Omaha daily bee., 1909-01-14

FREIGHT RATES AND EARNINGS.
The apparent determination OF
eastern railroad managers to force a
marked increase in freight rates is
being bolstered up with some stats
tics and arguments that fail to bear
the test of investigation and COMPARE
son. w. c. Brown. the new president
OF the New York Central. has printed
an array OF figures showing that in
the last ten years the cost of labor
and material used by railroads has in
creased from 80 to 76 per cent in the
face of a net reduction of 1859 per
cent in freight rates. He argues that
IL material and labor had cost the
same in 1907 that they did in 1897,
the expense to the railroads would
have beer S676, 1000, 900 less than it
was and If the 1897 scale of freight
rates had been in effect last year the
railroad earnings would have been
about 500, OOO,0 900 greater than they
were. He concludes:
Facts of this character furnish their
own argument. Figures such as these
require no elaboration. These are the
conditions with which the railroads of
the country have had to contend during
the last ten years and the conditions that
confront them today. These are the facts
that must be frankly spread before in
vestors to whom we are trying TO sell Sc
c%urities to obtain money for necessary
Improvements.
All of which is a clear case of beg
ging the question. The people and
the railroads are dealing with condi-
tions Of 1908 and not with those that
obtained in 1897. The volume of
traf1c is a very potent factor in the
fixing of freight rates, but Mr.. Brown
fails to show the increase in the
amount of business and to- explain
that the 1863 per cent reduction in
rates has been more than onset by the
volume of business, the facilities for
handling it, the more equitable dis
tribution of shipments in all direc-
tions and many other features con-
tributing to more economical and
profitable operation. He might, with
as much reason, go further back and
show what a great reduction there has
been in freight rates between Omaha
and Salt Lake City since the days
when all shipments between the points
were carried by OK teams.
Neither do President Browns con-
illusions fit in with the last report
Of the Interstate Commerce commits
sion. This report deals with the
claims of the railroads that the losses
they suffered in 1908 warrant a radi-
cal advance in freight rates. 1t shows,
in brief, that the gross earnings of all
the railroads for 1908. while 1884,
464,941 less than for 1907, were still
$9S ,S75,470 in excess of those of
1906, the banner year in American
railroad earnings, and $342 ,158,231
greater than the earnings in 1906, a
remarkably prosperous year. The net
Earnings, although Sill, 051, 006 less
than in 1907 and $59,349,13S less
than in 1906, were still $37,65S,50
greater than for 1905. According to
the commission. whatever might have
been true in individual cases, the rail-
roads of the country did not suffer so
severely in comparison with years Of
normal traffic and business conditions
as they would make out.
The evidence all appears to be that
the railroads have not suffered from
the depressed conditions OF the last
year any more than have other indus
tries and enterprises and consequently
have nj special warrant to recoup
their losses at the expense of their
shippers.