Holders of toll-road bonds are finding improvements in monthly reports on operation of the turnpikes .
Long-term trend of traffic on these roads seems clearly upward .
Higher toll rates also are helping boost revenues .
Result is a better prospect for a full payoff by bonds that once were regarded as highly speculative .
Things are looking up these days for many of the State turnpikes on which investors depend for income from their toll-road bonds .
Traffic on nearly all the turnpikes has been growing .
That added traffic means rising streams of dimes and quarters at toll gates .
As a result of the new outlook for turnpikes , investors who bought toll-road bonds when these securities ranked as outright speculations are now finding new hope for their investments .
Another result is that buyers are tending to bid up the prices of these tax-exempt bonds .
Other tax-exempt bonds of State and local governments hit a price peak on February 21 , according to Standard & Poor's average .
On balance , prices of those bonds have slipped a bit since then .
However , in the same three-month period , toll-road bonds , as a group , have bucked this trend .
On these bonds , price rises since February 21 easily outnumber price declines .
Tax-free returns .
Investors , however , still see an element of more-than-ordinary risk in the toll-road bonds .
You find the evidence of that in the chart on this page .
Many of the toll-road bonds still are selling at prices that offer the prospect of an annual yield of 4 per cent , or very close to that .
And this is true in the case of some turnpikes on which revenues have risen close to , or beyond , the point at which the roads start to pay all operating costs plus annual interest on the bonds .
That 4 per cent yield is well below the return to be had on good corporation bonds .
It's not much more , in fact , than the return that is offered on U. S. Treasury bonds .
For investors whose income is taxed at high rates , though , a tax-free yield of 4 per cent is high .
It is the equivalent of 8 per cent for an unmarried investor with more than $16,000 of income to be taxed , or for a married couple with more than $32,000 of taxed income .
Swelling traffic .
A new report on the earnings records of toll roads in the most recent 12-month period -- ending in February or March -- shows what is happening .
The report is based on a survey by Blyth & Company , investment bankers .
Nearly all the turnpikes show gains in net revenues during the period .
And there is the bright note : The gains were achieved in the face of temporary traffic lags late in 1960 and early in 1961 as a result of business recession .
Many of the roads also were hit by an unusually severe winter .
Indication : The long-term trend of turnpike traffic is upward .
Look , for example , at the Ohio Turnpike .
Traffic on that road slumped sharply in January and February , as compared with those same months in 1960 .
Then March brought an 18 per cent rise in net revenues -- after operating costs .
As a result , the road's net revenues in the 12 months ending March 31 were 186 per cent of the annual interest payments on the turnpike bonds .
That was up from 173 per cent in the preceding 12 months .
That same pattern of earnings shows up on the Massachusetts Turnpike .
Operating revenues were off in the first three months of 1961 , but up for the 12 months ending in March .
Costs were held down , despite a bitter winter .
For the year , the road earned 133 per cent of its interest costs , against 121 per cent in the preceding period .
The road's engineers look for further improvement when the turnpike is extended into Boston .
Slow successes .
Some turnpikes have not been in full operation long enough to prove what they can do .
The 187-mile Illinois State Toll Highway , for example , was not opened over its entire length until December , 1958 .
In the 12 months ended in February , 1960 , the highway earned enough to cover 64 per cent of its interest load -- with the remainder paid out of initial reserves .
In the 12 months ended in February , 1961 , this highway earned 93 per cent of its interest .
That improvement is continuing .
In the first two months of 1961 , earnings of the Illinois highway available for interest payments were up 55 per cent from early 1960 .
Success , for many turnpikes , has come hard .
Traffic frequently has failed to measure up to engineers' rosy estimates .
In these cases , the turnpike managements have had to turn to toll-rate increases , or to costly improvements such as extensions or better connections with other highways .
Many rate increases already have been put into effect .
Higher tolls are planned for July 1 , 1961 , on the Richmond-Petersburg , Va. , Turnpike , and proposals for increased tolls on the Texas Turnpike are under study .
Easier access .
Progress is being made , too , in improving motorists' access to many turnpikes .
The Kansas Turnpike offers an illustration .
Net earnings of that road rose from 62 per cent of interest requirements in calendar 1957 to 86 per cent in the 12 months ended Feb. 28 , 1961 .
Further improvements in earnings of the Kansas Turnpike are expected late in 1961 , with the opening of a new bypass at Wichita , and still later when the turnpike gets downtown connections in both Kansas City , Kans. , and Kansas City , Mo. .
Meanwhile , there appears to be enough money in the road's reserve fund to cover the interest deficiency for eight more years .
For some roads , troubles .
Investors studying the toll-road bonds for opportunities find that not all roads are nearing their goals .
Traffic and revenues on the Chicago Skyway have been a great disappointment to planners and investors alike .
If nothing is done , the prospect is that that road will be in default of interest in 1962 .
West Virginia toll bonds have defaulted in interest for months , and , despite recent improvement in revenues , holders of the bonds are faced with more of the same .
These , however , are exceptions .
The typical picture at this time is one of steady improvement .
It's going to take time for investors to learn how many of the toll-road bonds will pay out in full .
