Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-07-25
DANGERSHADOWS
RATE INCREASE
RAILROADS ARE CONFRONTED
WITH PROBLEM
PROPOSED STEP WOULD CAUSE
HUGE SPECULATION
Outbreak of Public Hostility, Stlmu-
IatIne the Desire for Government
Ownership, Would Result
Declares Henry clews

Henry CIews. banker, New York, in
his latest market letter, says:
whether the proposed advance OF
10 per cent in freight rates is being
used as part of big stock market
speculation or not remains to be seen.
1t is very certain that an advance Oh
this amount in freight rates alone
would add enormously to the revenue
of the railroads. According TO POOR
Manual the freight earnings of Amerl-
can railroads last year were 1,S25, O00,-
400 Ten per cent of this amount would
mean over $3.50, 900, 900 increase in reVe-
nue.. Net earnings last year on freight
and passengers amounted to $S23,OOO,OU0'
IT is but reasonable to expect that the
volume of traffic will shortly begin to
increase; In fact, it has done SO al
ready as shown by the smaller num-
Der of idle cars. The railroads nave
already put into effect many impor-
tant economics. and while expenses
had been enormously increased by high
wages and high materials, still the
roads should now be receiving the BEN
eft of improvements made for econom-
icaI results.
"Of course the railroads would soon
be In a critical position If present con-
ditions were maintained. What with
outlays forced upon the railroads,
party to satisfy public opinion ana
partly to meet the obligations OF grow
ing traffic, and what with the growing
difficulties of suitably financing the
roads, It must be conceded that rail-
road managers have grave problems
with which to DEAL
saThe railroad question, however, Is
a many-sided one, and cannot be set
tied purely from the railroad stand
point. Public interests will have to be
considered, and it will also have to
be recognized that an advance IN
freight rates Is not the most likely
method of stimulating a revival in
traffic, which, after all, is the one
thing really needed. If the advances
in rates now contemplated are really
nut into effect and maintained, the year
1909 may easily become far more
profitable one for the railroads than
even 1907.
"should these plans be successful II
is evident that the railroad business
would be placed upon a much more
profitable basis than heretofore, that
dividends would quickly recover from
recent losses and that this advance
would be utilized as the basis CT
huge speculation. Such result would
be welcomed by the speculative ele-
1nents. but would be exceedingly dis
tasteful to the more conservative
classes in both business and financial
circles.
Would Depress Traffic
ut cannot be ignored that higher
rates would depress and not stimulate
traffic; and the effect of such action
upon public opinion might prove dam
gerous in the extreme, especially in
face Of a political campaign. If the
roads temporarily advanced rates, say.
per cent instead of 10 per cent, for
the purpose of helping them out OF
purely temporary difficulties, and
agreed to return to the old level as
soon as conditions permitted, there
would be little complaint.
"Our railroad magnates are not yet
philanthropists; and though generally
large minded, far sighted and very
able men, there are few among them
who could be depended upon to resist
the temptation Of such a great specu-
lative opportunity. A movement that
contemplates putting railroad property
on an even more profitable basis than
existed before the panic and is accom-
panied by an unparalleled accumula-
ton of idle funds carries with 1t a
speculative opportunity of the most
dangerous sort.
''Its very possibilities make It highly
inimical to public welfare; and polit-
cal opinion will surely be strongly
aroused against the railroads, stirring
up another wave of hostile legislation
still more radical than the one now
subsidnig. It is to be hoped the rail-
roads will CAREFUL consider the effects
of their present movement which has
been planned with more earnestness
and care than is generally supposed.
Railroad managers are by no means
a uni On the F1rnnnCal and thew will
certainly do well to prudently consider
the consequences they will bring down
upon themselves by inviting a fierce
speculative debauch, not to mention
another outbreak of public hostility
that could only end in injurious legis-
lation and act as a further stimulus to
the desire for government ownership.