November 25. 1917 



XI^'A!i5K;y>^iTOsa g> ^TO!>ilig^)t^!»^ 



55- The 15 Per Cent Rate Hearing ^ 





Lumber iiitorcsts of tlie United States were represented pretty 

 tliorouglily at tlie hearings and ar-juments in the 15 per cent rate 

 advance case before the Interstate Commerce Commission at Wash- 

 ington recently. J. V. Norman and E. A. Haid appeared as counsel 

 for the Southern Hardwood Traflic Association, which presented the 

 first witness for the lumber trade in the person of J. H. Townshend 

 of Memphis. 



Mr. Norman participated in the examination of President Rac of 

 the Pennsylvania Company and other witnesses for the railroads. 

 He asked Mr. Rae whether the railroads should bo given higher 

 rates on account in ])art of the higher war taxes they have to pay, 

 when other people or industries do not receive more money on ac- 

 count of taxes, being obliged to economize in order to meet the 

 taxes. Mr. Rae replied that the railroads ought to receive fair 

 rates. 



Mr. Townshend in his testimony took the broad ground that the 

 lumbermen are patriotic and willing to bear their share of increased 

 transportation charges if the commission' deems it necessary, but 

 he argued that any increase allowed should not be on a percentage 

 basis, as that would disturb existing rate adjustments and com- 

 mercial competition, and if there is an increase it should be limited 

 to the war. 



Mr. Townshend presented statements showing Iiow the hardwood 

 shippers analyze the rate situation. In explanation of his tables 

 he testified in part as follows: 



To HufTalo. N. Y., Tine RUiff now pn.vs 542.04 more than Wniisau : with 

 the profKised advance I'ino BUitT will pay .$4T.;'.2 more. 



To South Henil. Intl.. Pine Hluff shipments liy tlie ear now pay ?47.S4 

 more tlian Waiisan, and will pay .$.'i2 under the advance of l."» per cent. 

 Holly Kldjre. La., now i>ayiiig .$0:1.44 per car more than Wausau, would 

 pay $G7.tio. 



To Toledo, Moorhead now pays $42.12 more than Wausau, but would 

 pay $40. 2S If a lo per cent increase was granted. Pine Bluff now 

 pays $:{S.04 to Toledo and would pay $48.88. Holly liidge, now $58.24, 

 will pay $04.48 in excess of Wausau. 



To Chlcaco. Moorhead now pays $fl."> and would pay $72,80 under the 

 l.'i per cent increase proposition. Pine Bluflf now paj's $70.20 and would 

 l>ay $78. Holly Ridge, now paying $85.80, will pay $93.60 more than 

 Wausau. 



The present relationship between Ohio and Mississippi river crossings 

 to points In Tcntral Freight .Association and Eastern Trunk Line terri- 

 tories, has been in existence for a great number of years. Business has 

 been adjusted to these conditions and to make the uniform advance of 

 1.' per cent from each and every crossing will, owing to the variance of 

 rates from these crossings, result in a disruption of the present spread 

 as between the crossings. This disruption ranges uii to IV. cents. 



Take, for example, the rate to Peoria. The advance from St. Louis 

 Is 1 cent, from Cairo and EvansviUe IVj cents, Louisville and Cincinnati 

 1.9 cents. The present spread between St. Louis and Cairo Is 2 cents. 

 I'nder the proposed rate this spread will then be increased to 2"^ cents. 

 This ."ame condition is also true of EvansviUe. The present spread be- 

 tween St. Louis and Louisville is 5.1 cents. Under the proposed advance 

 this spread will be increased to 6 cents or .9 of a cent In favor of St. Lonis. 

 The same Increase in the spread between St. Louis and Cincinnati of .'.) 

 of a cent is also true. 



Taking Buffalo. N. Y., as another example, one notes that the rate from 

 St. Louts under the present adjustment is 18.4 cents ; the i»roposed rate 

 1» 21 cents, an advance of 2.0 cents. The present rate from Cincinnati 

 to Buffalo is 10',^ cents and the proposed rate 12 cents, an advance of 

 1 Mt cents. The present spread between St. Ix)uls and Cincinnati is 7.0 

 cents. I'nder the proposed rate advance this spread is increased to 9 

 cents or 1.1 cents greater than now in effeet. 



The above cited cases are typical and reflect the disruption of the 

 present adjustment considering one crossing inter-related with the other. 

 Taking the adjustment to the Eastern Trunk Line base points, at the 

 present time the rates to Philadelphia are nuide an arbitrary of 2 cents 

 under the iiresent rate to New York ; Baltimore Is .'! cents uniier the rates 

 to New York and Boston is 2 cents over the New York rate. The result 

 of a horizontal 1." per cent advance will be the absolute disruption of 

 the adjustment. 



