Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-17
RAIL WAGE ISSUE
BARRED IN HEARING
ON RATE INCREASE
Continued From First Page }

all over the Milwaukee system Scan
drett answered
A. N Hendricks of North Dakota
asked Scandrett on cross -eXa mination
whether the railroads had considered
that international rates on grain from
Canada to Duluth would be involved in
an increase, and whether they had
considered that grain is carried between
these points in bond.
1T IS my understanding Scandrett
replied, that 1t is the intention to in
crease those international rates II we
get authority"
Bars Grain Discussion.
Hendricks then began to discuss the
parity OF this situation, but Commits
sioner Meyer interrupted, observing
there was so much in the records on
grain rates he saw no use of it here
In view OF the rate increases in
North Dakota. the condition of the
railroads and OF the farmers, do you
believe the increased rates can be sup
ported?" Hendricks asked.
Asserting that the railroads were "en-
tirely sympathetic with the farmer ;"
Scandrett saio he believed it was to his
interests for the railroads to be main
tanned so they can give him the serv-
ice he needs"
Following Scandrett's appearances. the
railroad situation was described by Cole
as potential threat TO the entire
financial and industrial structure of the
Nation" Cole testified as a representa-
tive OF Southern carriers.
The relation between railroad earn
ings and fixed charges is vital Cole
said, and controls the credit standing
OF the railroads. In 1880 the earnings
OF the railways in the Southern region
were only lbs times their fixed charges
When we consider that the statutes
OF some of our States prescribe as
condition of the eligibility of railroad
bond for investment by savings banks
requirement that the earnings of the
railroad whose bonds are being consid-
cred shall be not less than so times
the fixed charges for five out of six
mediately preceding this figure of
Southern earnings assumes the gravest
significance.
Bond Values Endangered.
with the enormous decrease in rail-
road earnings during the current year
below those of 1890 it is evident that
the availability of most railroad bonds
for such investments is not only seri-
ously threatened, but will certainly be
DESTROYED If some way Is not found TO
improve railway earnings.
1T would be difficult to overestimate
the potential threat TO our entire flnan-
cial and industrial fabric which this Sit
uation discloseS.
"A railroad is absolutely dependent
in obtaining new capital upon the earn
ing power of the property, and earning
power is in turn dependent upon the
rate level of the volume OF traftlc.
The inadequacy of the present rate
level is amply demonstrated by the in
ability of the railroads TO earn fair
return upon an unprecedented volume
of traffic generally during the period
1926-l929 inclusive.
In the present emergency. 1t Is no
longer a question of fair return, but
of a return sufficient to avoid the dis
aster of receiverships In the case Of
many railroads and the maintenance OF
reasonable credit on the part OF all of
them"
Cole said "heroic measures to meet
the existing emergency had been
adopted by Southern roads.
THE increase Of IS per cent now
sought" Cole said, lis believed to be
the minimum increase which would
even measurably relieve the present
emergency, although the level of rates
so produced would fall far short OF the
statutory rate of return
New Live Stock Rates.
Today's live stock decision flxed new
rates based on mileage Of hauls for
cattle, calves, hogs. sheep and goats;
set minimum carload weights, fixed ter
minal charges and dealt generally with
the live stock situation.
The rate on cattle and on hogs, sheep
and goats in double -decked cars was
fixed at a minimum Of II cents q hum
bred in Western trunk line and South
western territories, increasing cent
every 10 miles and beyond this point
by i cent for varying distances. For
calves and hogs in single decked cars
the minimum was fixeo al 10 Genus aIiu
for sheep and goats in single-decked
cars, IA cents. ,..
In mountain and Pacific territory the
rate on cattle and on calves. nogs ano
sheep and goats in double decked cars
was fixed at a minimum OF IL cents.