The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1921-04-11
ENouaH Is KNoWN A1REApy.

that the railroad problem should be
re-submitted for investigation. The
subject needs no further investigation,
Both the interstate commerce commits
sion and the labor board have had the
subject under continuous investigation
and are apprised of the facts upon
which to, make all necessary adjust
ments. Delay is the most serious
menace i1-tI1e railroad crisis. Prompt
and decisive action by the iebor board.
followed by that of the interstate COM
merce commission, is required to pre-
vent further dfsintegration of the rail-
road system.
Railroad managers have discovered
that the present high level of trans
portation rates has so largely de-
creased their earnings that even dras-
tic reduction Of the number of men
employed leaves them still with great
operating deficits. They have discov-
cred that the government guarantees
OF rate which will return 5 Il par
cent upon invested capital cannot ac-
compIish it's purpose
The requirement of the Esch- Cum
Minis bill that the interstate commerce
commission should fix rate for trans
portation service which would produce
a net income of Y per cent upon the
invested capital of the railroad Has
demonstrated it's utter futility Trans
portation service, like all other kinds
Of service, responds eventually to the
law Of supply and demand.
The railroads realize that traffic
has fallen off and that a further in
strict the transportation service from
which their profits must necessarily
be derived.
The buying public is unwilling to
continue paying war prices except for
the barest necessities. It becomes nee
-essary, therefore, for every line of
business to meet the inevitable and
take the loss entailed by the descent
from the. high to lower price level.
Railroads have desired to make the
same profits during the adjustment
period that are expected in normal
times. Capital has insisted on selling
its high cost surplus goods at profit.
Labor has insisted on maintaining
high price wage levels built up during
the war
notwithstanding the several pro-
tests against the inevitable, prices are
being reduced, wage levels are being
reduced, and transportation costs will
be reduced and must be reduced be-
fore business can again resume its
normal conditions.
The IS per cent rate increase al
lowed the railroads was calculated to
insure earnings on the present capital
investment which would attract new
capital to the industry. Under the
pressure to which all industry has
been subjected in this period of della
ton, the last rate increase has proved
to be more than the traffic can bear.
An extensive contraction of the ton
mage movement has consequently been
recorded, with 100000 freight cars
idle. The high cost of freight trans
portation has probably diverted more
tonnage to the motor, truck in the
short haul districts of the east.
Freight emanating on the Pacific
coast for eastern delivery has also
been diverted from rail to boat via the
Panama canal. What was calculated
in the rate increase to be an asset to
the railroads has under existing cir
cunstances become a liability.
On account of the operating deficit
sustained by the roads during the first
two months in the year, it must be
evident that not only is the present
rate more than the traffic can bear,
but that the wage scale itself is more
than the traffic can bear. Since the
rate increase has proved an embar-
rassment to traffic, railroad rates
should be reduced at the earliest mo-
ment.