Alma record. (Alma, Mich.) 1878-1928, 1922-07-20
A F RE|GHT. CAR
/ SHORTAGE SEEN
BABSON PREDICTS A SERIOUS
FREIGHT CAR SHORTAGE
THIS FALL.

Wellesley Hills, Massachusetts,
July IA l922:-During the past week
Roger w. Babson has been in New
York in consultation with important
railway interests. He has returned
believing that freight car shortage
is inevitable this fall, and everything
possible should be done to prevent
IT, Concerning the same Mr.. Babson
states as follows;
There are various events which in
dictate serious congestion Of freight
this fall. First there is a real short
age of equipment in good condition
Turnout the war the equipment Of
most railroads was allowed TO run
down. Little was done TO repair this
equipment until this year. During the
past few months railroads have been
endeavoring to do five years repair
work in one. As result great
many freight cars are either in the
process of being repaired or are wait
ing to be repaired In either case
they are out of sayice. 1t is true
that many Of these ears will be back
in service by winter, but they will
not be available by fall. This means
that there are fewer ears available
today to haul freight than are
usually available.
Usually the railroads haul their
coal during the spring and summer
The winter supply is usually deliver
ed by the railroads during the sum-
mer months. Thus far this year
very little coal has been hauled. On
ly immediate needs have been taken
care Of Yet only two more months
remain before people Will be starting
their furnace fires. On the assump-
tion that the miners will soon be back
10 work this means that the railroads
will be deluged with coal during the
remainder of the year. Every avail
able car capable of hauling coal will
be pressed into service and the coal
tonnage should be very, very heavy.
"The outlook today is for good
crops this fall. At prevailing prices
the farmers will want to sell their
grain and move il at once This
means that the railroads viii be
called upon to move large
amount of grain while they are at
tempting to move the coal. There
are factors which lead one TO believe
that manufacturing as a whole will
be more active this fall than it has
been at any time this year Funda
mental statistics indicate that the
low point in business viii be reached
this summer. Thus the railroads
will be taxed by hauling raw mater
ials in general and manufactured
products of all sorts"
Mr. Babson was then asked what
effects such congestion would have
upon commodity prices and securi-
ties. To this he replied as follows
Freight car congestion inevitably
leads to higher prices. This is only
natural as prices are determined,
not by costs, but by supply and
demand
If city naturally uses 80 car
loads of potatoes a day, any day that
there is a shortage Of only two or
three cars, the price Of all the pota-
toes in that city goes up. Another
day when there is a surplus Of only
two cars, the price Of all the potatoes
goes down. Price is not determined
by the total quantity of a product
produced or consumed, but rather by
that small percentage of surplus or
shortage A freight congestion this
fall would inevitably lead to a short
age in certain raw materials and
merchandise in some localities. As
result these commodities will tenn
porarily strengthen i'm price at these
points. Such a result is inevitable.
Strengthening commodity prices
are often-altho not always-pre
ceeded by strengthening security
prices. The stock market usually
discounts rises in the commodity
market. Thus congestion of
freight might mean both advancing
commodity and security prices. Fur
thermore, in the case Of a freight
congestion, the railways should tenn
porarily, at least, show very hand
some earnings. Already, the railways
are showing very good earnings ow-
ing to the high rates and reduced
operating expenses, Notwithstanding
the fact that they are hauling
very little freight. If the time
comes when the railroads will carry
1000 capacity, these earnings
should be very large. Large rail
roads earnings should tend for higher
prices for railroad securities. A
word tor the wise is sufficient"
General business according to the
index figure Of the Babson chart
stands at 17fo below normal the
same as last week.