Evening star., 1922-02-04
CITED AS FACTORS
NDUS|NESS
Mr.. Hoover Sees Betterment
in Reduced Freight Rates
and Railway Expansion.

Reduction Of. freight rates and re-
sumption OF railroad expansion are
the two sources from which the coun-
try may get its strongest impulses
toward economic betterment, Secre-,
tary Hoover declared yesterday appear
ing as witness in the Interstate
Commerce Commission ipVsstigation
of transportation charges. The first,
he said, depends on a rednction OF
operating costs. and the second on
restoration OF railway credit.
Transportation earnings, now peril
ousiy close to bond interest, Nr.
Hoover said. make it impossible for:
the commission to give "immed'ate
ciared that improving conditions
would allow downward revtsioES dur
ing the present year.
Should Apply to Needs.
When such revisions were made, he
said, the commission should apply
them first to the primary basic COM
modities--agricultura products, coal.
metals and timbers--even If passenger
rates, class rates. and less -than-car-
load shipments had to be charged
more to protect railroad revenues.
This course should be adopted. he
argued. because the Series of hori-
zontal percentage increases by which
the rates were advanced had distorted
the existing fabric of commerce In the
United States. and was moving in
dustry as whole toward it's sources
Of raw materials" incidentally, rail
wages should not be expected to go
back to prewar levels, he said. but
should follow downward step by
step the cost of living" and the rate
decreases should be SO applied as to
maintain railroad revenues. and re-
store the confidence of investors In
ultimate railroad earning power.
More Jobs BY Aiding Rails.
I'VE talk glibly of giving billions
of credits to foreign countries, to in
crease our farm EXPORTS" Mr.. Hoover
said. Il wish to say. with all re-
sponsibiiity for the statement. that
billion dollars spent upon American
railways will give more employment
to our people. more advance to our
industry, more assistance to our
farmers, than twice that sum expend-
ed outside the frontiers Of the United
States-and there will be greater Sc
curity for investors"
There il danger that in the pres
ent period of low earnings and little
traffic the needs OF the railroads
in new construction, equipment. bet
terments and maintenance Will be
neglected, Mr.. Hoover added, with re-
Sultlng breakdown OF transportation
when a full load is put upon them
by Industrial resumption. This should
be averted, even by the extension of
government Endorsement on railroad
securities whose sale would give
funds for expenditure and equip
ment. The commissions efforts
should be devoted, he said, to a policy
of maintaining public control Of
monopoly. and at the same time
maintaining private initiative"
QuestiOned on Bond Issues.
For shippers and agricultural orr
ganizations Clifford Thorne took up
Mr. HOover's statement on cross-eI-
animation, asking him first il he
thought railroads had a greater pro-
portion of bond issues as compared
with their property now as they had
ten years ago
Mr. Hoover replied that the bond is
sues are too high for fexibility and
financial strength. adding that I'VE
would be better off if the bond issues
representing debts OF the railroa1S
did not exceed 80 per cent of the to-
tai capitalization Of the properties"
Mr.. Thorne challenged Mr.. Hoover's
representation of the difficulty rail-
roads have encountered in securing
new capital, and likewise questioned
Mr.. Hoover's suggestion that less
than carload rates be increased il
necessary In order that the rates on
primary commodities might be low
cred. The Secretary insisted that this
method would result particularly to
the benefit of the. agricultural con.-
munity.