Omaha daily bee., 1902-12-17
WHY RATES ARE ADVANCED
Railway Men Seek to Justify New Grain
and Provision Tariff.
CLAIM THAT OPERATING COST HAS GROWN
Lake shore OhiciaI Says Roads Now
spend Relatively More Than
They Earn, hut Admits
Immense Profits.

WASHINGTON, Dec. 16.-An investigation
into the advance Of freight rates on grain
and grain products, dressed meats and pro-
visions from the Mississippi river, Chicago,
ETC., to New York and eastern points, gov
erned by the New York rate, was begun to-
day by the Interstate Commerce commits
sion.
The testimony showed that $3.50, 900 reye-
nue. would be added to the profits of one
road alone by the contemplated increase.
1t was claimed that the advances were
justified by the increased costs Of opera
tion.
The chief witness was the trafic man
ager Of the Lake Shore Michigan
Southern The traffic manager Of the
Michigan Central also testified, the latters
evidence, however, being qualified by the
| statement that his reason for increasing
the rates was because the presidents Of
the roads had ordered It,
Mr.. Grammar claimed that railroad ex-
penditures we're increasing much more
rapidly than the earnings; that even at the
increased tariffs grain was not being hauled
at a profit.
The principal items Of increase in ex-
penses were the maintenance Of engines and
| fuel supply, and he predicted, while admit
undoubtedly artificial, that prices would
not get back TO the old ngures for years.
| At the suggestion OF counsel and officials
of the roads represented the commission
! decided to require written statements by
January 10 next setting forth the alleged
| justification for the advance in rates. A
new hearing will be held, probably in
| washington at the earliest possible day.
Spend More Than They Earn.
BY general agreement Mr.. Grammar,
| traffic manager of the Lake Shore, included
| In his testimony a detailed statement re-
| garding his own road and Of the general
! situation. He contended that for a long
time railways had been relatively spending
more money than they earned, and that
this was because they were either spending
too much on the properties or the earnings
! were too small.
commissioner asked II the earnings Of
the Lake Shore were not sufficient on the
basis Of the last ten months, to pay inter-
| est on its bonds, 10 per cent on its pre-
ferred stock and Z per cent on its common
stock, and then carry S2500, 900 in the sur
plus fund.
Mr.. Grammar did not reply directly and
declined to state what he thought ought TO
! be carried surplus, but claimed that
under present conditions the road could not
do anything more than take care of itself.
Both he and Mr.. Mitchell said their roads
were strictly observing published tariffs,
but had not done SO prior to May. and ac-
knowledged that the departure from the
| tariffs had caused large losses.
The outgrowth OF their difficulties, Mr..
Grammar continued, was a meeting Of ex-
ecutive officials of practically every rail-
road in the trunk line and trafic associa-
tion territories which had agreed on the
advances already announced, and an in
crease on iron products west of Pittsburg
| by 100 per cent, but whether this advance
would be carried out would develop later.
Organized labor was getting not less
than 10 per cent more than the wages Of
May. and the Lake Shore was paying in
Chicago nearly 81 per ton more for coal
than It had to pay three months ago.
"As long as the present price OF coal is
only a temporary matter do you think that
item justifles you in imposing an increase
in your freight rates?" he was asked.
"If that we're the only question" he
answered, "and 1t was only a temporary
matter, should say no; but coal is not the
only factor in the situation"
He added that the Lake Shore received q
little less for grain freights than the aver
age on all other classes of freight.
When asked regarding, the cost of hauling
a train loaded with grain from Chicago tc
Buffalo he admitted that while the railroad
would receive a revenue OF $500, the cost
Of operating would amount to only $3.50.
All railroad supplies had increased ma
terially in price since 1sOO but generally
speaking the railroads were never more
|