The review. [volume] (High Point, N.C.) 1908-19??, 1921-06-02
GIVES REASONS
FOR. DEPRESSION
Rail Chief Declares Freight
Charges Not the Cause
of Stagnation.
FARM PRODUCTS ARE CITED.
Business Depression and Lackssot
Demand the Real Trouble. -

an inquiry into the railroad situation,
julius Kruttschnitt, chairman of the
board of the Southern Pacific com
pany, went into great detail as to the
effect of freight rates on produce ship
ments, foreign and domestic The
main points he made in this part OF
his testimony were:
FIrst-That business depression Is
not the result of high freight rates. y.
Second-That the real cause of stag
nation in produce shipments 10 lack
Of market or profiteerIno.
He said, in part:
A widespread propaganda is being
carried on to arouse public sentiment
against existing freight rates, whereas
the fact is that even since the rates
have been advanced the cost Of trans
porting commodities is far less than
the toll taken by the commission mer-
chant and the retailer for buying and
selling them.
Public Misled as to Situation
People are misled and conclude that
high rates have stopped the movement
of large amount of freight and that
the railways would make more money
If they would reduce the rates and
thereby revive the traffic.
There is the strongest reason to be-
lieve that the very great reduction in
traffic has been due almost entirely to
general business conditions that are
worldwide in their effect, and that
would have come if there had been no
advance in freight rates.
Prices of commodities reached their
maximum in the first half Of the year
1920 and thereafter fell with great
rapidity in France, the United States
and the United Kingdom. The fall in
the United States began in May, and
was rapidly on it's way downgrade in
September, when the advanced rates
took effect. Nevertheless traffic did
not drop for at least four months.
Slump Not Caused by Higher Rates
1t was a general dehatiOn and fall
in prices from the heights to which
they had been driven by war condi-
tons that has caused a stagnation Of
business throughout the world.
That it is not caused by the cost Of
TRANSFORMATION is convincingly shown
by the fact that stoppage of buying
has caused an oversupply of ships,
hence ocean tonnage rates have been
recently at the lowest points in their
history.
Notwithstanding these low rates,
ocean traffic shows as great stagna-
ton as rail traffic, and millions Of tons
of shipping here and abroad are rust
ing away in idleness. Many commOdi-
ties would not move even if the freight
charges on them were abolished en-
tirely, because producers can find no
market.
That the decline in business is not
due to prohibitive freight rates liz
shown by the following examples:
In January Of this year I'll the total ond
Ogden operated by the ne s9ut nsr ca pa-
| mage in Arizona and Nevada declined
SO per cent although no increase In
| the intrastate freight rates in those
States has been as yet authorized
braced grain, hay and livestock. as
coTT0N g ~ MHRKe7! soF LACK
million bales, 40 per cent remains un-
and water shipment from producing
| point 20 Liverpool has been reduced
face Of wSlch p about onehaif mllion
| bales Of cotton less than normal have
been exported to Liverpool. Obviously
| the freight rate is not responsible for
| the restricted movement.
During September, Octaber, and
| November, 1920, 46 per cent less rice,
30 per cent less canned salmon and
! n per cent less dried fruit were ex-
ported than during the same months
| reduction In ocean rates was sub
stantIaIIy more than the Increase In
\ inland rail- rates, that the material
decline in the exports Of these COM
modities was in the face of less az
gregate cost Of transportation.
The Case of the Fruit Growers
The troubles Of the California lemon
grower have attracted much attention
He claims he is unable to ship his prod
uct because Of the increased frelgh
rates. A removal of all the recent in
crease of the rate on lemons would no
help him. He has rate by sea through
the Panama Canal Of less than half
48 per ceht-of the rail rate, yet hi
lemons are not marketed.
The average price Of a canta1oup
laid down in New York in the seasOl
Of 1920 was not quite II cents. A
they were retailed at about % cents
there is a further profit to somebod
of IA cents per eantalOupe.
The managers of the propaganda TO
general reduction of freight rate
have lost sight Of the fact that in o.
tober, 1920, 1853 carloads of COG
were moved, being the maximum mo1
ed in any month in the preceding tw
years, although it was handled at tn
advanced freight rates, and we hav
heard nothing as to coal being Pre-
duced at a loss or Of the coal min
owners going out OF business becaus
of existing freight rates.
The percentage of freight charge
to ve1ps in the early part OF 1921
almost exactly the same as 1t was
1914.