The Meridian times. (Meridian, Idaho) 1909-1938, 1921-05-20
Business Depression and Lack
OF demand the Real Trouble

Washington, ID. C.-In testify-
ing before the Senate Gommiftea
on interstate Commerce. which ia
conducting an inquiry into the
railroad situation, julius hrlltf
oCuillLl, Chairman OF the Board
OF Inc Southern Pacific Company.
mehL Llto great detail as to the
eilect OF freight rates on produce
shipments, foreign and domestic.
me main points he made IN TINS
part Of his testimony were: First
THAT business depression is moi
the result of high freight rates:
Secund--That the real cause ~
stagnation in produce Shipments
~ lack or market or protiteering,
he SAID, In part: A widespread
propaganda is being carried on
10 arouse public sentiment against
existing freight rates, whereas
the fact. Is that even since the
rates nave been advanced the cost
OF transporting commodities is
lar less tnan the toll taken by the
commission merchant and the re-
taller for buying and selling them.
Public Misled as to Situation
People are mlsled and conclude
that nigh 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 there
by revive the traffic. There is
Inc strongest reason to believe
That the very great reduction in
traffic has been due almost en-
tlfely to general business condi-
tIOns that are world wide in their
effect, and that would have come
if there had been no advance in
freight rates. Prices of COM
modities reached their maximum
in the first half of the year 1920
and thereafter fell with great
rapidly in France, the United
States and the United Kingdom.
The fall in the United States be-
gan in May, and was rapidly on ..
its way down-grade in September,
when the advanced rates took
effect. Nevertheless traffic did
not drop for at least four months.
Slump Nos Caused by Higher Rates
1t was a general deflation and
fall In prices from the heights to
which they had been driven by
var conditions that has caused
, stagnation of business through
out the world. That it is not
caused by the cost of transporta-
lion is convincingly shown by the
fact that stoppage of buying has !
caused an oversupDly of ships,
hence ocean tonnage rates have
Deen recently at the lowest points
in their history. notwithstanding
these low rates, ocean traffic
shows as great stagnation as rail
traffic, and millions of tons OF
shipping, here and abroad are
rusting away in idleness. Many
commodities would not move even
II the freight charges on them
we're abolished entirely, because
producers can find no market.
That the decline in business is not
1ue to prohibitive freight rates Is
shown by the following examples:
In January OF this year the total
tonnage OF lines west OF FL Paso and
Ogden operated by the southern Pacific
Company fell Off Al per cent. The
combined iHtrastate freight tonnage
: in Arizona and Nevada declined SO per
cent although no increase in the tntrs-
state freight rates In those states
has been al yet authorized or made
effective. This decrease embraced
grain, hay and livestock, as we'll as
ores and other commodities.
Cotton unshIpped for Lack OF
Markets
or Texas cotton crop or over Iouf
million bales, 40 per cent remains I'M
marketed. The average cost OF rail
and water shipment from producing
point to Liverpool has been reduced
about SLASH per 100 pounds In the
face OF which about one-half million
bales OF cotton less than normal have
been exported to Liverpool. Obviously
the freight rate Is not responsible for
the restricted movement. During
September, October, and November,
1920, Is per cent less rice, so per
cent less canned salmon, and ~ per
cent less dried fruit were exported
shan during the same months OF the
previous year, although the reduction
in ocean rates was substantially more
than the increase in inland rail rates.
80 that the material decline in the
exports OF these commodities was IN
the face OF a less aggregate cost OF
transportation.
The Case of the Fruit Growers
The troubles of the California
emon grower have attracted mueh
attention. He claims he Is I'M
able to ship his product because
of the increased freight rates. A
removal OF all the recent increase
of the rate on lemons would not
help him. He has rate by sea
through the Panama Canal of less
than half-4s per cent-of the
rail rate, yet his lemons are not
marketed. The average price, OF
a cantaloupe laid down in New
York in the season Of 1920 was
not quite Ii cents. AS tney were
retaiied at about 20 cents, there
is a further profit to soIhep0ay
- .o4a - an napf a lOlInR The