Evening journal., 1919-06-30
Railway Rates and Cost of Livi7q

"A theory regarding The effect OF rail-
way rates upon the cost OF living has
been enunciated by persons in high
positions. which requires discussion"
says the Railway Age. Commissioner
WOOley, OF the Interstate Commerce
Commission, has presented It In a re-
cent address as an argument, as we
understand It, why ra'es should not be
advanced at all, at least for some time.
The theory referred 10 is that an adj
vance in freight rates results in an in
crease In the cost OF living which ex-
ceeds the advance In rates, and may
even be three or four times as large.
This is attributed to the alleged fact
that when freight rates are advanced.
business concerns use the advance in
rates as an excuse for advancing their
cover the increase in rates.
III this argument were sound it
would be conclusive against advances
in rates al any time. and especially at
time when the cost Of living is so
high as at present. But with all due
respect 10 the eminent government OIL
cials who have made Il. the Railway
Age challenges ITS correctness and as
seris that It can not be successfully
defended either on economic principles
or by the concrete evidence OF expert
ence
why should an advance in freight
rates have a different and greater effect
upon prices 10 the consumer than an
advance in any other Kind OF cost en-
terlng into The production and market
Ing Of a commodity To the manu-
Fr.. IL
are merely one Of their costs of doing
business, like wages, prices of raw ma
terials. cost Of advertising, etc. and,
considering The matter from O purely
abstract point OF view, there does not
seem TO be any more reason why It
SHOULD be assumed that an advance in
freight rates would result In a dis
pr0portionatc increase of prices to the
consumer than why an increase in
wages. or taxes. or selling costs would
result in a sproportionate increase 10
prices 10 the consumer
But II Is not necessary 20 consider
The question merely in the abstract
Concrete evidence demonstrates that
freight rates actually have not pro
duced any such effects unon the cost
Of living as Is attributed TO them. There
were vast Increases in the cost Of liy-
ing before any of the recent large adj
vanccs in freight rates occurred A lit
lie over a year ago the Railroad Wage
Commission made an Investigation Of
tho increase in The cost Of living and
estimated that between December. 1918.
and December. 1917. II had been about
- per cent. During This period there
had been no material advance IN freight
rates. ON the contrary the average
rate per ton per mile was lower in
1917 than IL was in 1918 70 is a poor
rule that does not work both ways in
economies as Ncll as IN other matters.
n an advance in freight rates would
have such an important effect upon the
cost Of living as is claimed. why did
not the stationary position OF railway
rates during this period keep down the
cost Of living? Mfr. Woolley has indi-
Gated that freight rates ought 10 be
'pegged' IN future to prevent an in
crease In the cost Of living But they
We're very effectively pegged by the
regulating authorities during the two
years mentioned, and meantime the
cost Of living increased 50 per cent.
what has occurred since freight
rates were advanced? The advance in
eastern territory in 1918 was approx
mately 81 per cent. and in the rest Of
the country p per cent. on The theory
that any advance IN freight rates results
in a relatively much larger increase in
the cost Of living. 10 would appear that
the Increase in the cost OF living, since
these advances in rates were made.
should have been much larger than it
was before. II no advance in rates is
accompanied by an advance Of - per
cent. in The cost OF living, then il