First, as to rates. There has been a good deal written of late for the

purpose of securing for the railways an acquittal of every charge that

has been or ever can be brought against them of having anything to do

with the increased cost of living. Inasmuch as the cost of transportation

is a part of the cost of every article consumed, freight rates may, and

doubtless do, conceal much that makes for high prices. A Johns Hopkins

professor says: “The claim of the railroads that the rates on foodstuffs

are not high enough to enter as a factor in fixing the selling price

is fully substantiated by the dealers in such products.” And again the

same authority says: “The average weight of a carload of food products

is 30,000 pounds. If the freight on such a carload be $300 the rate per

pound would be only one cent, and there is scarcely a commodity upon

which a freight rate of one cent per pound makes any difference in the

selling price.”

When one considers the staples on which a cent a pound constitutes from

six to twenty per cent of the selling price, these extremely sweeping

statements must be admitted to need a lot of verification. Those who feel

most keenly the pinch of high prices live mostly on things which sell at

from four to twenty cents a pound—of which price an average of a cent

a pound freight is a considerable increase. But the efforts mentioned

have not been confined to arguments of the sort above quoted. We are

called upon to believe not only that no appreciable freight charge is

added to the burdens of the consumer, but that nothing worth mentioning

is deducted as freight from the prices to the producer. We thus have

the great incomes of the railroads very neatly palmed and effectually

concealed somewhere between the professor of economics and the Secretary

of Agriculture. For Secretary Wilson asserts that:

With approximate accuracy it has been determined that when

the farmer receives 50 per cent of the consumer’s price, the

freight charge on butter is about 0.5 of 1 per cent of the

consumer’s price; eggs, 0.6 of 1 per cent; apples, 6.8 per

cent; beans, 2.4 per cent; potatoes, 7.4 per cent; grains of

all sorts, 3.8 per cent; hay, 7.4 per cent; cattle and hogs,

1.2 per cent; live poultry, 2.2 per cent; wool, 0.3 of 1 per

cent.

These things are very convincing. And they are, no doubt, reliable as

to averages. The trouble with them is that they are averages, and that

they have the merits and defects of averages. One of the defects is that

they do not tell the real truth. I have in mind a farmer living at New

Rockford, North Dakota. He grows wheat as his staple crop, and about

the only crop upon which it is at all safe to depend. His task is to

help feed the world. As this is written, his wheat is worth in New York,

if for export, a dollar a bushel, if for milling in this country two

cents more. In addition to the cost of handling, the New Rockford farmer

must submit to a deduction of twenty-four cents per bushel in price

for freight to New York if for export, and of twenty-six cents if for

domestic use. Something like 35 to 40 per cent of his returns is deducted

for freight. It may satisfy the city consumer of bread to be told that

this freight does not add “materially” to the cost of his living, but the

New Rockford farmer is stubborn, and merely because his freight charge is

a third or more of his returns, he is not mollified by Secretary Wilson’s

statement that all grains “on the average” get to market with a deduction

for transportation of three and eight-tenths per cent. In Johns Hopkins

and at Washington, the freight charge may not amount to much. It is far

otherwise at New Rockford.

A North Dakota station and a low grade staple are selected for the

purpose of putting a finger on the point where the railways and the

farmers clash crucially. They clash thus in the heart of the continent

where distances to market are long, where there has been no rate

structure fixed under competition, and where the farm produces in the

main cheap and heavy staples. Whether grain, hay, root crops, or live

stock, the case is the same—prices at the railway station are reduced to

the point of vanishing profits by freight charges; and the cost of living

on the farm is proportionately increased by the same agency.

HOW TO DEVELOP THE REMOTE PARTS.

The greatest transportation fact faced by the American people is the

problem of developing the remote parts of the continent under conditions

which are new to the experience of the human race. In the past mankind

has been content to develop its great civilization near waterways. The

sites of Egypt, Greece, Rome, Phoenicia and Carthage were determined by

ease of transportation. Whether or not it is possible for the interior of

the North American continent to be fully developed industrially by land

carriage only is a question which is as yet an open one. It is safe to

say that such development cannot take place without the adoption by the

railways of some new transportation principles, applied for the express

purpose of national welfare. And if the only alternative—the building of

a national system of waterways—be resorted to, the aid of the railways

must still be demanded if success is to be attained.

