Evening journal., 1919-06-30

Nvhiu ofF'cI bidl dn duNd duCt III idtto
OF % to 80 per cent. should. on this
theory, have resulted IN an increase in
the cost If living Of at least 50 or 100
per cent. But the increase in the cost
OF living since the adyences in
freight rates were male has been much
less than it was before.
Both reason and experience refute
the argument that an advance in freight
rates has any effect upon the cost OF
living which differ in kind or degree
from the effects produced by an in
crease in any OF the other costs OF
doing business. Freight rates are
factor in the determining OF the prices
at which goods are finally sold to the
consumers and, therefore, affect the
cost OF living. But the same thing is
true or every other element Of indus
trial and commercial costs. Nobody
would contend that The farmer. the
manufacturer and the merchant should
not advance their prices when an ad-
vance in prices is necessary in order
TO enable them. as classes, TO Offset
Increases IN their expenses Of doing
business. There is no more ground for
keeping down railway rates when an
advance in rates is needed to cover
advances in lhe cost OF rendering the
service Of transportation. than there Is
for not advancing the prices for COM
modities when advances in them are
needed 10 cover increases In the cost
OF producing and marketing them.
"One most important point which
seems to be overlooked by those who
oppose advances IN freight rates be-
cause Of the supposed effect upon the
cost Of living Is that if rates are not
advanced and The government continues
60 guarantee The returns of the rail-
roads as Mr.. Woolley suggests. taxes
must be collected from the public in
order 10 pay the railroad deficits
caused by the failure 10 advance the
rates. Now. the effect which an in
crease in taxes produces is not exactly
the same upon all classes Of people as
the effect OF an advance in railway
rates. The relative effects arc inilu-
enced by the differences in the Incl
dence Of the taxes and railway rates,
But, in the long run, half billion dol
lars in taxes levied TO pay a railroad
deficit Of that amount imposes as much
Of a burden upon the consuming public
as would an advance in rates OF half
billion dollars made to prevent The de-
felt from being incurred. Most taxes
like most freight rates, are finally
passed along 10 the consumer. Furthur-
more. when all the cost Of rendering
transportation service is covered by the
rates charged for 10, The railways arc
almost certain TO be more efficiently
and economically operated than when
the rates are made such that deficit
is Insured and the loss is recouped by
taxation. One reason why government
managed businesses almost always are
cxtravagantly managed is that the man
ayers know If they do not make them
earn enough 10 pay expenses, the de-
felt can and will be betrayed from
The public treasury.
Perhaps Director General Hines is
right in taking the position that an
advance IN rates should not be aqdo
until normal conditions have been re-
stored and the amount Of the advance
which must be made, in order to cover
all costs, including capital charges. can
be accurately ascertained. But 10 talk
about permanently keeping railway
rates too low 10 cover the total cost
Of rendering transportation service, rs
means OF holding down the cost Of
living. Is, we submit, to talk economic
nonsense"