Evening star., 1945-04-12
Letters to The Star
Denies 80 Per Cent Differential
Against the South
To the Editor of The Star

In the InurSQay, MarcQ ~, Issue Ol
The Star, Columnist Lowell Mellett
wrote of "a great victory on the home
front in the long war between the States
over freight rates." and said that the
South finally has achieved what mill
tary men call break through He went
on to speak of an average 80 per cent
differential' against the Southern States
and to say that 'in the opinion OF dis
interested observers, nothing more is
needed to establish the injustice than
examination of the existing schedule Of
freight rates." meaning by this the
average" 80 per cent differential
against the South.
But the facts are altogether other
wise. The average "differentiar'-if the
word properly could be used in this
sense-against the South is not more
than 5 per cent But this per cent
average higher level rests on a traffic
density in the South only one-fourth as
great as in the North. These figures
tell the whole story. For the railroads
of the South they reveal that the South
ern carriers failed by over $81 ,000,0 900 to
cover their fixed charges during the
1O-year period of 1930-1939, and that
25 per cent of their total mileage was
in bankruptcy To industry in the
South they tell of the effort to build
an industrial rate structure purpOsely
designed to aid and promote the indus
trial and economic development OF the
South by means of rates often the low
est in the entire country, and which
have accomplished this.
Says Rates May Be Increased.
The fact is that, If we exclude coal,
nearly one-half of all the tonnage
hauled by the Southern carriers moves
on rates lower, mile for mile, than with
in the North. This vast industrial rate
structure is involved in the break
through to which Columnist Mellett re-
fers 1t may well be break through"
but not of the kind he visualizes. While
it might not concern him where the
Southern carriers get enough revenue
to operate on, it is of direct concern to
industry in the South. If our rates that
are higher than in the North are to be
reduced, then obviously our lower rates
will have to be increased or else our
railroads all will be bankrupt.
But, of course, what Mr.. Mellett has
reference to, although he may not know
it, is an academic comparison OF two
prescribed rate scales, one known as the
Eastern scale and the other as the
Southern scale of firSt-class rates The
Southern first-claSs scale averages about
80 per cent higher than the Northern.
But there the comparison ends.
l do not think ColumniSt Mellett or
any other disinterested OBSERVE could
point to single movement of traffic
from the South to the North on a ''39
per cent differential." Obviously, there
could not be very many movements Of
this kind since the total overall average
revenue level Of the Southern carriers
is not more than per cent higher than
in the North.
In the South over period of Gears
we have adjusted our rates on a far
different basis from that in the North
different, in fact. from any other re-
gion in the country. While some are
higher, many are lower. But it should
not be overlooked that a general aver
age of not more than 5 per cent is a
lot different from an average" Ct 80
per cent If Columnist Mellett were to
inquire, he would find that hlgh-grade
traffic, such as dry goods made of cot
ton, wool, rayon, silk or similar mate
rials, moves within the South and from
the South to the North on rates no
higher than within the North; in fact,
somewhat lower. The same is true of
boots and shoes, hosiery of all kinds,
other high-grade textiles and many
other articles. So that if it is merely
a question of selected comparisons. such
as he makes of the two first class
scales, this very often could be turned
to show that rates on high-grade traffic
in the South are more favorable than
in the North, rather than the reverse.
Cites More Movement North.
Another fact of special significance Is
that in proportion to the total produc-
ton of manufactured goods the South
ships North four times as much as the
North ships South. And while no spe-
cific detailed figures are available to
show that the South ships its manu-
factured goods to the North on rates no.
higher than in the North, it is well
known that the average rate Level from
the South to the North is substantially
lower than from the North to the South.
1t is, I think a safe conclusion thai the
northbound rate level averages no high
er than in the North.
However, on the vast bulk of manu-
factured goods of all kinds which the
North ships to the South the rate level
admittedly is higher than in the North
This accounts for much of the per
cent referred to. But if these rates are
to be reduced, the resulting revenue
losses obviously will have to be made
up by increases in the balance of the
rate structure and the burden inevitably
will fall on the South's industrial rates.
How will this help the South?
Moreover, the argument is that the
South needs more industries and that
reduced rates will bring them in. But
how can this possibly be accomplished
by the process of reducing their COM
petitors' rates and effectively bringing
their Northern competitors nearer
Southern markets? Obviously, our pres
ent rate structure is better adapted to
encourage industrialization in the South
and it has had just that effect
So far as concerns the pending rate
cases before the commission or the court
proceedings, make no reference to
them. The commission, I know, will
docide tho issues fairly on the evidence