Vashon Island news-record. [volume] (Vashon, Wash.) 1919-1954, 1921-05-27
GIVES reason
FOR DEPRESSION
Rail- Chief Declares Freight
Charges Not the Cause
of Stagnation.
FARM PRODUCTS ARE CITED
Business Depression and Lack
of Demand the Real Trouble.

Washington. D. Gin testifying be-
fore the senate committee on interstate
commerce, which Is conducting an in
quiry into the railroad situation. JUL
us Kruttschnitt, chairman of the board
Of the Southern Pacific Company, went
into great detail as the effect Of freight
rates on produce shipments, foreign
and domestic. The main points he
made in this part Of his testimony
were: First-That business depres-
sion Is not the result of high freight
rates. Second--That the real cause
Of stagnation in produce shipments Is
lack Of market or profiteering. He
said, in part:
A widespread propaganda 10 being
carried on to arouse public sentiment
against existing fir light 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.
People 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
il they would reduce the rates and
thereby revive the traffic There Ia
the strongest reason to believe that the
very great reduction in traffic has
been due almost entirely to general
business conditions that are world
wide in their effect, and that would
have come II there had been no ad-
vance 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 its 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 general deflation and fall
in prices from the heights to which
they had been driven by war condi-
tons that has caused stagnation of
business throughout the world. That
it is not caused by the cost Of trans
portation is convncingly 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
rusting away in idleness. Many COM
modities would not move even If the
freight charges on them were abol-
ished entirely, because producers can
find no market
That the decline in business 10 not
due to prohibitive freight rates is
shown by the following examples:
In January Of this year the total
tonnage Of lines west of Ell Paso and
Ogden operated by the Southern Pa
The combined intrastate freight tom
mage In Arizona and Nevada declined
80 percent although increase in the
interstate freight rates in those
states has been as yet authorized or
made effective. This decrease en-
braced grain. hay and live stock. Is
well as ores and other commodities.
Cotton Unshlpped for Lack Of Market
OF Texas cotton crop of over four
million bales, 40 percent remains I'M
marketed The average cost of rail
and water shipment from producing
point to Liverpool has been reduced
about Sissy per 100 pounds. In the
face OF which about one-hah million
bales Of cotton less than normal have
been exported to Liverpool. Obvious
ly the freight rate is not responsible
for the restricted movement. During
September, October and November,
1920 As percent less rice, SO percent
less canned salmon and II percent
less dried fruit were exported than
during the same months OF the pre-
vious year, Although the reduction
in ocean rates was substantially more
than the increase in inland rail rates,
SO 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 lemon
growers have attracted much atten-
ton. He claims he Is unable 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 a rate
by sea through the Panama canal OF
less than half-4S percent-of the rail
rate, yet his lemons are not marketed.
The average price OF cantaloupe laid
down In New York in the season Of
1920 was not quite II cents. AS they
were retailed at about 25 cents. there
is a further profit to somebody of IA
cents per cantaloupe.
The managers Of the propaganda for
general reduction Of freight rates
have lost sight of the fact that In Octo-
Der, 1920, 1,l95,32l carloads Of coal
were moved, being the maximum
moved In any month in the preceding
two years, although It was handled at
the advanced freight rates, and we
have heard nothing as to coal being
produced at loss or Of the coal mine
owners going out Of business because
OF existing freight rates The per-
rentapa of freight charges to value in