52 



HARDWOOD RECORD 



May 10. 1921 



wood Traffic AsMoeiatioii, to |(etitioii tin- Interstate Commerce Com- 

 mis.sion to cancel the advances of August 26, 1920. This action was 

 taken after the industry had communicated and lield a conference 

 with the principal producing carriers of the entire hardwood scC- 

 tion. Wo frankly admitted that they were working under tre- 

 mendous handicaji, and accordingly offered our support in assist- 

 ing tlicin in having the national agreements, which had been 

 fastened on them during the Kailroad Administration period, abro- 

 gated. Wo took an active part in having these national agre;- 

 melts rescinded, writing thousands of letters to every commercial 

 organization in the United States. These agreements will be abol- 

 ished on July 1, anil will leave the carriers free to make their indi 

 vidual contracts with their own employees, according to the con- 

 ditions that govern in any particular section of the country. 



We are making rapid strides in our effort to bring about the 

 neeessary readjustment. The new administration at Washington 

 feels that some adjustments are necessary. The question is how- 

 to provide adequate revenue for the carriers, and, at the same time. 

 permit the free movement of coniTuoditics. In my opinion, there 



should be preferential rate treatment for essential commodities. 

 In other words, basic commodities, like coal, lumber, ore, etc., 

 should have relatively lower rates than the various miscellaneous 

 commodities, which are of higher value. Take shoes for instance. 

 If you would add .$200 freight charges to a carload of shoes it 

 would make very little difference in the selling price of shoes. In 

 one of the western tariffs which I recall there are hundreds of less- 

 than-carload rates published on specific commodities which should 

 move on class rates. I repeat, therefore, that basic commodities 

 should have preferential rate treatment, and I would not be sur- 

 prised to see the August 26 advance entirely suspended so far as 

 heavy movement, low grade commodities, are involved. You know 

 that every now and then some theorist comes forward with a new 

 method of making rates, but after over fifteen years of experience 

 in making rates I know of no better principle for rate making than 

 the simple rule of what the traffic -will bear. However, jii order to 

 bring about the necessary adjustment it is highly desirable and 

 essential that we have the entire industry backing our efforts, and 

 I trust that you will lend us your moral support. 



Hoover on Freight Rate Relief 



IT is interesting ami extremely encouraging, to discover that 

 no less a personage than Secretary of Commerce Hoover sup- 

 ports the basic principles in the fight of the hardwood lumber 

 industry, particularly the southern branch of the industry, to 

 secure relief from the high percentage advances in freight rates, 

 which threaten to destroy commerce in the lower grades of hard- 

 woods. That Mr. Hoover does this will be shown by putting 

 together certain statements which he made on April 29, in analyz- 

 ing the problems of American commerce and industry, and state- 

 ments made by J. H. Townshend, secretary-manager of the South- 

 ern Hardwood Traffic Association, before the Appalachian Log- 

 ging Congress in Cincinnati on the day before. Mr. Hoover said: 



I conceive that the continued use of an emergency horizontal 

 basis of rate increase can be seriously questioned. I believe an 

 examination of the rate-making structure of this country will show 

 that it was based fundamentally on charges varying to a rough 

 c.Ktent with the value of commodities. This method was modified 

 by competition, and by the deliberate policy of the railways to 

 stimulate local industries and local production. Horizontal rate 

 increases have thrown the relativity of these rate scales out of 

 gear, both as to value of commodities and zones of distribution. 

 The increase of the rate may amount to 5 per cent on the shipper's 

 value of some commodities and 80 per cent on others. 



Our great industries have grown up in the supply of the cheapest 

 transportation in the world for their basic raw materials, with a 

 higher differential on their finished products. We have many com- 

 plaints of the h;irilsliip worked by the upset in ratio; complaints 

 that it is readjusting the commercial and industrial map of the 

 United States; complaints that in some industries the charge can 

 be passed on to the consumer, while in others, such as agriculture, 

 it falls largely \iyi\n the producer; and complaints that it is stifling 

 production. ' 



It appears to me that, even though the same total income 

 must be earned by the raihvays, there must be a commodity and 

 class readjustment in rates, both in the interest of the community 

 and the railways themselves. Such a readjustment of rates was 

 indeed forecast by the Interstate Commerce Commission as a neces- 

 sity at the time of the last horizontal rate increase. We must also 

 look forward to ultimate reduction in rates if the economic levels 

 of the country are to find an equilibrium. 



We will now quote Mr. Townshend, and you ^vill no doubt readily 

 observe the parallel between his contentions and Secretary 

 Hoover's opinions: 



The association which I represent nuiintained (referring to the 



fight againstthe August, 1920, advance) that if a tax was to be 

 added to transportation, it should be uniform throughout the coun- 

 try and should bear a uniform maximum; that a straight percent- 

 age advance would be detrimental to tlie best interests of the 

 industry. 



Then further: 



A careful investigation shows conclusively, and beyond perad- 

 vcnture of doubt, that existing freight rates, as applied to low 

 grade, heavy loading traffic, such as hardwood forest products, is 

 excessive and retards to a very great extent the movement of 

 forest products. 



Tn my opinion there should be preferential rate treatment for 

 essential commodities. In other words, basic commodities, like 

 coal, lumber, ore, etc., should have relatively lower rates than the 

 various miscellaneous commodities, which are of higher value. 

 Take shoes, for instance: If you should add $200 freight charges 

 to a carload of shoes it would make very little diffrence in the sell- 

 ing price of shoes. In one of the western tariffs, which I recall, 

 there are hundreds of less-than-carload rates published on specific 

 commodities, which should move on class rates. I repeat, there- 

 fore, that basic commodities should have preferential rate treat- 

 ment, and I would not be surprised to see the August 26 advance 

 entirely suspended so far as heavy movement, low grade commod- 

 ities are involved. 



Consideration of these U\o statements suggests that Secretary 

 Hoover and Mr. Townshend have perhaps hit upon the happy and 

 only solution of the grave rate problem. It seems evident that the 

 railroads can not afford to reduce the aggregate charge for service. 

 But is it not entirely practical to reduce rates on commodities, such 

 as lumber, which have assumed "more than the traffic will bear," 

 and offset this by further increasing the rates on commodities that 

 have not yet received the full measure of their rate burden? Cer- 

 tainly this must be done, for the present rates on lower grade 

 southern hardwoods are nothing less than confiscatory. This was 

 illustrated by Mr. Townshend in the address from which we have 

 just been quoting. "As an illustration of the tremendous increase 

 in freight rates," he said: "From a certain point on the C. & O. 

 railroad to Norfolk, Va., a distance of 400 miles, is 27 cents per 100 

 pounds. Furthermore, I was talking to a lumberman this week, 

 who sold a carload of lumber at an eastern market, for which he 

 received a delivered price of .$427; the freight rate was $420. Mani- 

 festly, a shipper can not continue to operate and pay such excessive 

 freight r;ites. " 



These examples could be multiplied, ad infinitum. 



