PRIVATE OWNERSHIP MEANS TWENTY-FIVE PER CENT
INCREASE IN RATES
"An increase of 25 per cent in freight i-ates would mean
approximately $875,000,000 additional which the people
would have to pay to the railroads, and using Mr. Hines's
ratio, $4,875,000,000 additional which the nltimate con¬
sumer would have to pay for what he eats, uses, or wears.
'f The private-conti'ol propagandists have heen desper-
atelytrying to lull the public into a belief that the manu¬
facturer, the jobber, or the retailer—possibly all-three—
would absorb the rate increase and the consumer not be
allowed to feel it. I don't think in a final show-down the
American people will stand for such an insult to their
intelligence."
EXTENSION OF REMARKS
OF
HON. JAMES H. SINCLAIR
//
OF NORTH DAKOTA
IN THE
HOUSE OF REPRESENTATIVES
WEDNESDAY, OCTOBER 22, 19Í9
152457—202O8
WASHINGTON
GOVERNMENT PRINTING OFFICE
1910
Private Ownersliîp Means Inerease in Hates.
EXTENSION OF KEMAEKS
OF
JION. JAMES H. SINOLAIE.
i' ^
V Mr. SINCLAIR. Mr. Speaker, under tlie leave granted to me
to extend my remarks in the Record upon the subject of trans¬
portation, I desire to quote some extracts from an address de¬
livered by the Hon. Robert W. Wooiiey, member of the Inter¬
state Commerce Commission, before the American Academy of
Political and Social Science, at Philadelphia, on Saturday even¬
ing, October 18, 1919. The subject is of such vital interest to
the people of the country at this time that an intelligent dis¬
cussion of it should' be welcome. A proper solution of the
transportation problem will go far toward solving the question
of the high cost of living and do much toward allaying the in¬
dustrial unrest that is now in our country. Mr. Woolley said
in part as follows ; '
" Transportation, raw material, and labor are the three prin¬
cipal factors In the cost of an article to the consumer. Often
transportation is the greatest item of cost. For instance. In a
number of iron and steel products and in some of the products of
lumber, it plays a very considerable part in the cost where the
raw material moved under what Is known as the commodity
rate. Consider that between 75 and 80 per cent of all the freight
traffic of the railroads is carried as commodity traffic and J^ou
can appreciate what this means.
INCRE.4SE IN RATES PREDICTED.
" Mr. Theodore Cuyler, chairman of the railroad executives,
testifying before the Interstate Commerce Committee of the
Senate last winter, sounded an alarm, though he may not have
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/
3
meant to do so, when lie stated tliat upon the return of the rail¬
roads to their owners it will be necessary for the Interstate
Commerce Commission to grant a further increase in freight
rates. This statement has been repeated by other railroad
executives and has been much elaborated upon by propagandists
advocating the discontinuance of Federal control. IVhat the
measure of this increase may be I am sure I do not know. It
seems to be generally agreed that it will have to be at least
25 per cent ; some have placed it as high as 50 per cent.
"In a speech delivered at St. Louis in .Tune last Director
General Hines stated that an advance of .$300,000,000 in freight
rates would be reflected in the cost of the finished article to
tlie consumer to the extent of .$1,500,000,000. Investigations
made in normal times amply justify such a prediction. For
instance, when an increase of 10 cents per ton was granted on
anthracite in 1902 the price of a ton of anthracite to the con¬
sumer advanced 50 cents, and it never came down. An increase
of 25 per cent in freight rates would mean approximately $875,-
000,000 additional which the people would have to pay to the
railroads, and, using ¡Mr, Hiues's ratio, .$4,,375,000,000 additional
which the ultimate consumer would have to pay for what he
uses, eats, or wears, because when he buys a finished article
he pays an accumulation of increases. The private-control
propagandists have been desperately trying to lull the public
into a belief that the manufacturer, the jobber, or the retailer,
possibly all three, would absorb this rate increase and the con¬
sumer not be allowed to feel it. I donT think in a final show¬
down the American people will stand for such an insult to tlieir
intelligence. ' "
" We are fighting the high cost of living. Congress i.s now
enacting legislation .strengthening the arm of the President and
tlie Attorney General. We are trying to bring about industrial
peace. Those who have caught a vision from the war and the
economic revolution that has followed in its wake are pleading
with us as a nation to produce more, to save more, and to spend
less, in order not only that we may improve our present con-
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4
clitlon but that we may be prepared to play a wonderful part In
the future.
