The New York herald., 1922-11-25
SATURDAY. NOVEMBER 25, 1922


The American railway system is in
a dilemma which is the country's
dilemma as well. Here is Senator
CAPPER on the one hand demanding,
islation that will put down freight
rates. But on the other hand here
is the railway brotherhood of freight
handlers and station employees de-
manding a 20 per cent. increase OF
wages. And the other railway en-
pIoyees generally want more pay.
At the same time the cost of rail-
road supplies shows tendency to go
up. In the matter Of coal, the big
gest operating expense next to labor,
the roads paid an average of $4.S7
ton in August as against $3.46 in
April. That difference Of S1.41 ton
on the 12,5O0,00o tons of coal month
used by the roads means an in
creased fuel cost of about $17,500,000
for August alone.
The August price, 1t is true, was
coal strike price. But there was a
coal strike price in September and in
October. For months there will be
something of coal strike price to
pay and other strike prices. For
the matter Of that, there is always
something to upset the budgets Of
buyers that have to buy in such colos-
sal quantities as railroads buy.
Yet the fact remains that it is not
only the farmers who want railway
freight rates to come down; the man
ufacturers want them to come down,
the miners, the lumbermen-ail ship
pers want them to come down. And
they ought to come down. All busi-
ness would benefit, the whole coun-
try would be better off II the nations
transportation bill could be cut at
least billion of dollars a year and
preferably two billions Of dollars a
year.
But what chance Is there to get
two billions of dollars a year OF the
freight bills OF the American people,
what chance is there to get billion
off or to get anything off IL wages
and other operating expenses eat up
more and more of the carriers re-
ceipts? That is to say, what chance
IS there to cut the railway incomes
to any considerable extent without
throwing them for the most part into
bankruptcy?
Senator CArPER- like some Of the
railway brotherhood leaders. speaks
loosely OF the guaranty clause In the
Esch -Cummins act, meaning a pro-
vision that there shall be rates un-
der which the roads shall earn some
6 per cent. on their invested capital.
But there is no such guaranty In the
Esch -Cummins act. There is no
such guaranty anywhere. The Inter
state Commerce Commission has not
made rates under the present rail-
road act that give the roads per
cent. On the contrary, the Inter
state Commerce Commission has or
dered rates cut when the railroads
as a whole were not earning per
cent. It has ordered rates cut on
roads that we're not earning a dol
lar, that were showing heavy def
cits, that were in the hands OF
receivers.
So what sense or what sincerity is
there in demanding the repeal of a
guaranty clause that does not exist?
What is the use of talking about no
longer giving the railroads a total
net earning power of 6 per cent.
when they do not earn, never have
earned since the Esch-Cummins act
went into force, 9 per cent. or per
cent. or. with proper upkeep charges,
even per cent?
Nevertheless, the freight rates and
the passenger rates too could be cut
if the operating expenses could be
got down. No doubt the roads them
selves would be glad to cut the rates
&c make more business and steadier
business IL 1t could be handled with
out loss. But II the rates are cut two
billions OF dollars or a billion Of
dollars or half billion Of dollars
without the payrolls, which take
mdre than half the gross revenues Of
the roads, getting corresponding cuts
and without the other operating costs
getting their share-of cuts, the Amer
ican railway system will pile up in
vast financial wreck. And the
American people never can get the
transportation service TO which they
are entitled out OF a bankrupt and
collapsing national railway system.
That Is why the railroads of the