Already , however , several of the turnpikes are earning enough to cover interest requirements by comfortable margins .
Many others are attracting the traffic needed to push revenues up to the break-even point .
A top American official , after a look at Europe's factories , thinks the U.S. is in a `` very serious situation '' competitively .
Commerce Secretary Luther Hodges , accompanied by a member of our staff , on May 10 toured plants of two of Italy's biggest companies -- Fiat , the auto producer , and Olivetti , maker of typewriters and calculating machines .
Our staff man cabled from Turin as follows --
`` Follow Secretary Hodges through the Fiat plant , and you learn this :
`` One , modern equipment -- much of it supplied under the Marshall Plan -- enables Fiat to turn out 2,100 cars a day .
About half of these are exported .
`` Two , wage costs are a fraction of the U.S. costs .
A skilled worker on the assembly line , for example , earns $37 a week .
`` Three , labor troubles are infrequent .
Fiat officials say they have had no strikes for more than six years .
`` Said Secretary Hodges : ' It's a tough combination for the U.S. to face .
`` Olivetti had a special interest for Hodges .
Olivetti took over Underwood , the U.S. typewriter maker , in late 1959 .
Within a year , without reducing wages , Underwood's production costs were cut one third , prices were slashed .
The result has been that exports of Underwood products have doubled .
`` The Olivetti plant near Turin has modern layout , modern machinery .
The firm is design-conscious , sales-conscious , advertising-conscious .
`` Hodges is trying to get more foreign business to go to the U.S. .
The inflow of foreign capital would help the U.S. balance of payments .
`` Hodges predicted : ' I think we will see more foreign firms coming to the U.S. .
There are many places where we can use their vigor and new ideas ' '' .
Foreign competition has become so severe in certain textiles that Washington is exploring new ways of handling competitive imports .
The recently unveiled Kennedy moves to control the international textile market can be significant for American businessmen in many lines .
Important aspects of the Kennedy textile plans are these :
An international conference of the big textile-importing and textile-exporting countries will be called shortly by President Kennedy .
Chief aims of the proposed conference are worth noting .
The U.S. will try to get agreement among the industrialized countries to take more textile imports from the less-developed countries over the years .
Point is that developing countries often build up a textile industry first , need encouragement to get on their feet .
If they have trouble exporting , international bill for their support will grow larger than it otherwise would .
Idea is to let these countries earn their way as much as possible .
At the same time , another purpose of the conference will be to get certain low-wage countries to control textile exports -- especially dumping of specific products -- to high-wage textile-producing countries .
Japan , since 1957 , has been `` voluntarily '' curbing exports of textiles to the U.S. .
Hong Kong , India and Pakistan have been limiting exports of certain types of textiles to Britain for several years under the `` Lancashire Pact '' .
None of these countries is happy with these arrangements .
The Japanese want to increase exports to the U.S. While they have been curbing shipments , they have watched Hong Kong step in and capture an expanding share of the big U.S. market .
Hong Kong interests loudly protest limiting their exports to Britain , while Spanish and Portuguese textiles pour into British market unrestrictedly .
The Indians and Pakistanis are chafing under similar restrictions on the British market for similar reasons .
The Kennedy hope is that , at the conference or through bilateral talks , the low-wage textile-producing countries in Asia and Europe will see that `` dumping '' practices cause friction all around and may result in import quotas .
Gradual , controlled expansion of the world's textile trade is what President Kennedy wants .
This may point the way toward international stabilization agreements in other products .
It's an important clue to Washington thinking .
Note , too , that the Kennedy textile plan looks toward modernization or shrinkage of the U.S. textile industry .
`` Get competitive or get out '' .
In veiled terms , that's what the Kennedy Administration is saying to the American textile industry .
The Government will help in transferring companies and workers into new lines , where modernization doesn't seem feasible .
Special depreciation on new textile machinery may be allowed .
Government research will look into new products and methods .
Import quotas aren't ruled out where the national interest is involved .
But the Kennedy Administration doesn't favor import quotas .
Rather , they are impressed with the British Government's success in forcing -- and helping -- the British textile industry to shrink and to change over to other products .
What's happening in textiles can be handwriting on the wall for other lines having difficulty competing with imports from low-wage countries .
Among the highest-paid workers in the world are U.S. coal miners .
Yet U.S. coal is cheap enough to make foreign steelmakers' mouths water .
Steel Company of Wales , a British steelmaker , wants to bring in Virginia coal , cut down on its takings of Welsh coal in order to be able to compete more effectively -- especially in foreign markets .
Virginia coal , delivered by ship in Wales , will be about $2.80 a ton cheaper than Welsh coal delivered by rail from nearby mines .
U.S. coal is cheap , despite high wages , because of widespread mechanization of mines , wide coal seams , attactive rates on ocean freight .
Many of the coal seams in the nationalized British mines are twisting , narrow and very deep .
Productivity of U.S. miners is twice that of the British .
Welsh coal miners , Communist-led , are up in arms at the suggestion that the steel company bring in American coal .
They threaten to strike .
The British Government will have to decide whether to let U.S. coal in .
The British coal industry is unprofitable , has large coal stocks it can't sell .