The Washington times., 1911-02-26


Thursday, after business hours, denying
1.-The proposed advance in freight rates in
lOfficiaI Classification and Western Traf-
fic Association territory came to wall
iStreet as the proverbial bolt from the
| hlue Men whose recollectiOns run
back for a generation can recall but two
other events of like Importance which
caught the financial district so utterly
lunawares, the Trans-Missouri decision
Iapplvinp the Sherman antitrust act to
railways and President Cleveland's ia
nous Venezuela message. Both OF
these came from a cloudless sky, and
Influenced demoralizing breaks in secur-
ity prices.
There is of course, one important
difference between these former sur
prises and Thursdays decision OF the
Commerce Commission, in that the
financial district had no inkling of the
two earlier events, while all Wall
Street and the entire railway industry
and the whole country were fully
aware that highly important cases in
volving the transporting companies
were impending. But everyone-in fact,
II have not found a single exception
expected that the commission would
grant some advances. Few persons en-
pected that the railroads would receive
all they asked, but no one, apparently,
counted upon a wholesale and sweeping
PROJECTION of every freight schedule.
Prices Break and Recover.
Prices for American stocks broke
from to points in the London market
on Friday before the New York opeDinS.
The selling abroad was almost entirely
for American account, and was a more
accurate measure OF the early hySterla
which seized upon brokers than the
later operations in the New York mar
ket. Prices on the local exchange, to
be sure, broke with much violence, but
they did not reach the low level at
which the initial sales for New York ac
count were consummated in London.
TnQuestionably the heavy supporting
orders which appeared in the local mar
ket did much to allay fear and calm
Wall Street. The course of prices lndl-
Gated that stocks are in strong hands,
and that the underlying condition is
sound.
When one considers the outpOurinS OF
pessimistic statements from disappointed
railways presidents, which flooded IN"
financial district all day Friday, u IS
rather surprising that stocks behaved As
we'll as they did After ,fhe initial break,
which did not fully measure up 10 the
London decline stocks showed CCnSld-
cradle resistance and developed d recOv-
erin gtendency, which was sustained
until near the close when active is
sued eased off, but Wall Street as a rule
has few If any Illusions over the basis
of the rally or the influence of the Com
merce Commissions action upon the gen
eraI public. What little outside inter-
est had been attracted into the market
by the recent advance disappeared
promptly on the collapse m prices, and
no one now looks for the public TO take
many speculative chances until the ST.
preme Court decisions are out of the
way.
Seriousness 0verestimated.
1t was, of course, a simple matter for
speculative Wall Street to Overestimate 9
the seriousness of the Commerce Com
missions action. This because Of the
dire predictions made by railway rresir
dents, railway labor organizations, and
various manufacturers and dealers in
railway equipment and supplies, of the
disasters which must enSue # tine COM
panies were not permitted 10 advance
rates. AT the outset of the campaign
for higher freights it was asserted that
unless they were granted, railways
would be unable to procure fresh capt.
tai, that dividends must be reduced, and
that bankruptcies must ensue.
OF recent months less has been heard
of these features, but such predictions
are being revived as a result of the de-
Cison of the commission. 1t is well, in
consequence, to recall that although the
agitation for rate advances has included
two campaigns extending in all over a
period of three years, not a single fore
bodinE has, as yet, materiaIized. The
railways have issued securities abund-
antly, halted only during the six
months interval between June and De
cember of last year; instead of dividend
reductions the tendency has been the
other way, and there have been no de-
faults or bankruptcies whatever in im-
portant roads. In fact, as the Com
merce Commission shows, the roads put
the worse side of the case forward and
suppressed the favorable features. 1t
now remains for them to emphasize the
good features.
Higher Labor Cost.
1t does not follow, of course, that it
has been all smooth sailing with the
railways because no serious disaster of
the many predicted has materialized.
Operating cost has increased in the
transportation industry as it has in ev-
cry important industry in the country,
due to the high cost of raw material.
In addition, the railways have felt to u
degree greater than other industries the
effects of the increased cost of labor.
The unions appear tc be better organ
lied among railway employees than else
where, or the special nature of the in
dustry is such that corporation man.
ayers apparently do not care to join
issues with their working force. What
ever the cause, it is difficult to recall
an important instance in the last two
years where railway labor has not got
| ten about all it asked on each occasion.
Labor enters so largely into the oper-
atiuns of the railways that the in
creased cost has reduced net earnings,
and another feature about higher oper-
atIng cost through labor is that once
higher wages are granted, they amount
practically to a permanent increase, or,
at least, such has been the result In re-
cent. years. In fact there have been