Los Angeles herald., 1910-11-22
.R.R. RATE BOOST
BLAMED ON WASTE
Attorney Brandeis Charges That
Roads Could Save $1,000
900 a Day by Economy
ARGUMENT ON RAISE OPENS
Lawyer Declares: Make Stock
holders, Instead of ConSum-
erS, Pay for Mistakes
ARGUMENT ON RAISE OPENS
Associated Pressl

pers had their inning today in the
contest before the Interstate commerce
commission over the proposed increases
in freight rates on eastern trunk lines.
Their contention was that the real
solution the railroads need for greater
net income lay in scientific manage
ment.
This was the burden Of the whole
days proceedings, the only witness
for the railroads being President
Joseph Ramsey of the Ann Arbor rail-
road. the former head of the Wabash
system, who defended the proposed
increases as vitally necessary in view
of increased cost of operation and ma
terials.
The hearing will continue through
the week and the commission will not
be prepared to decide the case, which
involves an increased tariff on several
thousand articles, until well into next
year.
The shippers case is in charge Of
Louis d. Brandeis OF Boston, repre-
senting the commercial organizations
of the Atlantic seaboard, who sprang
his scientific principle doctrine in
his statement of the case at the OPEN
ing of today's hearing. His witnesses
were H. K. Hathaway and James
Mapes Dodge Of Philadelphia, both
heads of big manufacturing concerns.
Mr.. Hathaway testified he joined the
Philadelphia concern in 1904, with the
especial purpose of installing the
scientific idea in the plant, and that
since the change the cost of production
had been reduced about 80 per cent
and the business transformed from
losing to a profitable venture. His
testimony was largely devoted to a
detailed description of the minute
workings of his system.
How does the output in 1904 COM
pare with that of today?' asked Mr..
Brandeis, seeking to show the advan-
tages of the scientific SYSTEM
1--WE are producing three times as
m1ch," replied the witness.
BOASTS ABSOLUTE FAIRNESS
Mr.. Dodge testified the same system
exactly was In force in his plant. His
slogan was absolute fairness with
the workmen.'
He said under the scientific man
agement his company's manufacturing
digestion was very much better"
that the company had been able to
eliminate night work and that the eff
ficiency of his shop was double that
before the inauguration of scientific
methods.
Mr.. Dodge declared that any shop
IL
that does not vastly improve it's meth
DDS over those of five years ago would
have to go out of business today.
In his opening statement Mr.,
Brandeis told the story of the al
legged injustice Of the suspended rate
advances when the interstate COM
merce commission today resumed its
hearing of the subject Of the rate in
creases proposed by eastern trunk lines.
Mr.. Brandeis declared the proposed
rate increases were neither just nor
reasonable, and that greater efficiency
would yield greater income to the rail-
roads.
He contended for scientific manage
ment of the roads, and said the rail-
roads should cooperate to reduce costs
instead of combining to increase rates.
2 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 may reach $1,OOO,O0O a day.
While he promised evidence that
economies in railroad operation are
possible, he said the pending increase
in freight rates should not be approved
until the subject should have been fur
ther investigated by the commission on
it's own initiative.
He urged such an Independent opera
tion because much valuable evidence
would be available to the commission
which is not available to the shippers,
including some experiments in scientific
management by the roads.
Mr.. Brandeis combated the railroad
contention that a new source of income
through increased freight rates must be
found. Instances where such actual
need may appear, he said, have resulted
not from the fact that present rates
are too low. but that the management
has, through reckless expansion or 9TH
er waste, and through financial ineffi-
cheney, impaired the financial condition
of the road. and that the burdens so
should be borne by the stock
holders through reduction of dividends,
and not by shippers and consumers,
through increased rates.
He charged the proposed horizontal
increase in class rates would burden
the small producer and consumer, that
it makes arbitrarily a sweeping change
of long distance rates which have
largely been in effect for nearly gen.
Grafton, that the changes are made
without evidence whether the existing
rates are compensatory, that the
changes affect more than 1000 different
articles made without adequate in
vestigation into the effect upon the
particular industries to which they
apply and that they involve grave in
Justice, discriminating unreasonably
in favor of articles to which COM
modify rates apply and to some extent
discriminate in favor Of local traffic.
Even if the railroads need additional
net income and some raise in freight
rates were a proper means, Mr.. Bran
deis argued, the commission should
not approve the particular tariffs now
under consideration.
He declared under scientific man
agement the errors would be prevented,
errors and accidents avoided, and that
much of the economy would flow from
a fuller use of plant and equipment
and the lesser employment of work.
ing assets.
He urged use of appropriate ma
chinery in loading and unloading
freight, warehousing and accounting,
to reduce expense and congestion of
terminals.
Willia-l A. Glasgow, jr., of Phila-
delphia filed a brief with the commits
sion today comparing acts of congress
and British railroad legislation. He
contended that under the amended in
terstate commerce law the burden of
proof on the carrier would not be dis
charged by proof of increased cost Of
operation or apprehended increased
expenditures, but that the carrier
must show that the rate was Just and
reasonable for the service rendered,
Just as before the act of congress the
Ia.