The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1916-03-19
Railways May Be Forced to Raise Wages
Without Being Allowed to Boost Rates
Corporations Lie the Devil and Deep Blue Says
Camor for Better Pay While Commissions Prevent
Higher Tariffs

egulation-establlshe shed State railway
commissions empowered to regulate rates
within the boundaries Of the respective
States. Here was a phenomenal evil
srisin out OF our dual system of govern
ment-a system which has created very
difficult situations In regard to other
problems. The fact is, obviously, that a
business, although supplied by private
capital Is not allowed to TX the price
OF its product-transp ortation. Let US
grant that some regulation of rates was
necessary. How has our kind of regula-
ton worked?
Railway Expansion Checked.
In the last five years Qs10-1si0 as con-
trasted with five years ending In 1906, the
building Of new railways has fallen on
" per cent, thus reducing the employ
ment OF labor and the disbursement of
large sums for supplies In those parts of
the country which needed better trans
portation. The number of freight cars
ordered has decreased by - per cent, and
of locomotives by % per cent, thus cut
ting OF work from artisans in all the
shops providing cars and locomotives.
Why was this? Because capital, con-
WINGED of the hostility of public opinion
and legislatures toward railways, did not
believe 1t could get as good returns for
Investments in railways as in other in
dustrial enterprises. Railways could not
borrow to supply funds for equipment or
build new lines, and their own earnings
were falling OF, So that they could not
provide for improvements out of current
income. For what reason were earnings
creased.
Big Increase in Railroad Expenses.
In recent years, taking 1914 in COM
parison with 1906, traffic has increased
and the railways had to meet this in
crease. Ton miles grew 1913 per cent;
the investment to carry the increase
grew to s77,551 per mile of line from
S59,624, or 20 per cent Operating ex-
penses per mile increased 3S.4s per
cent; while the net revenue per mile
decreased 3.02 per cent. The increase
in expenses, common to all other en-
terprises during this period. cut down
railway income. The average annual
wage per employee increased 32.57 per
cent. Taxes increased 69.05 per cent.
Materials had risen in price. Conse-
auently, operating expenses per mile,
as we have seen, increased over IS
per cent.
What, then, has been the result of
regulation since the power to control
rates has been put into the hands OF
national and State commissions? A
largely expanding traffic necessitated
by the growth of the country, increas-
ing expenses in carrying this traffic.
falling of Of earnings, smaller divi-
bends to investors, diminished capacity
OF the railways to obtain credit. a
lessening ability of the roads to main
tain their property and keep to the
necessary requirements OF safety and
efficiency demanded by the public. an
increasing number Of roads getting in
to financial difficulties.
Certainly regulation by government
and state commissions has not as yet
met the situation. Something is amiss.
In every other enterprise supplied by
private capital. when expenses have in
creased. it has been possible to raise
the price of the product, or services
rendered. This recourse has, with
slight exceptions. been denied to the
railways. Banks, even though under
governmental supervision, are free to
fix their own rates of discount for
lending capital Why is it denied to
railways. even when under the expert
ence Of regulation it is seen that they
are facing a crisis? 1t is quite clear
why President Wilson, in his message
to Congress, recommended the wisdom
of a careful investigation into the
whole railway situation
Large Wage Increase Demanded.
Into this situation is now injected the
demands OF railway employees for higher
wages. Is this a matter which comes
under the jurisdiction OF the commits
sions? No; and this fact Is the alarming
phase of the situation to the general
public. Commissions regulate the price
of railway service, but they have no
control over the expenses Of providing
that service. One authority fixes rates
another, entirely separate. tries to regu-
late wages as they enter into expenses.
In any other industry. If the laborers en-
force a rise of wages, the employers can
raise the price of their product to the
consumer.