The copper era and Morenci leader., 1921-06-10
GIVES MKs0NS V
 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.

WdSnlnSIOn, U. C.--ID teSCllylng D0- fore the Senate Committee on Inter- state Commerce, which is conducting an inquiry into the railroad situation, Julius Kruttschnitt, chairman of the board of the Southern Pacific con- 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:
 A widespread propaganda Is being carried on to arouse public sentiment against existing freight rates, whereas 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 high rates have stopped the movement of 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 general business conditions that are worldwide in their effect, and that would have come if there had been no advand, in freight rates.
 Prices ofscommoditfes 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 Tn 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 It was a general def1ation and fall in prices from the heights to which they had been driven by war condi-
 
 business throughout the world. =
 That 1t Is not caused by the cost of transportation is eonvincingly 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- tion 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 ia business is not due to prehibitive freight rates Is shown by the following examples:
 .; ns. of tas g the total ad , Ogden operated by the Southern Pa eific Company feil eff fl per cent.
 mage in Arizona and Nevada declined 50 per cent although no increase in the intrastate freight rates in those
 or made effective. This decrease em- braced grain, hay and livestock. as
 well as ores and other commodities: OF MARKETS
 0f Tefas cotton crop of over four
 million bales; 4o'per cent remains tn.,
 marketed. The average cost of rali = and water shipment from producing
 point to Liverpool has been reduced face of which about one-haif million
 bales of cotton less than normal have
 been exported to Liverpool. Obviously
 the restricted movement.
 During September. October, and
 November, 1920. 45 per cent less rice,
 50 per cent less canned salmon and
 n per cent less dried fruit were ex-
 ported than during the same months of of.th.,, the previous year, although the r. stantiaily more than the Increase In
 Inland raIl rates, so that the material
 decline in the exports of these com modities was in the face of a less az
 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. removal sf all the recent in crease of the rate on lemons. would not help him. He has a rate by sea through the Panama Canal of less than half 4S 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 were retailed at about 25 cents, there Is further pr.'fit to somebody of 14 cents per can pc
 The managers of =. propaganda for 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 1t was handled at the advanced freight rates, and we have heard nothing as to coal being pro- duoed at a loss or of the coal mine owners going out of business because of. existing freight rates.
 TKe percentage of freight charges to'.value iii 1he carly; part of 1921 is almost IeSactly.the same as 1t was in