The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-05-27
BY ISAAC BORN

Proposal Of the carriers operating
east Of the Mississippi river, COM
monty known as the eastern district,
to increase freight rates scaled from
2 per cent to 20 per cent, in respect
OF the individual commodity, as
serted as averaging 10 per cent,
seems to have been conceived in ex-
pediency rather than principle.
Obviously from the amount stated
To be gained, measured by the total
tonnage carried and average rev.
enue per ton Of freight, the increase
of weighted average will be vastly
more than 10 per cent.
This means simply that raw ma
terial and low grade commodities
are to be, by percentage increase,
forced out Of the present direct
rate relationship. The shipper pays
charges in rates, not percentages.
1t means that there can be no
free interchange Of traffic, and the
industry Of the eastern district will,
by rate device, be restricted to short
zone operation.
1t further means that the natural
resources in other territories will be
fostered at the expense Of the man
ufacturer in the eastern district
and, specifically, within in Indiana.
Tax On Commerce
Freight rates have been defined by
federal court as, in ultimate analysis,
tax on commerce. In that interpre-
tation there may be noted the
definite fact that freight-rate-tax
on-conlnerce has had general in
crease in the eastern district dur
ing the last fifteen years at 902 per
cent and many individual commod-
tiles in traffic of Importance have
had vastly greater percentage / n
crease.
Onerous as such tax on commerce
must appear (and tea parties have
been formed in revolt against small
er oppressions) there now is sought
an additional tax, the equivalent of
$500 a mile Of road for all rail-
road mileage in freight service in
the eastern district approximating
$500 miles, although the average
haul per ton Of freight is about $50
miles.
In this connection 1t may be OBJ
served that carrier, federal and
state tax accruals in the eastern dis
trict are about $4,000 mile of road.
1t may be that the present as
serted depressed condition of car
riers is due to neglect Of their OPP
Grating duties as public agents, in
nl-advised direction Of effort to
wanton speculation in acquiring
stocks at tremendously inflated val
ues Of the lesser lines, by the Sys-
TENS tentatively grouped in consou-
dalton plan; and, the creation of
convulated network Of nonregulated
holding and auxiliary companies by
which abhorrent monopolistic pur-
poses could be attained; in ineVita-
bic artificial enhancement of cap
ital account and uncertain stock
worth.
Oblivion Is Forecast
The contention may be advanced
that it should be developed that
such facts are definitely true, treat
ment must be of later investigation
and independent of the question of
present financial distress which is
said to confront the carrier as a
public agent.
Probablized by experience, it may
be anticipated that the matters re-
served for future treatment gradu-
ally will be sunk in oblivion. More
over, congress has not, as yet, pro-
vided for direct regulation in such
matters. The immediate effect is
in restoration Of public confidence.
To the extent that there has been
dissipation or undue imitation of
capital account, there is concern in
the present carrier proposal.
The value of the plant Is as re-
suit Of the rates rather than basis
for rates. There is no fixed rule
as to specific weights to be given
cost of reproduction or original cost
in determining the valuation of a
railroad, but however accounted the
valuation for rate-making purposes
should not be reflected in the peak
of all years but should bear, at
least some relation to the period Of
rate change.
In any event, close scrutiny should