The Republican. [volume] (Oakland, Md.) 1877-current, 1921-05-19
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 Real Trouble.

/ SbAhN 10
| 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 ship
ments, foreign and domestic. The
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 profiteering.
He said, in part
widespread propaganda is being
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 mer-
chant and the retailer for buying and
selling them.
Public Misled as to Situation
People are misled and conclude that
! iUhCo nave SbOpDCu lllt 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 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 come if there had been no
advance 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 a general dItlation 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
transportation is convincingly 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 rust
ing away in idleness. Many commodi-
ties would not 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 Ell Paso and
Ogden operated by the Southern Pa
cihc Company fell off IL per cent
The combined intras state freight ton
mage in Arizona and Nevada declined
80 per cent although no increase in
the intrastate freight rates in those
States has been as yet authorized
or made effective. This decrease en-
braced grain, hay and livestock, as
well as ores and other commodities.
COTTON UNSHIPPED FOR LACK
OF MARKETS
OF Texas cotton crop of over four
million bales. 40 per cent remains I'M
marketed. Tho average cost of rail-
and water shipment from producing
point to Liverpool has been reduced
about $1.2sE per 100 pounds, in the
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, As per cent less rice
90 per cent less canned salmon and
n per cent less dried fruit were ex-
ported than during the same months
of the previous year. although the
reduction In ocean rates was SUBJ
stantlaily more than the Increase In
decline in tie exports of these COM
modities 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.
He claims he Is unable to ship his prod
uct because of the increased freight
rates. A removal of all the recent in
crease 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, vet his
lemons are not marketed.
The average price of a cantaloupe
Laid down in New York in the season
OF 1920 was not quite IL cents As
they were retailed at about % cents,
there Is a further profit to somebody
Of ii cents per cantaloupe.
The managers Of the propaganda for
a general reduction Of freight rates
have lost sight Of the fact that in Oc-
tober, 1920 1,195,321 carloads of coal
were moved, being the maximum NOV
ed 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 pro-
duced at loss or Of the coal mine
owners going out Of business because
Of existing freight rates.
The percentage of freight charges
to value in the early part of 1921 is
almost exactly the same as it was in
1914.