Sample A43 from U.S. News and World Report, May 22, 1961 Pp. 109-112"Better Times ..." Pp. 113-114"A Plan To Free..." A part of the XML version of the Brown Corpus2,011 words 223 (11.1%) quotesA43

Copyright 1961 U.S. News & World Report, Inc., Washington

U.S. News and World Report, May 22, 1961

Typographical Errors: attactive [1870]

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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 .