Evening star., 1949-11-18
Rail Executives Douh
Subsidies Will Solve
Carriers Problems
Seek Freedom Of Action
On LocoI Freight Rates
To Meet Competition

SSSk IISSOVii VI 7St'S"
On LocoI Freight Rates
To Meet Competition
By .David Laurence
When Interstate Commerce
Commissioner Alldredge told the
House Judiciary Subcommittee
that Congress may want to con
slider subsidies to the railroads II
losses in passenger revenue were
not stopped, he was suggesting q
solution that most of the railroad
executives themselves think Is un-
necessary.
What the railroad men want
is a system of rate-making thai
will permit them to compete with
other forms of transportation. To-
day If they make a rate between
two cities in order to meet 9
competitive rate by trucks. FOL
example, they must then apply
that lower rate to similar hauls
or situations in other parts OF
their transportation system ano
this could mean greater loss n
revenue than would be offset by
the gain in q specific locality.
The truth of the matter Is that
when the Interstate Commerce
Act was passed back in 1888 the
railroads in every sense had a
monopoly Of transportation facili-
ties. Today they find themselves
up against cargo-carrying by air
lines, and by heavy duty trucks
which have reached such size that
they look like railroad freight cars
On rubber-tired wheels.
Cannet Fix Prices.
The railroads are not asking
that the trucks or airlines be re-
ouired to charge higher rates. on
the contrary, the railroad execu-
tiyes say they want a chance to
meet freight competition in the
same way that any businessman
lowers his price to meet competi-
ton.
But the railroads cannot fix
their prices as do owners OF other
businesses In the private-enter-
prise system. They must wait many
months for the Interstate Com
merce Commission and sometimes
for State Commissions to act
They must bear the entire cost OF
the maintenance Of their rights
of-way, while their competitors
receive heavy subsidies or relief
from corresponding burdens OF
taxation.
Thus a study Of the year 1947-
the latest year in which figures
OF this kind are available-shows
that for all Class railroad;
the total operating revenue was
about $3.50 .000, 900 but that the
cost of owning. maintaining
and operating rights-of-way anc
paying State and local taxes
amounted to $1,770,0O0.000. Thi.
is 20.5 cents out of every revenue
dollar.
The interstate commemorative
and contract trucks, on the othel
hand. are estimated to have re.
ceived a revenue Of $1,800,000. .00C
in 1947 and to have paid out only
4.7 cents on the dollar, or $84,-
$4,000 for their State and local
taxes including gasoline, motor ve-
hicle, property and other taxes,
Looking at It from the expense
side, the railroads paid out 21.02
cents Of each dollar of their total
costs for owning and maintaining
rights-of-way and for State and
local taxes. while the trucks paid
out 4.89 cents Of each dollar of
their total expenses for taxes of
all kinds and paid nothing direct
ly for road maintenance.
Meaning to Railroads.
The meaning of this Is that II
the Glass I railroads could have
spent only ~ cents out Of each
revenue dollar for their rights-of-
way and maintenance of track
and yards as well as State and
local taxes, the railroads would
have cut their expenses In 1947 by
1885. .o51. 900 or by 1862 per cent
This might have permitted the
railroads to reduce their freight
rates to the shippers.
But the highways on which
trucks travel are shared by the
passenger travelling public as well
rs the freight carriers, whereas
the long lines of steel track are
used only by the railroads. The
country nevertheless needs the
railroads as the main system OF
transportation for heavy ma
terials and products in wartime
rs well as peacetime. With the
rate structure for passengers now
being pressed to the limit, as Com
missioner Alldredge points out
the railroads may have to COM
promise with their convictions or
the subsidy question and conside,
whether the Federal Government
IS measure of national defense
shall not contribute to the cost Of
maintaining the steel highways.
There is an easier way, however
1t is to let the railroads have free
dom Of action in making local
freight rates SO that they can meet
competition. This Is the American
way and 1t can beat the subsidy
adea. But II Government is to
regulate rates on a rigidly uniform
pattern 1t may find itself forced
to pay q subsidy to maintain the
roadbeds Of the Nations railroads
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