The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1922-03-31

turn on the Investment in the roads,
but that calculation was based on a
certain volume OF business.
when that volume fell Off so
greatly. the income did not material
ize and the roads found that not
only were they not earning enough
to pay interest and taxes but in
many cases they were not earning
operating expenses The natural re-
suit was all kinds of retrenchment-
Repairs to locomotives and cars were
discontinued, renewal Of rails ana
ties was stopped, clerical help was
discharged, trainmen laid off-every-
where economy of the most rigid kind.
To illustrate: The Santa Fe reduced
its forces from $4,000 in December
1920 to $1,000 in May, 1921. All
this, while absolutely necessary. made
for more unemployment and aggra-
waited the situation so far as you bust
ness men of the Rotary clubs are con-
cerned- While some roads were SEEM
ingly able to show fair earnings, and
among them the Santa Fe, please note
that this was accomplished at the ex-
pense of the property. for the main
tenance that was postponed must
eventually be done"
Cause of SLUMP of 1921.
According to Storey's idea the
slump of 1921 was due to the gov
ernment's withdrawal of its support
ting hand" from industry-price fix
ing of coal, copper, wheat, etc When
the law of supply and demand came
back to control things, he said. prices
began to drop. Europe began to take
stock and to turn its armies back to
peace pursuits. and the foreign mar
kets for our goods closed Our fac
tories closed down. The farmer found
himself with large crops of wheat that
had cost him more than he could get
for them. He curtailed his acreage
and hired fewer men and paid them
less; the copper mines shut down;
the steel works closed their furnaces;
the shipping board, having nothing
to carry, tied up its ships. The rail-
roads found their volume of business
cut--no lumber from the mills, little
coal was going to the factories. no
iron ore to the furnaces-and they
did what everyone else was doing:
cut their forces as much as possible.
thus throwing on the labor market
more unemployed.
Business Not Revived.
Claims were made that the rail-
roads stood in their own light, that
a lowering of rates would start
things, that a lowering of rates would |
volume of business and
hence that we could make more mon |
ey in lower rates than in higher rates
IL thereby they could add to their !
volume and at the same time meet
their out-of-pocket costs. The inter-
state commerce commission, yielding
to this pressure, cut the hay and grain
rates an average of 16 per cent, and |
the railroads themselves voluntarily |
made further cuts-but has business
revived? 1t has not. The real cause
Of our trouble was over-production |
and not high railroad rates. The |
business of the country will improve
slowly. It will not reach the fever |
sh activity of war times. but we will |
soon get it to a point where there is |
4 little profit"
Regarding the valuation of the rail- |
roads as made by the interstate COM
merce commission, Storey said it was
"a distinct surprise to all who adj |
vocated it. because It demonstrated |
that most of the roads are not over
and that 1.-The water |
which was supposed to be in their |
stocks is not there"