The spread between St. [..ouis and Cincinnati to eastern trunk line 

 I'oluts is In each and every instance increased by 1 cent In favor of 

 rincinnatl. The present spread between Cairo and Cincinnati Is In- 

 ' leased in amounts ranging from .8 of a cent to 1.4 cents. The present 

 sj^read between St. Louis and Cairo is disrupted, as would be the present 

 spread respectively between Cairo and EvansviUe, between Louisville nnd 

 EvansviUe, and between Louisville and Cincinnati. 



Suinming ui> the advances to Trunk Line territory proposed In this 

 I't per lent case it will be found that In no instance does the advance 

 from the Ohio anil Mlsslsslp|il river crossings equalize. The extent of 

 the (lisru|>llon of the pri'sent adjustment can be easily ascertained from 

 the statements submitted to the commission by a mere subtraction of the 

 measure of advances from one crossing compared with another. 



To thirteen of the nineteen jiolnts shown In my table the spread be- 

 tween Cairo and St. Louis rates Is Increased '.^ cent In favor of St. 

 Louis. To 17 of the 19 points Cincinnati gets the lowest advance of 

 all the crossings. To C of the points Louisville gets the lowest advance. 

 To l.'J ot the points Cairo gets the greatest advance and In no case does 

 it get the least advance. To 3 of the destinations shown St. Louis gets 

 the least advance and to G it gets the greatest. To 4 ot the points where 

 the Cairo advance Is not the greatest, the Cairo advance Is only 1/10 of a 

 cent less than from the point which takes the greatest advance. 



The position of other represeutativca of the lumber interests 

 at the hearings and arguments were similar to those of Mr. Town- 

 shend. They protested that lumber is doing well for the railroads, 

 now. while substitutes and other bulkj- freight pay lower rates. 

 They jilcaded, however, that any rate increase should not be by 

 percentages and thought that it ought to be limited to the war. 



Gen. L. C. Boyle, counsel for the National Lumber Manufactur- 

 ers' Association, urged that the economic aspects of the situation 

 be carefully considere<l by the commission before it disturbs exist- 

 ing relationships. A. G. T. Moore, assistant secretary of the South- 

 ern Pine Association, declared that the commission should not up- 

 set existing parities between competing Inmber-producing sections 

 and lumber consuming markets. 



W. E. Gardiner of the Georgia-Florida Sawmill Association, 

 testified in opposition to a percentage rate increase. George L. 

 Forester of the Western Carolina- Lumber & Timber Association, 

 which is said to be largely hardwood men, read a statement show- 

 ing the stand of the association on the (juestiou before the com- 

 mission. 



The lumbermen's testimony was taken by Examiner Disque of 

 the commission's staff. The opening testimony of the railroads was 

 presented before the full commission. After the testimony for 

 separate industries was all in the full commission met again for 

 rebuttal testimony by the carriers and cross-examination by the 

 shippers; also to hear general statements by F. A. Vanderlip, head 

 of the war savings certificate division of the treasury department, 

 and Paul M. Warburg, vice chairman of the federal reserve board, 

 who advocated rate increases as necessary at this time. 



The commission also sat as a body while Clifford Thome, chief 

 witness and counsel for shippers' interests generally, presented a 

 mass of material in opposition to the proposed rate increase, and 

 finally during oral arguments in the case, which were postponed 

 for one day in order to give the shipping interests more time. 



The commission has set December 17 for hearing an application 

 of western railroads for a general rate increase, and southern roads 

 are also in on the demand for higher rates. 



The commission has consolidated a number of fifteen section ap- 

 plications of the railroads for increases in rates on commodities, 

 including boxboard, wood rollers, vehicle parts, lumber and forest 

 products, with investigation and suspension docket 1125, which is 

 being considered in connection with the 13 per cent rate advance 

 case. 



One of these is the application of the Boston & Maine Railroad 

 to increase rates on lumber and forest products from points on the 

 Boston & Maine and St. Johnsbury & Lake Champlain Railroad to 

 points on the Central New England R.v., the New Haven R. E., 

 Rhode Island Company and other lines. 



Other ajiplications received by the commission under the amended 

 fifteenth section include the following: 



C. C. McCain, .\gent -Lighterage of lumber and forest products In New 

 York harbor. 



R. II. CountlsH, Agent — Non-appllcatlou of lumber and other forest 

 products rates from north Paclflc coast points to stations between Dulutb 

 and St. I'aiil via Canadian Northern Ry. and Duluth, Winnipeg & Paclflc 

 Ry.. through I •ninth. 



18a— 



