The New York herald., 1922-05-25
THURSDAY. MAY 25. 1922.
The Cut in Freight Rates.

The United States Government, act
ing through its Interstate Commerce
Commission. has made no mistake in
ordering the sweeping reduction OF
railway freight rates provided it
also does one other necessary thing.
This is for the Government, acting
through its United States Railroad
Labor Board. to bring about con-
temporaneous reduction of wages.
Otherwise these traffic rate cuts
which ought to be good for the coun-
try will be bad for the country as
well as for the railroads.
The rate reductions will be good
for the country in the lighter load
on shippers if the roads can do their
work for the shippers and the coun-
try. But the rate reductions without
wage reductions will be bad for both
the railroads and the country, be-
cause the carriers cannot stand so
heavy loss Of revenues unless they
can make corresponding cut in
operating expenses.
Already the roads have their main
keep, rail renewals and rolling stock
repairs slashed to the bone In respect
of these excessive savings in main
tenance expenses the roads are on
the danger line of physical safety.
They can go no further in the direc-
tion of such enforced economies with
out beginning to fall to pieces. The
roads cannot deteriorate physically
end haul the country's traffic.
~ In any event, the railroad revenues
In the bulk go directly into the
payrolls. In 1920 sixty cents out of
every dollar the roads took in went
lost revenues under these rate reduc-
tions can be Offset by reduced labor
charges there is no chance for the
roads to take care of the revenue
cuts at all. IL they are not taken
care of the service of the American
transportation system must weaken,
the properties themselves must de-
cay and the country's industry and
business suffer for lack of essential
distributing facilities.
What the rate reductions will take
,eout Of present revenues can at the
moment be only approximated. 1t is
estimated that the order makes a
10 per cent. cut in revenues. In 1920
when the total operating revenues
of the roads were more than six bill
lions of dollars. the passenger, mail
and express business accounted for n
billion and half in round numbers
and the freight for $4.323,677 $50.
II the roads were now doing the
same business as they did then the
estimated average 10 per cent. rate
cut would take more than 100000.
600 out of them. But the roads are
not doing the same business. In the
extreme Of the country's industrial
depression they we're doing very
much less than that. On the other
hand, there has been material inn
provement in traffic since February:
but the figures for this period are
not available, with the exception of
March.
So there is no accurate way to
measure the traffic rate cut in dollars
and cents of lost revenues The
Washington guess is s225.000 900.
But IL the freight business is now
running no better than at a rate of
three billions OF dollars year. and
il in the rest of 1922-always the
richest part OF the railroad year
they would have run under the old
traffic charges no better than at a
rate OF three and half billions Of
dollars a year, 10 per cent. cut of
that amount would be at the rate OF
from $500 900, 900 to $350.0OO.000 a
year.
'rhe roads could not possibly make
up 350,000.000 a year out OF coal
bills, the next biggest operating ex
-pense to labor. They could not make
up any considerable part of $3.50. .000.
900 or $500, 100000 or $3.50 0000. 900
They could not make IL up out of
coal because until 1913 the total nor.
NAL coal bills never exceeded $780,
600, 900. also because the cost of soft
icoal. which is burned by the loco
motives, has been more than cut in
fialf since the peak Of 1920, and again
because, with the miners strike on,
the prico Of the rapidly diminishing
supply of coal has no prospect of go
ing lower. II the strike continues It
must, sooner or later, go higher.
On the other hand, the labor
charges of the roads in 1918 were
more than two billions and six hun