Rates as a deduction from the income of the farmer are even on the face

of the averages quoted, considerable; but in the interior and on things

produced at a close margin of profit, they are decisive of the matter

of agricultural prosperity. On butter they are so inconsiderable as a

proportion that the output of Dakota creameries has not infrequently gone

on the market under conditions which enabled the Western butter-maker

to pay his entire freight bill with the difference in his favor in the

matter of quality. On eggs the burden of freight is similarly light. But

on potatoes the freight is, according to the figures of the Secretary of

Agriculture, 7.4 per cent of the consumer’s price, or about fifteen per

cent of the farmers’ returns, as a national average. It is quite clear

that the Montana or Nebraska potato grower must often find the freight,

over the great distances to market, decisive of the question of profit or

no profit. An acre of onions takes the labor of two or three persons a

good part of the season. The cultivation is largely done with hand tools

manipulated while the worker kneels and bends his body to the ground.

His produce should be about a carload. If on this he pays the railways

$300 freight it is a not inconsiderable contribution on the part of one

gardener and one acre of land to the transportation system of the Nation.

Just what is included in these professorial and secretarial calculations

is not quite clear. The word “freight” may or may not include such items

as the charges for refrigeration and of refrigerator car companies, fast

freight lines and the like, and until we know as to these items, we are

unable to decide on the worth of the statistics. But one item of expense

which through the policy of the railway companies the farmers are obliged

to pay is clearly not included—I refer to the charges of the express

companies.

The railways of the United States have enormously retarded the

agricultural development of the country, and added to the expense of

living, by permitting the lodgment in our transportation system of that

industrial parasite, the express company. Just what are the financial

inter-relations which have contributed to the willingness of the railways

to allow parcels carriage to pass from their hands, while sufficiently

obvious in a general way, cannot now be detailed. The glaring fact is

that the express companies, save for certain services which they have, in

violation of the criminal law, usurped from the postal system, perform

absolutely no functions which do not properly belong to the railways,

and no functions which the railways of other lands do not assume. Every

dollar of the huge profits which the express companies make is a burden

upon industry which is unnecessary and unjust. But instead of seeking to

remedy or lessen this burden, the railways pursue the policy of making

it greater. They practically abandon the field of parcels carriage to

the express companies. They allow their agents everywhere to work for the

express companies on commission, so that their wages are increased as

express business increases, while their interest in the growth of railway

business is reduced to a minimum by the receipt from the railway of only

a small fixed salary. Thus the railways not only turn over to the express

companies the parcels business, but saddle on that business, and on the

shippers by express, a good deal of the burden of their own payroll.

THE TOLLS ASSESSED ON AGRICULTURE.

The effect of this policy on agriculture is not to be measured by the

amount of express tolls paid on shipments made. That is a great burden,

but it is inconsiderable as compared with its injury to the farmers and

to the Nation by reason of the immense volume of potential traffic that

does not move at all. Under the paternal governments of the Australasian

colonies of Great Britain, agriculture is fostered by low railway

rates and a carefully studied policy of encouragement to the small

shipper. Packages of poultry, eggs, meats and other farm products are

collected on the remote railway lines, brought to concentration points,

refrigerated, shipped to the world’s markets, sold and remitted for

to the great benefit of the remote farmers, who otherwise would have

no way of marketing their little shipments. But here the trucker and

poultryman and the fruit-grower are in most localities relegated by the

railways to a third party—the express company—who seems to have no office

but the exaction of tolls which the railway itself could not charge,

but which it divides with the railway. This is unjust and is rapidly

becoming intolerable. The farmer must be placed in such position that he

can work up trade in the city and ship in small packages direct to the

consumer at just rates. The head of one of our great railway systems has

delivered several powerful addresses recently, in which he has asserted

that the farmers, and not the railways, are to blame for the spread of

from 30 to 75 per cent between the price received by the producer of

food products and that paid by the consumer. He advises farmers to “cut

out the middleman.” Good counsel, but let him follow his own advice. Let

him, and let all railways cut out the express middlemen, the private car

middlemen, the fast freight line middlemen, and the ordinary farmer will

be placed in better position for taking his advice. These agencies have

no place in a rational system of transportation. They are parasites,

which suck blood and confer no benefit. Transportation by rail should

be a simple transaction between the railway and the shipper, and with

no third party whatsoever. Whatever there may be in the way of parcels

transportation which does not properly belong to the railways should be

assumed by the government in the form of a general parcels post.

With the way cleared to simple relations between shipper and railroad,

the matter of rate-making in the interests of national development may

be taken up, and the railroads enlisted in such policies as may be

dictated by patriotism. In these the farmers are entitled to so much of

special consideration as is commanded by the importance of agriculture

as the basic industry of the world—no more, no less. In many schedules

the railroads have favored agricultural development. These instances are

those in which farming interests have been controlling in the matter

of dividends. Perhaps we should expect nothing more of the purely

individualistic philosophy of the past, but of the future we must demand

much more.

RATES AND DEVELOPMENT.

Instances of the influence of railway policies on agriculture may be

found in almost every country of the world. The beet sugar industry

of Austria has been built up through the adjustment of railway rates.

