New-York tribune., 1921-05-11
Stop Use as Carriers I'm.
less Self : Sustaining,
krattschnitt Asks as
Senate Inquiry Begins
Wants U. S. Kept
Out of Sea Trade
High Operating Expense
Blamed ON Labor Costs
and Government Rule
From 1he Tribu,,e's Washington. Bureau

WASHINGTON, May 10,-The Sem
ate Interstate Commerce Committee.
acting under the Cummins resolution.
to-day began its inquiry into the af-
fairs of the railroads Of the United
States. with special reference to the
reasons for high operating expenses,
Ihe inquiry promises to be compre-
hensive and the means of shedding
hight on many important phases of the
transportation problem. On the evil
dence gathered much may depend as to
the maintenance or lowering of the ex-
listing rates. Whether legislation to
amend the transportation act Is seri-
ously needed also is likely to be de-
veloped.
I1e committee had decided to hear
first 1rom the railroad executives and
under this plan julius Kruttschnitt.
chairman of the board of the South
ern Pacific Railroad, was the first wit
ness. After the executives have been
heard the committee will obtain the
views OF representatives of labor
Shippers and others interested in i'm
proving conditions.
Roads Blame Labor for High Costs
The railroads are, in a sense. on trial
with respect to their operating ex-
penses, and realizing this the execu-
yves have set about to show that there
are substantial reasons for the sx-
penses. At the same time they are
seeking to show that the roads are not
open justly TO attack for the high level
OF rates. They hope to demonstrate
that the heavy outlays are chiefly due
TO enormous increases in labor costs.
Representatives of the railroad en-
ployees, of the shippers, security hold
ers and state commi ssions were in the
audience to-day when Mr.. Krnttschnitt
spoke.
Seeking to show how greater labor
outgo burdened the roads and that
rates were not excessive, Mr. Krutt-
schnitt said'the difficulty with the rail-
roads was excessive operating ex-
penses and "an abnormal amount Of
these expenses is the cost of labor
"The labor bill of the carriers in
1916, which was before the Adamson
Law took effect" said Mr.. Kruttschnitt,
STOOD at S1,46S,576,394. Increases upon
increases in labor cost have occurred
in the mean time. The increase in labor
cost in 1929 over 1919 was 1897, 7,814,652.
III the increased scale which became
effective retroactively last May had
been in force during the whole year Of
1920 the wage bill for that year would
have been approximately S3,980,000,oo0.
This is an increase over 1917 (the last
year of private operating before the
wary of $2,24o,517,85S.
Calls Federal Rule Strangulation
"The government, having strangled
the railroads into something like bank
ruptcy, at last removed its hands and
permitted q sudden increase in rates
that should have been gradual and
started at least twelve years ago. We
should bear in mind and circulate
widely the Presidents epigram, More
business in government and less gov
ernment in business
Expenses over which the railroads
had no control, because of prices fixed
either by the government or by gen.
eral market conditions, covered 9715
cents out Of every dollar Of operating
expenses in 1920"
Going into detail, Mr.. Kruttschnitt
said that "sixty-four cents out of every
dollar of operating expenses in 1920 was
paid out to labor, and the wages of
labor are fixed by the government"
Fifteen cents out of every dollar
of operating expenses was paid for
materials and supplies at prices fixed
by the government.
"Three and one-half cents out of
every dollar was paid for materials
and supplies at prices fixed by the gov
ernment.
"Three and one-half cents out of
every dollar was paid for other ex-
penses incurred by the government in
the first two months in 1920.
"a total, therefore, of 821s cents out
of every dollar of operating expenses
for 1920 was paid out at prices directly
fixed by the government.
'rhe remainder up to 973s cents was
for materials and supplies purchased
at prices fixed by general market con-
ditions and beyond the power OF the
railroads to control"
sponsible for business depression, Mr..
Kruttschnitt said:
widespread propaganda is being