PKOBLEM IN A NUTSHELL.
" Does Congress propose to turn back the railroads to their
owners at this perilous time and thereby make new high-price
levels instead of lower-price levels inevitable, or does it jiropose
to enact legislation requiring the holding of these roads for a
fixed reasonable period following the proclaiming of peace, and
thereby aid the vitally important work of checking the profiteer
and getting us back to normal? That is the problem in a nut¬
shell. There is no blinking or evading it.
" Furthermore, during tlie recent war we built at a cost of^
approximately $5,000,000,000 a great merchant marine, and we
are expending more millions of dollars in the same undertaking.
At a time when the whole world is upside down, when the
great powers of Europe are wrestling with how to regain their
feet commercially and financially, with their labor conditions
chaotic, with treasuries empty, with credit paralyzed, with ex¬
changes topsy-turvy, and the balance of trade tremendously
against them, are we to do all that we can to keep down costs
and win permanently th^ foreign trade which now lies invitingly
before us, or are we, through new high-price levels, so to advance
costs in this country that once Europe is on her feet she can
underseli us in every competitive market of the world?
" Are the Stars and Stripes in the future, as in the days of the
clipper ships, to be the most familiar of all flags in the ports of
the seven seas, or are we to be confronted with the necessity of
either tying up our merchant ships at American docks and piers,
there to rust and decay, or of selling them to other nations? We
are at the crossroads. Return the railroads and increase freight
rates and, I fear, no measure before the House or the Senate
to-day can save us. For nearly a year now, in statements to
Congress and in addresses before conventions and commercial
clubs, I haVe been contending that the present freight rates are
ample; that the operating revenue of tlie railroads in the period
of shrinking or vanishing tratlic following the signing of the
armistice was no test of their sufficiency, and that as we ap-
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ö
proach a general resumption of industrial activity the soundness
of my contention would become evident. In other words, though
hostilities ceased ivith the signing of the armistice, economic
disturbances due to the war did not cease by any means. I do
not have to explain what I mean to an audience like this.
WHY ROADS SHOWED A DEFICIT.
" That there should have been an operating deficit tremendous
in proportions following the cessation of hostilities was ^evi¬
table. As a war-making measure there had been stored in all big
centers and in many smaller *nes large reserves of coal in order
that the fearful experience of -the winter of 1918 might not be
repeated. Building operations other than those conducted by
the Government on a mammoth scale had practically ceased.
Érivate enterprise had either put its shoulder to the wheel in
the winning of the war or it had stepped aside. With the sign¬
ing of the armistice building by the Government stopped, capital
was timid as to the resumption of private construction work, and
those who had purchased coal at peak prices decided to use their
reserves before buying more. When you consider that the prod¬
ucts of the mines, chiefly coal and ores, and road and building
material constitute fully 70 per cent of all the freight traffic^ of
the railroads, it is easy to understand tliat the Savior of Man
Himself, with the Archangel Gabriel as his chief assistant, could
not have earned the standard return without increasing freight
rates and consequently making higher and higher the cost of
living, unless he had performed a miracle.
" I hope you will pardon me for taking pride in the fact that
my prediction as to the early disappearance of the monthly
operating deficit has come true. Since July 1 the railroads have
earned thé standard return and a few millions besides. Con¬
gress should treat the total amount of the operating deficit in¬
curred from the beginning of Federal control to July 1, 1919,
as a war cost and appropriate for it out of the Public Treasury,
just as only one year ago it was appropriating billions for muni¬
tions with which to vanquish the Hun. Let the Government
retain the railroads during the period of reconstruction and hold
freight rates where they are. By pooling receipts of all the
152457—20208
6
roads it does, with the present operating ratio of 85 per cent,
wliat would he impossible for most roads under private control.
Let it help, not liinder, the President in his fight on the high cost
of living.
W.iGES r.ilD TO LABOR.