Huebner says of the German policy in this regard:

With the deliberate purpose of regulating industry and

commerce through the powerful medium of freight rates, 63

per cent of the traffic is given rates generally about half

as high as classified rates and seemingly unusually low as

compared with rates enforced in neighboring countries. These

rates are given to build up particular industries, to promote

specified districts, to protect German railways against foreign

competition, to overcome emergencies, to build up German

sea-ports, to promote German export trade, and discourage the

entry of specified imports.

We have been told over and over again that the acquisition of the

railroads of Germany by the government has been dictated by consideration

of military strategy; but the world is just awakening to the fact that

it is rather industrial strategy which has impelled the Germans to

government ownership. The time is coming when the German railways will

be freed from the fixed charges of both bonds and stocks, and German

agricultural products will go to market, with her manufactures, at

rates based on actual cost of service. The fostering uses of properly

adjusted rates as applied to remote agricultural districts in Australia

and New Zealand have been known to the world for years. Protection to

home industries through tariffs has failed to benefit our farmers in any

direct way, and the policy of attempting longer to maintain such tariffs

seems to be in process of abandonment; but Van Wagenen has pointed out

that agriculture may be stimulated and fostered through railway rates,

and given all the benefits which clearly accrue to protected industries

through tariffs. It might be no more than fair to the farmers if some

of the taxes exacted from them through tariffs in the interests of

manufacturers, were returned to them in such freight rates as would

develop their agriculture along the intensive lines made possible by

nearness to market; but it might be unfair to ask privately-owned

railways to do it.

The whole structure of rates as they now exist is devised to favor the

long line to and from market, and made up with reference to the demands

of certain trade centers, and certain powerful financial interests,

some of which are closely allied to the ownership of the control of

railways. A striking instance of this is to be found in the history

of the rates on the border line between the Gulf trade basin, and the

territory of the railways running to Chicago and the Atlantic ports.

From Kansas and Oklahoma points the distance to tidewater on the Gulf is

only from a quarter to a half the distance to the Atlantic. The farmers

of that region, and of a great part of Nebraska, Colorado, and much

other territory, are entitled to an outlet by way of the Gulf. It is

nearer. It is over cheaper track. It is on easier grades. It should be

in every way more economical. But when the battle between the old lines

and the new began with the building of the roads to the Gulf, it was

fought out, not along lines of what was best for the Nation, not along

lines of what was best for the farmers whose stake in the controversy

was the right to a fair price for their grain, but with sole reference

to the interests of the railways themselves, and of the grain trade with

which the railways have always maintained so intimate a friendship. Such

agreements were made that grain would be as likely to go from Kansas

City to the Atlantic as to the Gulf. In other words, the building of

the Gulf lines was robbed of its benefits to the farmer. Rates were so

adjusted, and still are, as to make the Gulf lines as bad for the farmer

as the Atlantic lines, instead of making the old lines as good as the

new should be. This is equivalent, as an economic futility, to the plan

of handicapping the binder so as to restrict its work to the amount done

by the same force in the old days of hand binding. Financially it may be

wise—for the elevator trade, and the railway community of interest—but it

is an economic crime as much as the breaking of the power looms by the

old weavers. The present railway situation is full of such anomalies. One

could spend days in their discussion. They are familiar to the shippers

of the nation. They are apologized for by the wise men who write great

tomes on transportation. But they must sometime be so corrected that

trade will go on the railroad which can perform the transportation task

most economically, without regard to the historic channels of traffic and

the private interests concerned in the use thereof.

[Illustration: DARIUS A. BROWN, Mayor of Kansas City]

“TAPERING RATES.”

I have spoken of the difficulties which confront the people of the deep

interior of the continent in working out their complete industrial

development. By complete industrial development, I mean that full growth

in industry which has come to such seaboard locations as Great Britain,

the Netherlands, our Eastern seaboard, our lake regions and the like. One

can scarcely conceive such complete development in Iowa, Nebraska, the

Dakotas, or Oklahoma. And yet it is merely a question of transportation.

The problem of the future relates to the question of the ability of land

carriage of any kind to furnish it. If it cannot be accomplished by land

carriage, the Nation will have recourse to waterways. New Rockford

and her sister hamlets will reach the sea, either by the way of the

railroads, or by the Missouri river. If the railways are to give New

Rockford—and in her I typify all the interior—what it must have if it is

to develope completely, they must find some way to compensate the place

by means of rates for its remoteness from the sea.

