Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-11
rail RATE BOOSTS
HELD IMPORTANT
More LiberaIity for Carriers
Than in Past ForeSeen
by FinanCierS.
Special Dispatch to The star.

NEW YORK, July 11.-Wall Street,
railroad executives and bankers attach
the greatest Importance to the decision
of the Interstate Commerce Commits
sion this week granting rate increases
to Eastern and western trunk lines on
so-called classified traffic. AS is well
known, that order will add many MIL
lions of dollars annually to the revenues
of the railroads.
That fact is not the only reason for
the qualification Of railroad men, how
ever. They see broader significance In
a growing tendency on the part OF the
commission to treat the transportation
companies with more hberality than in
the past.
In the view of important railroad
directors here the increases on CLASSIFIED
traffic are designed by the Interstate
Commerce Commission to compensate
the railroads in part for loss OF business
to motor trucks and BUSES and to air
planes in recent years. Even II that
deliberate purpose was not behind the
order the higher rates granted will at
least have that practical effect and
therefore will tend to improve the posi-
ton of railroad securities. Indeed, the
recovery in shares of railroads in the
last day or two undoubtedly was in re-
Spouse to the Washington news.
Trucks Have 10 Per Cent.
Just how much traffic has been taken
away from the carrier lines by motor
truck competition is difficult to eSti-
mate. One of the most authoritative
gueSses has been made by a leading
railway executive. He estimated that
motor truckS now haul 10 per cent of
the freight of the country. Motor BUSES
have eaten extensively into passenger
traffic and so, too, have passenger auto
de kN 80
service on local lines and in some cases
to operate bus lines themselves.
The railroads have been trying for
many years to obtain the rate advances
Just granted to them. The fact that
the commission has at last yielded to
their appeals is therefore suggestive of
a change of heart which is believed to
augur we'll for the future of the car
riers, The two groups Of rates affected,
in the West and in Eastern territory,
have been regarded as unduly de-
pressed. The Western lines in particu-
lar sought this relief as part compensa-
ton for reductions made in rates on
commodities which, of course, con-
Stitute the bulk of their traffic.
Estimates of the total annual in
crease in revenues that the new rates
will bring the carriers run as high as
SOS 1000, 900, of which Eastern carriers
will receive the lions share, possibly
amounting to $50,000,0 900, while West
ern carriers will get about SIS 1000 600.
In proportion to their traffic, therefore,
the Eastern lines will fare better than
the Western systems. OF course all
estimates of increase revenues are more
or less gueSSwork, since revenues de-
pend upon volume of traffic.
More Even in East.
Distribution of the increases will be
more even among Eastern roads than
those in the West, because the
Eastern territory is more highly in
dustrialized. In the West certain
roads will benefit heavily while others
will gain comparatively little, the lat
ter being the so-called Granger" roads
whose business is largely hauling of
agricultural commodities.
This decision of the Interstate Com
merce Commission is the second favor
able news of Importance to the railroads
within a comparatively short time. The
oth@ development was the ruling of the
United States Supreme Court in the
Hoch-Smith case. That decision in
effect, held that railroad rates must be
based on the value of the service rem
dered by the carriers not on the profits
of the shippers.
Ii had been argued on behalf of fruit
growers of California that rates should
be reduced on the ground that the coast
fruit growers had had poor season and
could not afford to pay the freight
charge. The court. in effect held that
the misfortunes of the fruit grower had
nothing to do with the rates to which
the railroads were entitled.