Southwest Washington labor press. [volume] (Hoquiam, Wash.) 19??-19??, 1923-08-31
HIGH FREIGHT RATES
GAUSESANDRES
Continued from Page Two,

most part within the group Of trans
pOrtation expense"
After a full hearing and investi-
CATION of all facts disclosed by the
record, the commission held there
was not sufficient evidence before it
which established a necessity for
higher rates based upon increased
wages, and that the probability was
that increased rates would not be
necessary in the future.
The increased operation ratio Of
recent years that is pointed out quite
frequently by the railway represen-
tatives as due to increases in wages
is, therefore, not due to wage in
creases alone, but also reflects addi-
tional compensation paid to a larger
number of employees, the cost of spe-
cial service to shippers and so on.
As to the part which is due solely to
actual increases in the rate of wages,
the commission merely utters an eco
nomic truism, which the railroads
persistently overlook, when it says in
its report in the Five Per Cent case,
that even greatly increased rates Of
wages are perfectly consistent with
reduced unit labor cost.
Increase Not Justified.
The federal regulative body lays
down the indisputable fact that an
increase in gross operating expenses
not IN itself Of any great Importance
IS q result Of increases in wages Is
for Significance. 1T does not follow
that because Of this increase in gross
expenses there should be an increase
Of an equal amount in gross revenue
by raising freight or passenger
rates. It proves nothing Of value to
point out that the cost Of railway
operation has increased, in. proportion
to gross revenue, or that there has
been an increase in the ratio of COM
pensation compared with the other
items of operating expense"
That which the commission en-
phasises as being Of real significance
is the effect upon net operating reve
nues. even though the percentage
of net to gross is less" it says, "still
the total net may be more and the
percentage of net value may also be
more" Wages can increase not only
in amount, but also in proportion to
other items of operating expenses
and still there can be sufficient net
revenue as well as an increase in the
net. The commission gives specific il
lustrations of these facts. 1t then re-
lates the net income at different
years to capital cost and the corpo.
rate income to outstanding capita
stock and to the market price Of
stocks. It concludes that by none OF
these rules of measurement is a mere
increase in wages necessarily of seri-
Gus consequence.
Scientific Management.
Increase in wages can be Offset by
economics, by so-called scientific
management" by greater efficiency,
by increase volume of traffic, by low
er unit costs, and so on. This aspect
of the situation l shall reserve for
treatment later.
The operating expenses of the rail-
roads after they were taken over by
the private owners from the govern
ment increased in 1920 more than
81 400, 900 over 1919. The argu-
ment that wages are an increasing
part of the general railroad expense
is not borne out by the facts, as
shown by the following table pre-
pared by George W. Anderson, for
mer member of the Interstate Com
merce Commission, and now Judge of
the United States circuit court of
appeals:
Compensation of Employees, Class |
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