Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1922-01-31
CUT IN RAIL RATES
OPPOSED BY HINES
Earnings Too Low and Busi-
ness Wouldn't Be Stimu-
lated, He Declares
BETTERMENTs ARE NEEDED
BY the Associated Press

Washington, !an. 31.--Walker u.
Hines, former Director General Of the
Railroad Administration. called today
MS representative Of the public by the
Interstate Commerce Commission In its
investigation of transportation rate lev
els. testified that in his opinion rail-
road earnings are too low to admit of
general-rnte reductions and business
would not be stimulated by such a step
If Taken.
Mr.. Hines estimated that "in the
public interest 1t is probably necessary
for the railroads to spend on better
mtnts and facilities at least n billion
dollars year for some time to come.
Looking over the statistics of rail-
road earnings during 1921 Mr.. Hines
said. 1--WE can take It for granted that
general rate reductions are not called
for on the ground that earnings are
too high. We must all admit railroad
rates are high now, but in my opinion
current business depression is not due
to that fact, but to conditions that are
fundamental and worldwide. Chiefly It
is the effort of people TO get to normal
adjustment after the strain of the great
war.
Would Deplete Reserves
Considering the effects of possible
general reduction we must conclude
first, that it would further deplete the
financial reserves of railroad companies
(which are already weakened. unless il
stimulated business sufficiently to pro.
duce traffic which would make up tn,
loss.
Second. we must conclude that II
would reduce the purchasing power OF
the railroads themselves. which is an
important factor in the fabric of com
mcrcial organization. | doubt that q
reduction would stimulate business
| Depression is due to the absence OF
demand for commodities, which demand
cannot be created by slight price re-
| ductions which rate reductions would
| allow.
1T would be doubtful whether the
effect of the reduction would ever reach
those sections Of the community which
need support because the benefit would
be monopolized by those classes which
are most highly organized.
Transportation service costs are not
the real c'use of trouble now. A far
greater bu len on consumption and
production today Is that placed by the
existing system of distribution.
Urges Great Caution
On examination Mr.. Hines
when asked for his opinion as to how
the commission should proceed in con
sidCring specific reductions, replied
that great caution" should mark al
| approaches to the subject. He said he
did not have information on which tc
base an opinion as to whether any
given reduction should be made.
II. c. Fullbright, representing South
western shippers, asked Mr.. Hines /
all other industries had not had to face
losses during 1920 and 1921.
'No doubt that is true" the witness
replied. But looking at it from q
! public service standpoint railroads ar,
/ public utilities which have no oppor-
tunity to pile up funds during periods
of prosperity upon which they can de-
pend in lean times.
For instance, during the war nearly
every industry accumulated immens,
| profits, some of which were held back
to tide them over. The railroads wer
unable to secure anything but norma
returns and their rates and revenue!
alike were held down"