Evening star. [volume] (Washington, D.C.) 1854-1972, 1945-08-19


to equalize freight rates in the North
east, South and West does all that ad-
vocates of equality have argued that it
would.
The 1CC has not yet gone the whole
way, but its interim order, scheduled
to go into effect November 30, is a long
stride in the direction of equality. Tech
nical difficulties in putting into effect
the rate adjustment originally ordered
Tor August 30, resulted in postpone
ment for three months of the effective
date. Beyond that, however, the rail-
roads are ordered to prepare entirely
new tariffs which will equalize freight
rates, on mileage basis, throughout
the country east of the Rocky Noun
tains. This process may take two or
three years.
What the ICC has done in the mean
time Is to reduce the distance from
Natchez to Mobile by 10 per cent, and
to increase the distance from Pittsburgh
to Bdffalo 10 per cent-this when it
comes to paying the freight on the
products of factories.
The theory is that this will place
factories in the South and West in q
better position to compete with those
of the industrial Northeast. Factories
there have enjoyed so-called "class rate"
differentials, computed by the Tennessee
Valley Authority as ranging between 81
and 81 per cent, over factories in the
South and West.
Rates Based on Regions.
1t needs to be explained that railroad
rates are computed according to regions,
or territories, including the official, the
Southern and the Western. Another
element to be taken into consideration
is that the current ICC action affects
only "class rates"-which apply gener-
ally to the finished, high-value packaged
products of factories Glass goods con-
stltute about Is per cent of all freight.
The other shipments-generally raw ma
terials, but also some finished products
move under commodity rates, or ex-
ceptions to class rates
The official rate territory lies generally
east OF the Mississippi River and north
of the Ohio and Potomac Rivers The
Southern territory lies south of these
rivers and east of the Mississippi. The
Western lies between the Rockies and
the Mississippi. Each territory has its
own system of rates specified for some
10000 items known to commerce, apply
ing between tens of thousands of desig-
oil
nomical total of individual freight rates.
Advocates of the existing system and
partisans of change are poles apart in
their explanations of the cause and
effect of the railroad freight structure
as it has existed. Those who uphold
the traditional pattern say it evolved
out OF the mutual necessities of shippers
and the railroads and is the best sys-
tenn of serving the varying interests of
varying sections of the country. The
system is challenged most aggressiveIy
by the Southeastern Governors Confer
ence and the Tennessee Valley Author
ity, who point to the relatively low
freight rates for factory products in the
industrial Northeast, the relatively high
rates in the South and come up with the
conclusion that freight rates are the
cause of the Souths lag in Industrial
development.
Trend Toward South.
Business analysts who have studied the
implications of the ICES move toward
equalzed freight rates seem to agree that
its eong-run effect will be to foster the
development of industry in the South
and to hasten the trend toward decen-
tralization of industry in the Northeast.
That, trend has already set in, evidenced
by New England's loss of a great part of
Its textile industry, and the growth of
the steel industry in Alabama.
No one anticipates that the industrial
Northeast will wither and die Rather
the expectation is that in the expansion
OF civilian production hoped for after
the war the South and West will gain
relatively more than the Northeast
In the struggle for markets, the South
and West have held important advan-
tages-cheap electric power, lower labor
costs and access to raw materials among
them. Offsetting these advantages were
freight rate differentials, which gave
lower shipping costs to Northern manu-
facturers.
Gov Ellis Arnall of Georgia, for in
stance, thinks it is a rank injustice that
an Atlanta shoe manufacture must nav
as much to ship his shoes to Chicago as
q Boston competitor, although the Bos-
ton shoes must travel $50 miles farther
from factory to market.
Intrenched Industry Protected.
The railroads reply that Gov. Arnall
is dealing here with Kangaroo rates.
Atlanta is not shoe manufacturing
center and Boston is. If Atlanta were
a shoe manufacturing center, the rail-
roads say, the rate on shoes would be
adjusted to equalize its competitive DO
sition
Spokesman for an industrial South do
not recognize the validity of this argu-
ment. 1t overlooks, they contend, the
fact that new industry is in no posi-
ton to bargain with the railroads for
rate which will enable it to compete
with an intrenched competitor. Their
point is that the Northeast, having been
first in developing industry, is protected
IN that position by discriminatory
freight rates which tend to keep indus
try where it got head start.
The 1oard of Investigation and Re-
search set up by the Transportation Act
OF 1910. in report last year which drew
its data from the 1910 census, pointed
out that the States in official freight
territory contain but Is per cent of the
area OF the country, and a little more