" But tliat is not all. The Pi'esident and the director general
have dealt suece.ssfully with labor. As I .say this, I realize
what is running through the' minds of some of you. You are
thinking of the substantial increases in wages granted railroad
workers in June, 1918, by Director General McAdoo and of
another modest increase granted by Director General Hines a
few weeks ago. Denouncing the Government for doing what
capital did in the steel plants, the munition plants, tiie sliipyards,
and lu many otiier industries has been a favorite sport with tliose
who refuse to deal with this problem fairly, wlio find it con¬
venient to forget wliat the presidents of tiie great railroads of
the eastern United States said they needed money for, how maiiy
rate increases they might need for tiie same purpose, wlien tliey
testified in the Fifteen Per Cent case before the Interstate Com¬
merce Commission in November, 1917.
" How easy it is for tliose who seem to he afraid tiiat tiie Gov¬
ernment will not remit tlie railroads once more to tlie mercies of
great hanking houses for capital witii whicii to finance additions
and betterments to forget tlie picture of labor conditions on the
railroads in the autumn of 1917, painted by iVIr. Samuel liliea—
how skilled labor was leaving to take up unskilled employment at
mucii better wages in the shipyards, munition plants, and steel
plants ; how it was necessary to use tliree men wiierè formerly
two men would do ; liow the shortage in ofiicial classification
territory especially was becoming alarming. But joyfnlly do
they point to the fact tliat on the date of the signing of the
armistice tliere u'ere approximately 145,000 more men employed
ou the railroads tlian there were at the time the railroads were
taken over by the Government. I have a.slied this vyuestion once
before. Suppose Director General McAdoo liad not so aug¬
mented ills force tliat lie could get approximately 100 per cent
efliciency, no matter v.'hat the'eniergency, and a crisis had found
152457—2020S
7
him unprepared, would those who now talk of waste and
prodigality have come forward with peans of praise for the
niggardly policy he had pursued? The ratio of labor cost to the
entire operating cost in 1917 was 61.36, in 1918 it was 65.54, and
I am informed by the Railroad Administration that for the first
seven months of 1919 it is estimated to have been 64 per cent.
I wonder how this showing, compares with that made in some of
our other big industries.
MAY CBIPPLH TEANSPOBTATION SYSTEM.
" If the present unified control is done away with and each
road now under Federal control is turned back to its owners on
January 1, what is to be the policy of those owners toward labor?
Have the executives of the corporations who have been sitting
on the side lines criticizing for two years caught a vision out of
ail that has happened, and are they ready to deal with the labor
problem sanely and fairly—and by that I do not at all mean
abject surrender to labor's every demand—or do they purpose
to pursue the mailed-fist policy and run the risk of seriously
crippling the transportation, systems of the country in. the hour
of its greatest economic needf
" Several days ago one of the foremost trafile attorneys of
the country told me an interesting story. He was shouting a
few months ago to give the railroads back ; to-day he says the
service the shippers are receiving is so much better than they
ever got under private control that he now wants the Govern¬
ment to hold the roads. Hp came to Washington to see what
could be done about the recent coal-car shortage in Kentucky.
' I called on Mr. Hastings, assistant traffic director,' he said,
' and immediately he got on the'wire with Atlanta. He directed
the Southern. Railroad to turn over 500 coal cars to the Louis¬
ville & Nashville. When I get back to Kentucky the relief will
be under way. Under private control we would have stewed
in our own grease before such a thing could have happened.'
"A few weeks ago Clifford Thorne, who represents many of
the big independent oil companies and other considerable ship¬
pers in actions before the Interstate Commerce Commission, told
* 152457—20208
\
8
the ííouse Committee on Interstate and Foreign Commerce
tliat now is no time to be turning back tlio railroads ; that they
should be held for two years following the proclaiming of peace.
Mr. Tliorne was one of the bitterest critics of the Railroad Ad¬
ministration during the war and one of the first to demand—■
almost viciously—that they be given back to their owners at
the earliest possible moment.
" Wiieu I was in Chicago a few weeks ago a prominent com-
mis.sion merchant who handles perishable stuft from California
in a big way told me that the shippers of such freight had never
received such service under private control as they are getting
under Federal control. When you consider that wo have never
had Federal control in its real sense, that we have only had
what amounts to a receivership, and a loose-jointed one at that,
that the morale of the director general's organization has for
many mouths been admittedly low, due to uncertainty as to
what is going to happen, do not you think the testimony of
such men tells a story worth considering in these critical
times? "J
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