Eastern roads with heavier passenger traffic have neither dropped the surcharge nor reduced the basic fare.

If Pullman has not cut its own prices it has at least made a lively bid for business with three types of bargains:

1) Every Pullman conductor now tries to sell a section for the price of a lower berth plus one-half the price of the unused upper.

2) Special round-trip excursions to “historic” points like Niagara Falls are sold at only a fraction more than the one-way Pullman charge. With 3,400 cars in that service last year Pullman reported the amazing average of 26.6 persons per car.

3) One-and-one-half Pullman charges for round-trips are liberally offered to vacation spots and resorts.

Bargains are also available in private cars, of which Pullman has 16 in commission, five laid up. It still costs $75 per day with a minimum of $200 to indulge in that most luxurious form of land travel. But it used to be necessary to pay the full rent for the time the empty car spent on the return trip. Now the return charge is only one-half. The railroad charge has also been cut from 25 full fares to 15.

During the Kentucky Derby last May all of Pullman’s private cars were chartered but usually about only four are in transit simultaneously about the country. If a tycoon prefers his own car, Pullman will build it for him, as it has done for 226 people and companies in the past, at a cost of $65,000 up. Henry Ford spent $200,000 on his Fair Lane. Last private car built was the Wanderer, for the late Harry Payne Whitney in 1930.

It would be difficult to assemble a more impressive aggregation of wealth than is represented by the men on Pullman’s board: J. P. Morgan and his partner George Whitney; Richard K. Mellon and two Mellon lieutenants; George F. Baker and a vice president of his First National Bank; General Motors’ Alfred Pritchard Sloan Jr.; Harold S. Vanderbilt, Montgomery Ward’s Sewell Lee Avery. President of Pullman is David Anderson Crawford, a husky, popular gentleman of 55 who works hard and plays money-golf in the low 80’s. During the winter at Chicago’s University Club he plays racquets with his friends, using a soft ball. He calls it “pansy racquets.”

* Some roads still operate a few of their own sleepers locally. Gulf, Mobile & Northern owns five; Chicago, Milwaukee, St. Paul & Pacific, 25, all painted orange-yellow. Canadian National and Canadian Pacific own all their sleepers and parlor cars.