The Penn's Grove record., 1921-07-22
GIVES REASONS
FOR DEPRESSION
Rail Chief Declares Freight
Charges Not the Cause
of StagnatiOn.
FARM PRODUCTS ARE CITED
Business Depression and Lack OF
Demand the Zeal Trouble.

] lore lIlt ENttlll'
state Commerce. which is conducting
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 shin
ments. foreign and domestic. Fh2
main points he made in this part Of
his testimony were:
First-That business depression is
not the result of high freight rates.
second-That the real cause of stag
nation in produce shipments is lack
OF market or profiteerlng:
He said in part:
A widespread propaganda Is beng
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 mef
chant and the retailer for buying and
selling them.
Public MisIed as to Situation
People are misledaand conclude that
high rates have stopped the, movement
of a large amount of freight and that
the railways would make more money
If hey 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 CONF if there had been no
advance in freight rates.
Prices of commodities reached thelr
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 III
Sentember, 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 heen driven by war condi-
lions that has caused a Staguation of
business throughout the world.
That it is net eaGsed by the cost oG
transportation is convincingly shown
hy the fact that stoupaGe of buying
has caused an ~oversupply of slips.
hence ocean tonnage rates have been
recently at the lowest points in their
history.
Notwithstanding these low rates,
ocean traffic shows as great sta@na-
tion as rail traffic, and millions of tonS
of shipping here and abroad are rust
ing away in idleness. Many commodi-
ties wouldtnot 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 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 Pa
cifc Company fell off Al per cent.
The combined lntrastate freight ton
mage in Arizona and Nevada declined
so per cent although no increase in
the intrastate freight rates in those
or made effective. This decrease en-
braced grain, hay and livestock, as
well as ores and other commodities;
OF MARKETS
OF a Texas cotton crop Of over four
million bales. 40 per cent remains un-
and water shipment from produoins
point to Liverpool has been reduced
about s1.2sKa per 100 pounds, in the
face of which about one-ha'f million
bales Of cotton less than norsal nave
peen exported to Liverpool. Obviously
the freight rate is not responsible for
the restricted movement.
During September, October, and
November, 1920, 45 per cent less rice,
so per cent less canned salmon and
II per cent less dried fruit were ex-
ported than during the same months
of the previous year, although the
reduction In ocean rates was sub
stantia,Iy more than the increase in
Inland rail rates, so that the material
decline in the exports of these com.
modltles was in the face Of a less ag-
gregate cost Of transportation.
The Case of the Fruit Growers
The troubles of the California lemon
grower have attracted much attention.
lie 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 q rate by
Ntb OuSI IiIt L ulldIllu Ndllul Oh less
than half-46 per cent-of the rail
rate, yet his lemons are not marketed
The average price Of a %cantalom,e
: laid down in New York in the season
Of 1926 was not quite II cents. As
hey were retailed at about % cents
here is a further profit to somebody
, of II cents per CantalOupe.
&. Tie managers of the propaganda fol-
: Il general reduction Of freight rates
, have lost sight Of the fact that in Dc
toher. 1920. 1,195.321 carloads of Goa
were moved, being the maximum NOV.
ed in any month In the preceding tive
years, although it was handled at the
advanced freight rates. and we have
heard nothing as to coal being pro
duced at a loss or of the coal mine
owners going out Of business because
OF existing freight rates.
The Dprceutaup Of freipbt cbarro,