Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-13
The Railroads Request.

crease of fifteen per cent in their freight
rates doubtless will be given prompt at
tention OF the Interstate Commerce
Commission when 1t receives the petit
ton. The roads will ask for the in
crease as an emergency measure to meet
the drastic reductions which have oc-
CURED in their earnings since the bust
ness depression set in. The commission
will it may be expected, take into con-
sideration the Nationwide situation
which now prevails, with business seek
ing to struggle back to a better position.
Whether improved conditions for the
entire business structure, including the
railroads, can be effected by increases
in freight rates at this time is decidedly
a problem.
The railroads argue that their rates
have been forced too low in recent
years depression or no depression. They
urge that had these rates not been
brought so low they would not now be
in the straits in which they find them
selves. They argue, also, that because OF
the reduction in railroad earnings rail
road credits have fallen off heavily,
with railroad security owners suffering
greatly from the failure of the roads to
earn and to pay dividends They pic
ture a situation in which the roads may
be forced later into the hands Of re-
ceiverS and bankruptcy. Further, they
point out that under the transportation
act the Congress fixed five and three
fourths per cent as the earnings to which
the roads are entitled and that the
Interstate Commerce Commission is in
duty bound to see that the rates are SO
adjusted as to make such earnings
possible.
On the other hand, it is obvious that,
no matter how high the rates might
be set by the Interstate Commerce Com
mission, II there were little or no bust
ness the roads would earn nothing. 1t
has been demonstrated again and again
that a bigger volume Of business at low
prices brings greater earnings than a
small volume Of business at high prices.
Such a demonstration is found today in
the increased sales Of department stores
throughout the country, with prices
much lower than they were two years
or even a year ago.
The general public, which uses the
railroads and which needs their services.
naturally will look with sympathetic in
terest upon the plight in which the
roads find themselves today. But the
general public, and business the coun-
try over, have bsen taking their losses
for many months as a consequence of
the depression. The railroads have also
taken their losses. But how an increase
in freight charges upon business at this
time can aid in bringing all end to the
business depression is not quite clear 1t
is true that the railroads are great pur-
chasers of all kinds of goods. But if
rates go up, Is there any assurance that
the roads will undertake to buy in
greater quantity? The arguments adj
vanced for the increases would rather
incline to the belief that any increased
revenue would be used to pay dividends
to stockholders ard interest on bonds,
rather than that it would be put into
added equipment for the roads.
The chances that the Interstate Com
merce Commission will agree to
blanket increase in freight rates at this
time would not, under all the circum-
stances, appear bright. But that is a
matter which the commission itself
will have to determine. The decision OF
the railroads to ask for the increase
comes as surprise, in view of the fact
that the opinion of the railway
executives has by no means been
unanimous in the recent past upon the
advisability of seeking these increases.
Some of the railroad executives have
been lowering rates to meet competi-
ton from truck and waterway carrier
and pipe lines. They do not believe
that they can gain more business by
an increase, and they fear that in
creased rates may take from them
business which they now have. Doubt
less there are individual freight rates
which need adjusting and which would
under ordinary circumstances warrant
an increase. But the roads are not
asking for such increases. They are
asking for general increase, the right
to raise all rates by fifteen per cent
1t is urged that they would not eXer-
else the right to increase all the rates.
But they would have it, nevertheless.