The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1910-11-21
CUT EXPENSES.
Advice of Attorney L. d. Bran
deis to the Railroads.
His Opening Argument for Ship
pers in Rate Case.
LACK OF REVENUE.
Is Due Generally to Bad Manage
ment, He Says.
Stockholders Should Stand 1t,
and Not the Patrons.

Washington, Nov. 21.-The opening
statement of Louis D. Brandeis, coun-
sci for the traffic committee of the COM
mercial organizations of the Atlantic
seaboard, told the story of the alleged
injustice Of the suspended rate adj
vances when the interstate commerce
commission today resumed its hearing
of the subject of the increases propos-
ed by the eastern trunk lines. Mr..
-Brandeis had many witnesses ready to
take the stand to testify concerning the
conditions in the east and this testi-
mony was arranged Immediately to fol-
low his statement.
Mr.. Brandeis declared that the pro-
posed rate increases were neither just
nor reasonable and that greater eff
cheney would yield greater income to
the railroads. He contended for scien-
tific management of the roads and said
the railroads should cooperate to re-
duce costs instead of combining to in
crease rates.
He described what he said was the
huge field for the application of scien-
tific management and the rich fruit in
economies and improved service which
may be expected to result, economies
which have been estimated as aggregat-
ing more than a million dollars a day.
He said scientific management de-
mands preparedness and detailed ana
lytical study, that both employers and
employee gain and that it does not in
volVe capital expenditures. While he
promised evidence that huge economies
in railroad operation are possible he
said the pending increase in freight
rates should not be approved until the
subject should have been further and
more fully investigated by the inter
state commerce commission on its own
initiative.
He urged such an Independent in
vestigation because much valuable evil
dence will be available to the commits
sion which is not available to the ship
perS, including some experiments in
scientific management by the roads.
No Need of 1t.
He combated the railroad conten-
ton that a new source of net income
through Increased freight rates must
be found and submitted no such need
has been shown to exist. In instances
where such actual need may appear, he
said, it has resulted not from the fact
that present rates are too low but that
the management has, through reckless
expansion or other waste, and through
financial inefficiency, impaired the
financial condition of the roads and
that the burdens SO arising should be
borne by the stockholders through re-
duction of dividends and not by ship
pers. and consumers through increases
in freight rates
Mr.. Brandeis referred especially to
the testimony of Presidents McCrea of
the Pennsylvania, Willard of the Balti-
more & Ohio, and Brown of the New
York Central. and Vice President
Stuart of the Erie. He took issue with
the railroad contentious which he sum-
med up thus:
That a greater net income is neces-
sary to maintain or properly increase
present dividends and certain addi-
made from surplus income, as the ratio
of operating expenses to gross operat-
ing revenues has risen monthly mainly
through wage advances and burdens by
congress, such as laws providing safety
appliances. limiting hours of labor and
standardizing railroad accounting.
Evidence insufficient.
THAT the possibilities of economies
at least for the leading railroads have
been practically exhausted and that
the proposed increases, confined prin-
cipally to horizontal increases of long
distance class rates are the proper
means of raising additional net in
come" Mr.. Brandies charged that this
proposed horizontal increase in class
rat es would burden the small producer
and consumer, that it makes arbitrar-
NY a sweeping change of long distance
rates which have largely been in effect
for nearly a generation, that the
changes are made without evidence
whether the existing rates are or are
not amply compensatory, that the
changes affect more than four thou
sand different articles, made without
adequate investigation into the effect
upon the particular industries to which
they apply and that the changes in
volve grave injustice, discriminating
| unreasonabIy in favor of articles to
which commodity rates apply and tc
some extent discriminate in favor OF
local traffic.
| Even if the railroads need addition
| al net income and some raise in freight
| rates were a proper means, he argued
| the commission should not approve the
| particular tariffs now under considera-
| ton. He said he offered the gospel OF
| hope as against the railroad presi'
dents declaration of despair involving
| a vicious circle of ever increasing
| freight rates and ever increasing cos
| of living.
He declared that under scientific
| management the errors would be pre-
vented instead of corrected, delays anC
! accidents avoided and calculation sub
/ stituted for guess, and that much OF
| the economy would flow from a fullel
use of plant and equipment and the
lesser employment of working assets
rendering additional capital invest
| ment unnecessary.
He urged use of appropriate machin.
cry in loading and unloading freight
/ warehousing and accounting, to reduce
| expense and congestion of terminals