Evening star., 1947-10-08
Railroad Freight Rate
Increase Continues
Spiral Of Initiation
ice Ruling FoiIs to Stote
Manner in Which Cycle
Wus Started in 1916
By David Laurence

do IN the face OF the evidence on
the plight of the Nations railroads.
Nothing, however, is said by the
commission or by any governmental
agency or by any one in the Tru-
man administration as to the man
ner in which the cycle of wage and
cost increases was started in 1916.
The American people now are 60
ing to pay higher prices for shipping
goods because coal wages were in
creased at the demand Of John l..
Lewis and the miners union and be-
cause steel prices were increased at
the demand of the CIO unions.
Railroads use coal and steel in large
quantities. Likewise, wage increases
to their own employees have been
related to cost-of- Living increases.
Each time the wage increases were
forced by the threat Of Nationwide
strikes In coal or steel management
gave in because Of fear OF a
paralysis of the national economic
system The bargaining power of
the national unions in such cases is
so strong that the employers could
not afford to resist such demands,
especially when the unions were en-
couraged by the administration at
Washington.
Political government began soon
after VI day to encourage wage
increases while holding prices
down. AS ''black markets" muti-
piled and legitimate production was
retarded because Of the inability
to face rising costs, the Truman ad-
ministration was finally compelled
to remove certain price controls.
Again the President urged industry
to increase wages and absorb the
increased costs.
Cycle Catches Up.
But the cycle has caught up with
itself. The railroads have their
rates regulated by the Government.
They could not do as other private
businesses did-increase prices over
night. They had to wait for the
Government to give them permis-
sion. They had to present thousands
of pages of testimony and evidence
OF their need. So, when the Inter-
state Commerce Commission, after
examining all the facts, grants an
increase, it means that the economic
facts were persuasive.
Thus, the commission says very
frankly and forthrightly on this
point:
"It has been strongly urged upon
IL by responsible authorities that
any increase in freight rates and
charges at the present time might
stimulate already existing inf1ation-
ary forces. But in our judgment
that factor is outweighed by the
necessity of keeping the carriers, in
the face of higher costs of opera
ton, in reasonably healthy condi-
ton in order that they may main
tain their credit, procure additional
eouipfnent which Is now urgently
needed, and rehabilitate and i'm
prove their properties generally to
take care of the demand of the pub
lie for adequate transportation
service"
This is but one way of saying that
the 10 per cent increase in freight
rates was justified by the high op-
Grating costs faced by the railroads.
It means, moreover, that imitation
ary elements, for which the railroads
were in no way responsible, forced
the commission, by unanimous vote,
to grant to the roads what other
businesses were able to obtain
through their own action.
Now the roads want another II
per cent increase, because the 10
per cent Just granted was recognized
as only a temporary measure. 1t Is
estimated that many millions OF
dollars are lost to the railroads al
ready through the lag between the
time they had to pay increased
prices for fuel and steel and this
month when the new increase goes
into effect.
Permanent Factor.
Businesses that are regulated by
the Government run into abnormal
expenses because they cannot exer-
else independent judgment in pric-
ing their commodities. They must
wait for governmental agencies to
act. This takes. a long time while
high costs have already been i'm
posed. Everybody else, to be sure,
is free from price control except the
railroads. They have 1t in peacetime
as well as wartime. 1t Is a permanent
factor in their businesses and this
should be an eye opener to those
who favor augmenting the number
OF businesses that are on regu-
lated or public utility basis.
The railroads are in the midst OF
negotiations with the railroad union
brotherhoods for an increase IN COM
pensation to the operating employees.
Recently, as result OF arbltratlon,
the incorporating employees were
granted a IS per cent increase In
wages. Now it Is the turn OF the
operating unions. The rumors are
that some substantial increase will
be granted. This, in turn, will doubt
less have a bearing on how much
more of an increase in freight rates
will be ordered by the Interstate
Commerce Commission between now
and January l.
Thus, the imitation spiral goes on
and on with no corresponding IN
crease in output per man or in the
efficiency of the workers and no
assurance that volume of business
will rise as prices rise. Sooner or
later, the whole world will discover
that imitation hurts the worker far
more than his numerical increases
in wages help him and that "real
wages" will go down steadily until
production is substantially increased
and prices can be revised downward.
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