Five Mile Beach weekly journal., 1921-05-20
GIVES REASONS
I. 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.
FARM PRODUCTS ARE CITED

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 ship
ments, foreign and domestic. The
main points he made in this part of
his testimony were:
First-That business depression Ia
not the result Of high freight rates.
Second-That the real cause of stag
nation In produce shipments Is lack
of market or proflteerIng.
He said in part:
A 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 MisIed as to Situation
People are misled and conclude that
high rates have stopped the movement
of a large amount of freight and that
the railways would make more money
If 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
$1,000 h.1ri1ocC conditions fhat oro
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 It's 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 defatlon and fall
In prices from the heights to which
they had been driven by war condi-
lions hat has caused a stagnation Of
business throughout the world.
That 1t 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 wen 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
cific Company fell off IL per cent.
The combined lntrastate freight tom
mage in Arizona and Nevada declined
W Pei SCAl aALhOO5A az AAOA OaSS hA
the intrastate freight rates in those
States has been as yet authorized
or made effective. This decrease en-
well as ores and other commodities.
COTTON UNSHlPPED FOR LACK
OF MARKETS
OF a Texas cotton crop of over four
million bales. 40 per cent remains un-
marketed. The average cost of rail
and water shipment from producing
point to Liverpool has been reduced
~knTf+ q 4 OQZ 400 -AtanH In fhn
face of which about one-half million
bales of cotton less than normal have
been exported to Liverpool. obviously
the freight rate is not responsible for
tho restricted movement.
During September, October, and
November. 1920, 40 per cent less rice.
7 per cent less dried fruit were ex-
Ior5ei than during the same months
Of the previous year, although the
reduction in ocean rates was sub
inianl rail rates, so that the material
declE e in the exports of these COM
mcdi les was in the face of a less ag-
Ira90te cost of transportation.
The Case of the Fruit Growers
The troubles of the California lemon
grower have attracted much attention.
Ee claims he is unable to ship his
because of the increased
rates. A removal of all the
recent increase of the rate on lemons
not help him. He has a rate by
through the Panama Canal of less
than half-48 per cent-of the rail
rate, yet 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 we're retailed at about % cents,
there is a further profit to somebody
Of IA cents per cantaloupe.
The managers of the propaganda for
A general reduction Of freight rates
lost sight of the fact that In Oc-
.ober, 1920, 1,195,321 carloads of coal
we're moved, being the maximum NOV
I'd In any month in the preceding two
Years, although 1t was handled at the
advanced freight rates, and we have
heard nothing as to coal being pro-
luced at a loss or of the coal mine
49,. ~o1o~ ont ~ hrcinpcc hppauge