The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1934-09-26

carriers want a 49, IL
higher price for 0
their services. :8.@3
In fact, many ''''''''
people have de- Lewis Haney
manded railway rate reductions,
and I have received letters from
various parts of the country sug-
costing lower freight rates as a
step toward cheaper building ma
terials and business recovery.
This paradox we'll illustrates
the problems that arise when we
attempt to fix or maintain prices
artificially. 1t also shows the diff
ficulties that arise under infla-
ton.
If we try to put ourselves in the
position of a railway management
or a railway stakeholder, we can
see part of the situation more
clearly. Unquestionably the rail-
ways are in a tough position.
Aside from the competition OF
trucks and waterways, the rail-
ways have to deal with the prob
lem of.the higher cost of materials
and labor. While their rates re-
main fixed, their costs are in
creased. :,
Thus iron and steel are about
10 per cent above a year ago, ana
building materials average about
5 per cent higher. But there has
been no general change in railway
rates, and some have been reduced
for emergency traffic.
Again, the same is true Of
wages. These have been in
creased materially, and the et-
feet is greater because the rail-
ways are compelled by law to
maintain their working forces
with few exceptions.
On top of these facts are the
recent law compelling railways
to provide a pension fund for
employees, and growing taxes
which fall heavily upon the car
riers.
Without considering whether
these burdens are just and 'deslr-
able, I merely point to the prac-
teal difficulty of the situation.
This is seen in the fact that While
gross revenues are only a little un-
der a year ago. net operating IN
come is far below.
Even in June, when official fig
ures showed a gain in gross of 10
per cent over last year, the net
operating income was down 80 per
cent. This was because operating
expenses were 1874 per cent higher.
If we don't want higher freight
rates. what we are going to do
about it? If we are going to in
flate prices and wages, are We go
ing to hold freight rates down?
It seems to me that four courses
are open:
~ We can quit trying to
boost commodity prices and
wages, and allow prices to go
where they will, trusting market
forces to work out a reasonable
adjustment. This would mean
lower prices and living costs,
and wages to fit the existing
railway rates.
~ We can reduce the labor
bill of the railways by lower
ing railway wages and removing
requirements which prevent car
rierS from ecOnOmiZing in num-
Der of employees.
80 We can raise railway
rates high enough to allow the
railways at least to earn their
fair fixed charges.
~ We can cover the prob
lem by having the Government
take over the railways. Then
the losses would be borne by
the taxpayers. There would be
no private owners to call at
tentiOn to the inadequacy of
freight rates. Rates would be
q matter of politics. and would
be as low as the taxpayer would
stand.
OF course, sustained general
business recovery which would
greatly increase freight traffic
would greatly relieve the situa-
ton. But there seems to be lit
tie prospect of such a recovery.
Something must be done. Will
we not either have to debate
prices and wages or initiate freight
rates?