Evening star., 1921-05-12
FREIGHT BUSINESS
NOT CUT BY RATES
KruttsChnitt Tells Senate
Committee Railroads Are
Not 0vercharging.

Under crosS-examination today be-
fore the Senate railroad investigating
committee Julius Kruttschntt. chair
man of the board of the Southern Pa
ciic Company, insisted that the re-
cent increase in freight rates had not
operated to bring about a drop in
railroad freight business. The only
trouble is. he said. that the increase
in rates came simultaneously with
the depression in general business"
Remarking that lower rates stimu-
lated transportation" Senator Town
81 nd, republican. Michigan. said there
was doubt that ''anythine justifics an
overcharge by the railroads..
Il don't believe that there is any
overcharge by the railroads in rates.
said Mr.. kruttsrhnitt. There is a
limit below which you cannot go.
For fifteen years. the roads nave been
going down hill under a policy Of
rate starvation"
Don't you believe the roads. as a
matter of equity, would have been in
a better position to ask decreased la
Dor wages had they not first asked
this last increase in rates." ask ed
Senator Townsend.
Il do believe this" Mr.. kruttschnitt
preston had not come We should not
have been obliged to ask SO speedily
for a reduction in wages
Says Roads Were Desperate.
You haven't answered directly"
Senator Townsend retorted. Haven't
you seen the risk of alienation of pub
lie opinion by that policy of increas-
ing rates before reducing wages."
The roads were in a desperate sit
How does a man look upon institu-
tions entering upon their death
throeS."
Senator pomerene. democrat Ohio,
asked if rate increases were not some
times harmful. to which Mr.. Kruttschnitt
agreed that there was "a point where
rate increases would be unwise because
of their reduction tendency upon traffic. =
Senator Pomerene suggested. citing
road material movements. that "rat ties
have reached the embarra SSment point.
Wouldn't it be sound business policy
TO reduce rates on road materials" SEN
ator Pomerene asked. 1T Seems to me
We would help the whole business situa-
ton in the country if Va could get these
charges down.
When the roads applied for the la ST
increase" Mr.. kruttsclrnitt replied. lit
was distinctly understood that if any
rates bore so hard upon any groups and
on their merits before the Interstate
Commerce Commission. and reductions
brought about. This IS the step for ma
terial men to take.
"All these claims for reduction bear
the earmarks of we'll planned prop
aganda on the present rate struc-
ture. The fact is. sas our investiga- =
tion has shown, that commodities for
which the producers now receive very
little are taxed so very greatly by
middlemen and retailers. all the inter-
mediaries in the distribution of goods.
that consumers must pay altogether
d!sproportionate prices. while the
trans sportation charges are very small
parts of the Increases
Senator Pomerene said he had no
doubt thar the retailers profit and
the constant statements of la Dor lead
ers that there shall he no reduction
in war wages have most to do with
the SITUATION
ut is all the intermediate profit
takers" Mr.. kruttschnitt sad.
Explains Staxnadion.
Starvation in railroad building in
the United States must be attributed
to the disparity between the cost of
ronstructiou and the return to the
investor. Mr.. KruttSchMtt yesterday de
clared in resuming his testimony before
the committee.
"In 1920 only S62. 2s4 900 went as
return to those VINO pau i'i N'''
properties while sixty times as much
went TO those employed on the rail-
roads" he said. This answers me
question Why don't We build more
ralroadS?
Efficient management. he insisted.
has left but narrow limits within
which to attempt control oil optr-
ating expenses in 1920 because OF the
MANY elements entering into costs
over which it had no influence
Among these clements he included in
creaseS in wholesale prices OF mate
rials the OUTLAW" strike in April
1920: restoration of adequate passen-
ger service demanded by the public
and relocation of freight cars to
owners rails The last item alone,
the witness declared. involved an in
crease of 32S.0O0.000 'empty-car
miles.
Answering committee questions Mr..
Kruttschnitt complained bitterly of
Panama canal competition.
Traffic through the canal has in
creased - per cent this year he said.
..all business being taken from the
transcontinental lines The United
states Shipping Board. with the
Treasury behind it. is conducting "A
competition which the privately own
ed carriers cannot meet. The ships
avian ta the Pacific cnaSt ,ir