The labor journal. [volume] (Everett, Wash.) 1909-1976, 1920-06-18
THE RAILROADS
SUFFER FROM
PR0FITEERING
And Pass the Buck to the People
in Excessive Freight Rates.

WASHINGTON, ID. c., June r.
! That profiteering has cost the rail
roads of the United States at least
$500. 5000 during the last three
years and, unless checked, will cost
them more than 81 ,O00,000,000 addi-
tional during the years of 1920, 1921
and 1922 is the cruX of a supplement
taty report by w. Jett Lauck, con-
sulting economist for the railroad la
Dor organizations, transmitted to the
Railroad Labor Board and made pub
lie today.
"NeXt to wage earners, the sal
aried class and people of fixed in
comes, the railroads have been the
greatest victims of the profiteers,"
says this report, "and the most Sc
rious aspect of this phase of the
profiteering problem is that it means
a fixed charge upon the public of
millions of dollars annually for all
time to come, for if the railroads are
mulcted of a billion dollars in undue
profits in the expenditures for main
tenance and betterments during the
ensuing three years that amount
necessarily becomes part of the
capital investment upon which the
public must pay fair return.
an this connection it should be
stated that if the railroads were
protected against the profiteers, rea-
sonable and necessary advances could
be made in the wages of railway
workers without material increases
in transportation rates, and attention
may be also called to the fact that
in such legal steps as have been
taken to punish or restrain profiteer-
ing not move has been made against
the profiteers in steel and steel prod
ucts, coal, petroleum and railroad
equipment and supplies
The Lauck report fixes II per
cent. as the profiteering tribute
which the railroads have paid to the
producers Of coal, petroleum, steel
and steel products, car and loco
motive manufacturers and others.
This figure has been arrived at"
states Mr.. Lauck, "only after the
most thorough and painstaking an
alysis of railroad expenditures and
the profits of the corporations from
which they buy, For instance, dur
ing the three years Of 1917, 1913
and 1919 the railroads of the coun-
try combined bought 451 ,935 tons
of coal at a total cost of S1,225,-
610,793. The companies from which
this coal was purchased made an
average profit Of 526 cents pre- ton,
or $237,179,652, after paying all
taxes and other charges. A survey
previously made shows the average
net profit of coal companies for the
pre-war years to have been q cents
per ton, which would have Melted
them $94 1873, 1926 in profits upon this
tonnage. The amount of profiteer-
ing in coal for the three years,
therefore, is ascertained by deduct
ing the normal profit from that ac-
tually taken, which adduces an eX-
cess profit of S142,445,726 in the
coal bill alone, or practically II per
cent.
During the three years mentioned
the railroads bought 4,508,213 tons
of rails at an average price of $45.19
per ton, on which the steel companies
made net profits of at least S11.O0.
For a great many years before the
war steel rails had sold at exactly
$500 per ton, on which the manu-
Att~ u . lNetIlASu elDOul pf.pJ III IlGl
profits, after paying interest and
other charges. The total excess
profits on this one item for the three
years amounts to approximately $780,
100000, or more than IA per cent
Of the cost"
Mr.. Lauck cited a letter written
by Mr.. John Shelton Williams, Comp
troller Of the Currency and formerly
Director of Finances of the Railroad
Administration, referring to an an
alysis which he had made of the
earnings of the United States Steel
Corporation and the Lackawanna
Steel Company, The letter states in
part:
"The statement shows that the
U. S. Steel Corporation for 1918 ex-
acted profits from the government,
our allies and its other customers
sufficient to enable it to earn 100
per cent Exclusive of war and eX-
cess profits taxes on its entire
capital stock-$508, 100000
"This statement shows also how
unjustified is the claim of this cor
poration that it could not make
further reduction in the price of
oCCCl ans anu OIllGl pIOU-
ucts without impinging upon the
wages paid to labor. AS a matter
of fact, the corporation in 1918 could
have doubled the wages paid to all
of its men, from President to water
boy, and would still have had earn
ings sufficient to enable it to pay
7 per cent on its common stock
81 also hand you, with this, a
memorandum analysing the earn
ings of the Lackawanna Steel Com
pany for 1918, showing that that
company could have made a reduc-
ton Of about $50 per ton on its
steel products and still have had
earnings enough to pay about 7 per
cent on its capital stock"
Mr., Lauck also presented his own
figures showing that excess profits
approximate Is per cent of the sell
ing price of all steel products.
GAS an overwhelming proportion
if railroad expenditures are for steel
products of various sorts, and fuel"