FREIGHT RATES WILL GO UP
Browne, E. E.
Freight Rates Will Go Up Prediction of 25 Percent Increase Under Private Ownership Is Made; Will Mean Burden On People of More Than Total Wealth of Wisconsin By E. E. BROWNE (Congressman from...
...On a number of occasions I have called attention to a statement of Director General Hines made in a speech at St...
...For example: the Baltimore & Ohio Chicago Terminal Railroad the last year before Government control operated 79 miles of railroad...
...The Director General's exact words are as follows: "Whenever there arises any reason for an increase in cost of anything, the public has to pay the amount of the increase, and the amount of the increase in the price is several times as big as the reason justifies...
...In stating the amount the Government has expended they do not tell you that the Government has been paying $940,000,000 annually to the railroad companies for the use of their property, $250,000,000 to $300,000,000 more each year than they should have paid...
...What I have said is that the consumer catches an increase in freight rates in the shape of an accumulation of increases...
...I have received many letters from the holders of railroad stocks and bonds and have seen much propaganda sent out by the railroads to the effect that the railroads have been starved by the Government...
...Louis in June last, to the effect that this ratio might be as much as fivefold...
...These large dividends were laid upon the book value of the railroads, which all admit is an inflated valuation...
...The railroads of the country have destroyed water transportation on which the government has expended hundreds of millions of dollars...
...My belief is that attempting to reach a permanent solution of the railroad problem at a time when everything is in the flux is a hazardous proceeding, fraught with danger to the Republic...
...The principle of the Government guaranteeing profits to any person or corporation is indefensible and a dangerous precedent to establish...
...My Dear Congressman: I beg to say that the quotation you make inquiry about from recent utterances of mine is a free translation rather than an accurate statement...
...The difference between the Chicago, St...
...the Louisville & Nashville, 16.75 per cent...
...I have devoted to this question a great deal of thought and some investigation, and am satisfied that Director General Hines stated the case very conservatively...
...There are like examples...
...Using the ratio of 5, I have said on several occasions that based upon 1918 receipts from freight traffic, the 25 per cent increase in freight rates which the carriers propose to ask for upon return of the roads to private control would mean $875,000,-00O additional which the shippers would have to pay and $4,376,000,000, or $215 per family of five—assuming our population to be 100,000,000 —which the consumer would have to pay...
...The following letter to me from an authoritative source throws additional light on this subject: Interstate Commerce Commission, Washington, January 20, 1920...
...Louis, and New York markets and the local markets where the farmers' products start on their journey to the consumer is the transportation charge that the farmer pays...
...An increase in freight rates of 25 per cent that the carriers propose means that the shippers of the United States will pay $875,000,000 additional in freight...
...the Atlantic Coast Line, 10.80 per cent...
...On the contrary, it shows that the railroads have been among the heavy profiteers...
...Starving the Railroads...
...You can realize what this stupendous amount means when you consider this is an amount in excess of all the assessed property of the wealthy State of Wisconsin, including all farms, personal property, and property of all kinds...
...He is bound to, because he is at the mercy of the manufacturer, the wholesaler, the retailer, and generally the commission man, as to each single material that enters into a finished article and then as to the article itself...
...R. W. WOOLEY...
...Under operating expenses the high officials can continue to receive their exorbitant salaries...
...The value of the property will not be determined in that time, as the commissioners who are making a valuation state that they will not have completed their work before that time...
...Marie, 12.09 per cent...
...The directors of these great trusts and those of the railroads are interlocked...
...Guarantee the Railroads Profits...
...Will Mean Burden On People of More Than Total Wealth of Wisconsin By E. E. BROWNE (Congressman from Wisconsin) RETURNING the railroads at this time means an increase of at least 25 per cent in freight rates...
...The Standard Oil Co, the Anthracite Trust, the Packers' Trust, the Steel Trusts, and all the great trusts in America were built up by discriminating freight rates...
...What were the dividends of some of these railroads...
...The Government has been powerless in the past to prevent discrimination in freight rates and special favors, and as a result all competition has been strangled, and these concerns, in their own language, charge all the traffic will stand and are responsible in a large measure for the high cost of living...
