Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-13
STATES LEAD FIGHT
ON RAILROAD RATES
Six Appearing as Unit Con.
tend Increase Would In
jure Farmers.
BY CARLTON A. sHIvELY.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, August 13.-Opponents
of the railroad application for Is. per
cent increase in freight rates are hav-
ing their innings in Washington. Con-
trary to what might normally be ex-
pected, the best organized and most
aggressive opposition is coming not from
the largest shippers but from State
governments. Six Northwestern states
are as a unit presenting arguments be-
fore the Interstate Commerce Commits
sion protesting that the increase would
be an unbearable burden for agriculture.
They are supported by the National
Grange
Hearing the evidence in opposition
and then some rebuttal will. Of course,
lengthen the proceedings, but already
the hearings have been pushed along
faster than many had hoped Railroad
men scarcely had expected decision
before mid-Autumn, nor had they antici-
pated any appreciable increase in their
revenues this year, even were the rate
increase granted. They had, OF course,
looked forward to a considerable psy-
Geological gain from the granting of
their application. That, they felt, would
reassure security holders, stop the long
and severe decline in share and bond
prizes and stiffen the market Sufh-
GENTLY for them to obtain new capital
through the medium OF other than
short term bank loans.
Viewpoints Clash.
There is a decided lack Of harmony
in the viewpoints taken on the rate rise
on the railroad side. Some superficial
observers seem to be under the impress
sion that revenues would grow enough
so that the extra income would alone
enable the roads to maintain wages,
cover bond interest sufficiently to keep
bonds on the legal list. maintain d1vi-
dends and provide the necessary new
capital for improvements and mainte-
nance.
All the railroad executives really hope
for is enough additional revenue to stave
of. for some of them at least. receiver
ship, and to help bolster their credit
sufficiently to enable them to borrow
on favorable terms against the days of
greater prosperity. On their side also
the feeling Is strong that in actual APP
plication the principal professors. the
farm organizations, will find that the
winds will be tempered to the shorn
lambs Already the railroads have made
considerable reductions in rates on farm
produce.
wall street is agreed that so far the
railroad side of the case has not been
presented to the best advantage. Too
much stress has been laid on the in
creased expenditures which the roads
would make with the extra revenue or
capital to be derived as a result. 1t Is
agreed that the suggestion of one wit
ness that this expenditure would help
to promote a trade boom was inept.
just now railroad management does not
wish to increase expenses so much as
rot to reduce them further at the ex-
pense of properly maintaining the prop
- - - 49,
have looked into it, few railroads are
undermaintained.
Removals Not Likely.
Bond and share holders organiza-
tions also apparently feel that higher
revenues would be retained and shown
as larger net income. Obviously the
roads won't be able to spend their money
for ordinary operations and stin show
it as profit applicable to stocks and
bonds. On this subject some harm per-
haps Is being done by alarmist views
Of the standing Of railroad bonds. Al
though half of the 80 major roads are
failing to earn their fixed charges the
one and a half times as prescribed by
the New York legal bond requirements,
and while it may be true that, given no
revenue Improvement $500. 600. 600 of
railroad securities would be jeopardized
as legal investments, no wholesale re-
nnovals are likely.
In the first place, it is probable that
the New York law viii be amended or
softened in its application Secondly,
there Is little or no precedent for orders
compelling insurance companies and
banks TO sell bonds removed from the
legal list. although they may not buy
additional securities of roads on the
blacklist, and may be obliged to write
down these holdings Trust companies
probably would be obliged to sell These
large holders rightfully are aroused over
the prospect of further declines in their
huge investments, but no wholesale
dumping Of railroad securities from them
is in prospect However. many already
have begun to increase their proportion
Of public utility bonds.
tCopyright. 1879