The Washington herald., 1922-02-05
Says Plan Would Help
Relieve Thousands of
Unemployed.

probably less than / per cent to the
price of cotton goods on the aver
age haul, but II has added probably
so per cent to the price OF coal.
The Increased rates since 1914 have
added nearly 100 per cent to the
cost OF assembling the materials for
pig iron.
"kIl this Is artificially fore ng our
industry to move toward their raw
materials. This does not alone rep
resent the starting of new fac
tory: 1t Is a movement of the whole
mechanism of the community, labor,
homes, schools, railways and what
not-an enormous duplication OF
plant and loss of capital. We will.
ultimately have the >rates read
justed and then we, will destroy
the new industries created under II.
increases On Groups.
"of equal Importance there is Q
new economic light on this distor-
ton Of rates evident under the stress
of the last few years. That Is, the
better realization that some increase
OF rates come mostly of the producer
while others are paid BY the con-
surner. Increases in spread between
producer and consumer do not fall
equally upon each Of them. In prl-
mary commodities where the price
Is fixed by international competition.
the increase or decrease in rates is
a deduction from the producer. Take
wheat, for instance, the point of COM
petition with foreign produce lies at
Liverpool. The net to the producer
Is Liverpool less transportation and
other handling charges. Therefore
increases OF rates are a deduction
from the farmers price. The same
thing applies to the producer in cer-
tain cases of domestic competition.
Also where there Is rapid turnover.
as in manufacture, and consequent
ability to reduce supply, the con-
sumer pays tho freight, as processes
OF productivity will not continue be-
low profit point. In most manu-
factured commodities the consumer
pays the freight. for production quick
ly shrinks when prices at the factory
become improbable and the price to
the buyer Is the factory price plus the
freight. For instance. in hides. the
farmer gets the intentional price less
freight. On boots he pays the manu-
facturer's cost. profit and freight.
1t appears to me that with the
paralysis induced by the increased
spread. we have to take a broader
vision OF what part Of the commu-
nifty is suffering most and direct
such concessions through the rail-
way rates as can be given to that
group-if We would better equalize
the whole economic lead.
During the mast aiOhx r,onths
the railways have made many
thousand readjustments of local
rates in endeayoring to heal local
distortions. but 1 am convinced
that the whole railway rate struc-
ture needs a most systematic over
haul in the light of these new eco
nomic forces that have been
brought into play. We obviously
must maintain the AVERAGE rate
that will support our transporta-
ton systems adequately and such
an overhauling of rates might quite
well mean the advancement of
rates in certain commodities in or
der that compensation can be given
to others where there Is undue
duress.
Question Of Rates.
IF I were to discuss the rates
charged today I should say at once
that decrease in passenger rates
is not nearly so vital to the COM
munity as freight rates, for passen-
ger rates do not enter into the
spread in proportion to the rela-
tive volume of earnings. II were
examining the freight rates I
should al. once say that coal, metals.
wood. and agricultural and other
producers goods should be reduced
to the bottom before L. c. l.. and
class rates are touched.
Il would be willing to 60 even
farther and say that / am con-
vinced that even If the commission
cannot at the present moment
justifiably reduce railway incomes
a single dollar, it is warranted in
investigating the possibility of
some relief to the more distressed
commodities by a revision of some
rates upward. There is perhaps no
great field for changes in this di-
rection but it is worth inquiry.
As mentioned above an economic
analysis Of our industry will show
that l. c. L. and class rates are far
too low compared to the rates on
primary commodities.
with the gradual return of the
traffic to normal. with decreased
operating costs, relief in rates will
be available, and IL would be an
economic crime to amply such relief
by horizontal reductions to all rates
thus giving relief to higher priced
goods, and travel. when the vital
n,oipsDri1p of our economic life,
our agriculture and fuel and metals
are choked.
DIFFERENTIATION Of anything in the
nature of permanent rate basis Is
in my own view. impossible at the
present time, because:
The last FIVE years of changing
administration. irregular trafnc and
wildly fuctuating wages and prices
of materials give US but little re-
liable historical criteria upon which
to base the future. We are in the
midst OF violent economic readjust-
ments, of a profound industrial de-
preston. No one can determine to
what plane the reduction in operat-
ing costs will settle. No one can
estimate the volume of traffics that
are probable for any particular Pc
riod ahead. 1t appesrs to me-. there
fore. that the commission will need
to temporize with the situation Tor
some time. and that its conclusions
may we'll fall into three periods:
II. The immediate present.
"a. During the early period of
decreasing costs and increasing
efficiency and slawly recovering
traffics.