...High officials of the Government, like the Director General of Railroads, Walker D. Hines, and Robert W. Wooley, Interstate Commerce Commissioner, men who have given years of study to the railroad question and who are not biased by any prejudice, say that the increase of 25 per cent in freight rates, which private ownership at this time means, will be an increase to the ultimate consumer of $4,375,000,-000, or $215 per family of five, assuming our population to be 100,000,000 people...
...So if after study of the matter it is discovered that the Government ought to have $300,000,000 additional per year to pay the operation and rental, and increases the rates accordingly, there would be danger that after the increase had been passed along to the ultimate consumer of food and clothes and other things which we all have to buy, the public would pay a billion or a billion and a half on account of the three hundred million the Government would be getting, because the prices would be increased by the manufacturer and the wholesaler and the retailer...
...J. M. Dickenson, receiver of the Rock Island, receives $120,000 per year under private management...
...more than fairly...
...Paul & Sault Ste...
...It paid them as rental an amount equal to the average amount of income they had received in the three prior years from June 30, 1914, to June 30, 1917, which were the most prosperous years the railroads had ever had in their history...
...The reason is that the price of farm products is fixed in the markets of the world...
...THE railroads from the beginning of gov-ernmental control have tried to discredit governmental management by an extensive and misleading propaganda...
...Did the Government treat the railroads fairly...
...When in December, 1917, the Government took the railroads over as a war measure because they were not meeting the demands required by the Government private ownership and management of our transportation system had completely broken down...
...Consequently the book valuation of the railroads, with all the watered stock, will be guaranteed a profit of from 5 1/2 to 6 per cent...
...The railroad companies would have been obliged to make this necessary increase in wages themselves under private control...
...This increase of wages to date from January 1, 1918, amounted to over $874,000,000...
...THE bill provides that the Government shall guarantee every railroad in the United States a profit of from 5 1/2 to 6 per cent on its property for two years...
...In 1912-13 they had a deficit...
...Hon...
...Yet this railroad would be paid from 5 1/2 to 6 per cent on its exorbitant capitalization under the guaranty of the Government...
...the Chicago, Burlington & Quincy, 22.05 per cent...
...An increase in freight rates is borne more by the farmer than any other producer...
...They do not tell you that the Government expended $372,000,000 for cars and locomotives and that the Government paid out $780,405,512 for roadways, structures, and other betterments that were necessary to make the railroads efficient and were necessary because the railroads had been so greedy in paying themselves high dividends and their officers high salaries and had let the railroads run down...
...In the past there has been ruinous competition and duplication among railroads...
...In 1913-14 they had another deficit...
...Our foreign trade, our own economical well-being, depends upon a well mobilized and unified transportation system and a perfect coordination of rail and water transportation...
...Hence I feel that in the interest of the general consuming public we ought to be exceedingly cautious about making the increase in transportation rates...
...These figures, of course, are approximate...
...the Norfolk & Western, 12.51 per cent...
...the Atchison, Topeka & Santa Fe, 9.70 per cent upon its capital stock...
...The owners of that stock are getting out of that terminal company in a way of net returns very little...
...What did the railroads receive under this management...
...They do not tell you that under government control the Government increased the wages of all railroad employes to meet the high cost of living on the average of $31.67 per month per man...
...the Minneapolis, St...
...Edward E. Browne, House of Representatives, United States, Washington, D. C...
...It has a stock issue of $8,000,000, It has a bond issue amounting to $41,044,000, or $519,544 per mile...
...The Illinois Central Railroad received a net income of 11.33 per cent upon its capital stock...
...I have the names of over 200 officials that were receiving salaries ranging from $20,000 per year to over $100,000...
...As-cording to Senator Cummins, who certainly would not be charged even by the railroads with hostility to the railroads, they received from two hundred and fifty to three hundred million dollars more per year than they should have received...
...Water transportation on our great rivers bas been throttled by the railroads owning the wharves and dockage and making unfair rates between certain competitive points...
...The railroad companies have stated this repeatedly, and this is verified by members of the Interstate Commerce Commission...
...While an increase of rates beyond the 25 per cent may be necessary to take care of increased costs running from 50 to 80 or 90 per cent, yet improvements in conditions may accomplish a great deal in wiping out the deficit without any increase in the transportation rates...
...the Chicago & North Western, 10.18 per cent...
...These figures would not indicate that the railroads had been starved or had made any sacrifices during the war...
...Governmental Ownership Misrepresented...
Vol. 12 • March 1920 • No. 3