This may be done by what is called “tapering rates”—that is, by rates

which increase not with the distance, but on some basis which gives the

remote point a less tariff per ton a mile than the nearby point. The

railroads have made such rates always when the demands of profit called

for them; and their policy has resulted in great benefit to the interior;

but the diverse ownership of the different lines and restrictive laws,

as well as the lack of a national policy in rate-making, conspire to

prevent the full application of the principle. Congressman D. J. Lewis

of Maryland has laid down the principle that rates along a line should

increase with the square root of the distance, instead of with the

distance. Thus, if the proper rate per hundredweight for twenty-five

miles is ten cents, for 625 miles the rate should be not $2.50, which

would be the increase directly with the distance, but twenty-five cents,

the increase over ten cents according to the square root of the distance.

The value of this formula may lie principally in the emphasis of the

economic justice, as well as the necessity, of tapering rates for long

hauls. As it is, rates taper from New York to Chicago, not according to

the square root formula, but in a manner not very much at odds with it;

but then they are increased by the fresh start from Chicago as a basing

point. Under a national policy in rate-making, these rates would continue

to taper to the point at which it would be more economical to ship in

some other direction—to the Pacific, or to the Gulf.

The influence of tapering rates on the industrial development of a

people may be seen strikingly manifested in Texas, which has long had

a rate system peculiar to itself. This system is said to be the fruit

of the statesmanship of Judge Reagan, and was devised expressly in the

interests of a population deemed to be permanently agricultural. It is

exactly the opposite of the general policy which has built up a few

great cities at the expense of the rest of the country, and the best or

worst example of which is perhaps the case of Chicago. Chicago is fed by

livestock shipments which sweep past the very doors of packing houses

quite as well equipped to slaughter the stock as any in the Windy City,

and the livestock rates are only a sample of the system of tariffs that

keep in Chicago’s hands the headship in commerce to which in the natural

development of things she would not be entitled. Railroad rates keep

the great centers great by decreeing that the primary products shall be

sold there, and that the supplies of goods ready for consumption shall

be bought there. This is done by depriving other trade centers of the

natural advantages over Chicago, of their nearness to the farms, while

leaving them handicapped by their remoteness from water transportation.

And wherever a great city is found in the United States, the same sort

of rate structure is found. The economic result is that long hauls are

favored for the railroads, with greater profits to them perhaps; but the

farmers are deprived of the benefits of the home markets which nearby

large cities afford. The state of Iowa is Chicago’s back field; and

Iowa’s population is shrinking. This fact alone is enough to condemn the

rate system which permits it. And Iowa’s case is glaring merely because

she is an almost purely agricultural state. The farm populations of the

other states on Chicago’s back fields are shrinking, also. And while I

do not think it fair to attribute all this to rate mal-adjustments, I

feel sure that if the Texas system of rates had been in effect in the

Chicago-St. Louis basin, the phenomenon of decreasing population would

have been long postponed, and might never have appeared.

THE TEXAS SYSTEM OF RATES.

The Texas system, as perfected by the Texas State Railway Commission,

is based on the theory that many medium sized towns and cities are to

be preferred, for the agricultural welfare of the state, to one or two

overgrown municipalities with rates made to stimulate their growths at

the expense of the rest. This has been accomplished by the establishment

of a maximum freight charge, above which there can be no increase, no

matter what the distance—with the exception of certain remote points

in the cases of which additions are made, not according to the entire

length of haul, but according to their distance beyond the limits of the

zone which is established about every shipping point. Thus merchandise

taking the class rates pays a tariff from any shipping point according

to distance, up to 245 miles, beyond which the rate for 245 miles is

paid no matter what the distance. The maximum rate on cotton is reached

at 160 miles from any station; on flour, grain and hay at 140 miles;

on coal, 790 miles; on fruits, vegetables and melons, 180 miles, and

thus for all shipments. The result is that the remote truck farmer is

as close, so far as rates are concerned, to the city 500 miles away, as

to the one 180 miles off—and the principle is applied to all producers,

with variations as to distance. This gives him a wide choice in markets

and rates, which equalizes conditions so far as rates can do so, between

the interior and the coast. And it fosters the small and new city by

enabling it to compete in jobbing and manufacturing with the large and

old one. Thus, while such places as Galveston, Houston, Dallas, Fort

Worth and Waco are among the most prosperous towns of their size in the

country, they are constantly meeting the competition of that numerous

class of smaller Texan cities the unsuspected presence of which in the

interior is such a constant surprise to the traveler from the North.

Business is decentralized to an extent nowhere else seen in the United

States in an agricultural community. And decentralization, while opposed

to the immediate interests of the railways, is clearly profitable to

the farmers, better for the people in general, and in all probability

will prove in the end better for the railways themselves. For after all,

railroad prosperity must depend on national prosperity.

Proceedings of the third National Conservation Congress at Kansas City, Missouri, September 25, 26 and 27, 1911 · 第 13 / 45 段