The Washington herald., 1922-02-05
Hoover Asks Government Guarantee
Equipment Trusts to Aid Railroads

eSUmaLed from 1bZtoloO
Wage scaies(approximate)
Farm labor ........... 135
Textile industries $3.50. 210
steel industries ....s... $50
Railways ............... zoo
Metal trades .......... 21S
Building trades 1900. 19O
Coal mining scales -. ia
This table at once demonstrates:
I'D The inequality In prices and
wages between different groups OF
crease in spread between PRO
dticer's" and CONSUMERS" goods.
(3) The lag in wage scales.
"As the. population engaged In
the debated" producers goods
agriculture. and metals, wood. etc.
-comprises one-half the total in
number Of the nation, their power
70 buy the same ratio of consumers
goods has been reduced to less
than 10 per cent of pre-war. and is
the consequent cause OF a large
part of the Industrial and COM
mercial unemployment and stagna-
ton In our cities and our trans
portation.
Increase In Spread.
Il wish to especially call your
attention to the indicated enor-
nous increase in spread between
primary producers and ultimate
consumers goods. In considering
IL, We must bear in mind that when
we use 100 for both consumers
and producers goods of 1913, we
have already included the spread
between producer and consumer at
that period. I. therefore, believe
that the index numbers indicate an
increase of 100 per cent in the ae-
tual spread. 1t is right here where
the most of our economic difficult
ties lie today. Our increased cost
of manufacture and distribution
bears two relations to 1.-THE rate
question-first, that the increase
OF rates from 30 per cent to 100
per cent in different commodities
are part of ii, and arc in turn part
caused by It; and second. the in
creased rates bear very unequally
on different groups in the commu-
nifty.
IF we search for the cause of
this increase of spread we shall
find therein a vast complex of in
creased taxation, increased wages,
rents. and a dozen items, all reaor-
ing upon each other, and also. ex-
pressing themselves in increased
cost of operating the railways. For
instance, the total increase in ma
tional, State and municipal taxes
since 1918 Is approximately $780,
100000. At the present purchasing
power of the dollar. our national
l.
around $4,000, 900, 900. of which
over 10 per cent must now be de-
voted to increased taxes. This sum
of money must be obtained either
from the producer or the consumer
and In any event a considerable
part Of the taxes contributes to
widen the spread. Because the in
crease in spread due to taxes neces-
rents. etc, and before its force ex-
pends itself my opinion is that pos
sibly twenty points in the distorted
taxes;
Cites Rate Increases.
The increase of railway rates
since 1913 in Glass 1, railways 1891,
is about s2.soo. 900, 900, of which
about s1.4o0. .o0o, 900 are duo to wage
increases and about $16o, 900, 900 to
tax increases. If our trafics were
normal the total increase of rates
would be more like $500, 900, 900.
These sums enter into this increase
in the spread and carry with them
a further trail of increased living
costs and again a spiral of higher
wages. rents, etc, in all other
branches of manufacture and dis
tribution.
There are other causes of the
increased spread. some of which
will be mitigated with time.
mo one can say to what particu-
lar table-land of prices and wages
We may settle upon, but it Is a
certainty that the exchange value
of producers goods will not again
line up with consumers goods un-
less We can decrease the costs ana
eliminate the wastes of our whole
manufacturing and distribution
trades. And unless we can secure
their nearer proximity We will re-
tard a return of employment and
prosperity.
Discusses Price-FixinE.
Il wish to digress for just a mo-
ment from railway to agricultural
subjects to point out that the re-
cent projects for fixing farm prices
by law are apparently founded on
the notion that by raising agricul-
tural prices up to the levels Of
consumers goods we can remedy
the extreme hardship of our farm
ers. Even il it be possible to raise
the prices, much less advantage
would accrue to the farmer than
anticipated. Unless the spread" Is
decreased by actual savings, the
costs of manufacture and distribu-
ton would be at least partially in
creased by higher prices of pro-
ducer's goods. The spread is fun
damentally due to increased cost
of manufacture and distribution,
not to the fall in producers goods.
The real remedy is an attack upon
the causes of the spread and there
by to bring the consumers goods
down to the producers buying
power.
Tt is a certainty that N order
to decrease the spread, railway
rates must come down and for
rates to come down costs of rail-
way operation in wages and prices
OF supplies must be reduced. Until
this adjustment is secured the eco.
nomic machine will continue TO
move slowly. We cannot and should
not expect wages to come back to
prewar levels. Many Of our wage
scales were too low in prewar
times. They can follow down step
by step with the cost of living, but
there are permanent charges in
this spread. such as the taxes,