Evening star., 1927-04-24
COMMISSION TO PROBE
FREIGHT RATE PROBLEM
Commerce Body Acting Under Orders
of Congress Will Conduct Greatest
Inquiry Ever Undertaken.

CATION under the Hoch-Smith resolu-
zion as to rates in the Western dis
trict. The carriers request for an
increase in rates was denied. NO re
duction in rates on agricultural proc
ucts, however, was ordered unuef tHe
resolution, the commission reSerVlnB
that issue for future determination.
The railroads in the West were advised
at that time that they should propose
no advances in rates on agricultural
products, including live stock, except
where particular rates on such prod
ucts might need adjustment to remove
inconsistencies or where it could be
shown that the product in question
was not affected by depression. There
the Hoch.Smith resolution was
brought into play.
Question Resolution.
After enactment of the resolution
students of interstate commerce law
differed on the question of whether
or not the resolution really added any
thing to the law governing the Pegu-
lation of railroad rates. On one
hand, it was contended tha., because
of qualifying language used in the
resolution as TO lawful" rates and
maintenance Of an adequate system
of transportation, the resolution sim.
ply meant thG, the commission was
to investigate, as it had the power To
do before the resolution was passed.
and order changes in rates only il
such changes were justified by rules
of rate-making that were in effect
before the resolution was passed. On
the other hand. it was contended that
the resolution meant that the com.
mission should give relief to agri.
culture in the way of reduced rates
and make up the loss in revenue to
carriers from such reductions by in
creases in rates on other commodities.
In a recent decision rejecting pro-
posals OF Western railroads involving
substantial increases in rates on grain
and grain products between points in
Middle Western and Northwestern
States the commission indicated, TO
some extent, its view of the part
the resolution was TO play in the ad-
Justment and regulation of rates. 1t
said that when railroads proposed q
general increase in rates over a large
area on agricultural commodities
shown to have been affected by de.
preston they must clearly demon
strate that such an increase was justi-
ned under the law, including the
Hoch-Smith resolution.
The commission takes the position
that the intent of the resolution
that products of agriculture e"
move al the lowest possible IN
rates compatible with the maintea
OF adequate transportation service
Sets No New Standard
at sets no new standard of lawlt
ness" in the view of the commissiG..
but provides, in effect, that to thu
extent that there are flexible limits 20
our discretion we shall require the
maintenance Of the lowest rates fan
ing within those flexible limits. Rates
that may lawfully be required must in
principle be high enough to cover all
OF the cost that may fairly be aIlo-
Gated to the service, plus at least some
margin of profit"
IL has always been recognized, ac-
| cording to the commission, that the
burden of transportation may reason.
ably be adjusted with some regard to
| the value of the service-in other
| words. that the higher grade, more
| valuable commodities may be required
| to pay greater margin of profit than
those that are of lower grade and less
valuable.
The substance of the part of the
resolution referring to rates on agri-
cultural products. the commission be-
lieves, is that agricultural products af-
fected by the depression shall be in
cluded in the class of most favored
commodities, to such extent at least
as may be compatible with the main
tenance of adequate transportation
service"
Distribution Permanent.
The commission construes the Hoch-
Smith resolution as bringing to the
forefront the question of distribution
among commodities of the transporta-
ton burden, thus emphasizing the
need for considering the relative costs
of service and the relative earnings OF
the various kinds of freight traffic
Equitable distribution among COM
modities of the transportation burden
will not prove to be an easy task. A
proposed readjustment of rates in
favor of one commodity at the ex-
pense of another commodity will bring
into play antagonism of shippers Of
such commodities. The shipper of the
high-priced manufactured article is
just as concerned about his freight
rates as the shipper of agricultural
products. The farmer asserts his
fl eight charges are excessive.
The shipper of a manufactured
article says that, while his freight
rates are not too high, they are high
enough and should not be increased
to make up a reduction in rail reve-
nues caused by lower charges on some
other commodity At the same time,
Congress has said that the railroads
are entitled to a fair return on the
value of the property devoted TO the
transportation service, and the duty
has been imposed on the commission
to see to it that the railroads get
that fair return, 'as nearly as may
be. The riddle has been put up to
the commission for solution. It may
get the answer in 10 years, and then
again 1t may not. If agriculture and
industry could be made equally pros
porous, 1t would not make so much
difference what the freight charges
were.