The Birmingham age-herald., 1918-12-26
CANNOT INTERFERE WITH FREIGHT RATE ON RAW MATERIALS Prouty Tells Why He Can not Yield to Protest of
 Alabama Furnace
 Companies
By HUGH ". ROBERTS

Washington, December 25.-(Special.) In declining to interfere with rates or raw materials in the Birmingham district, or which furnace companies have bitter ly complained, c. A. Prouty, director of the division of public service and ac. counting. railroad administration, ex- pressed this opinion with attendant req sons
 While the record is long the issue is short Most rates were advanced a percentage of the old rate, usually 9 per cent. Certain rates on gross materials, like, ore, lime rock, sand, etc, were in- creased not by a percentage of the exist ing rate but by a given number of cents per 100 pounds or per ton This latter method of increase was applied to these furnace rates at Birmingham.
 'The result was that the per cent ot increase in the Birmingham district, where the rates were abnormaly low was much greater than in other big iron producing districts where the rates were higher. The Birmingham people com plained that the percentage method should have been employed in making advances upon their raw materials.
 "Generally speaking have been of the opinion that the advance in cents per 100 pouns was improper for the req son that it created a discrimination by advancing the short distance rate to the same extent as the long distance rate. have never been able to see any reason why the rate for a haul of five miles should be increased by the same amount as a rate for haul of 800 miles. I have, therefore, as I suggested to you favored the application of the percentage and not the absolute increase and have in sisted in several cases that rates should be modified accordingly
 The same consideration does not ap- ply in case of these Birmingham rates. The purpose of the advance in cents per 100 pounds was to maintain the relation already existing between localities and commodities. The low rates in the Bir- lningham district were originally estab- Jished because the manufacturer of pig iron in that district could not compete with his rival in the Pennsylvania dis trict, for example, unless the raw ma teria1 rates were low Now the effect of this advance in cents as made is to absolutely maintain the differential be- tween those points, If the Alabama fur mace enjoyed in its transportation charges an advantage of s2 per ton be- fore the advance, it enjoys exactly that same advantage today. He can compete as well as he could compete before. To put his advance upon a percentage basis would be to give him an additional ad- vantage by reason of the advance in freight rates.
 Upon the other hand rates on pig iron have been advanced 25 per cent and to the extent to which the rate of de- livery paid by the Birmingham district exceeds that paid by it's competitor, the furnace in that district rests under a disability. This, however, applies to but a comparatively small portion of the out put.
 In view of the fact that the method of advance which has been applied to tse-e -"~r material rates in all parts
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 s1ealati eftkncNt ssgiaang that sarl MaaIhGd tss s.a ;orsiittas, fir. Cham 51Sf@ and sssssa rggeNs& sbs onclusion that we ought not to interfere with these raw material rates. If the probable