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:11 Wednesday, September 21, mm. Furthermore, the railways while joining with everyone else in the general agitation for deflation of prices and wages-found themselves recently in the seemingly anomalous position of demurring when it was pr'oposed to C In this connection the railway companies have beqp specially inter- ested. Freight Rates touch everyone, and, because they touch eyeryone, are always close to the public consciousness and more conveniently atiackGrthiin the true causes of depression which are less easily discerned and mortrdif- ficult, if not indeed impossible, to control. ' . K . The indicator of true prosperity is unemployed Wen, unemployed machinery and unemployed capital in Canada is rea large Canadian business interest to study ---to see whether anything in its power r general prosperity of the country. Unemployment 'll'"" ill, réight Rates T «and the Railways V r e Now while 'll-even the railways-sed the desirability tor low freight rates, there are certain limits beyond which no one urges Be- ductions. Of course there are theorists such as Mr. Bernard Shaw, who believed that all railway service should be free. But leaving aside views so tar in advance, as yet, of'public opinion, it is assumed by most people that a railway will give best service at least cost--. because, of course, even free railways must be paid for by the tax- payer-when their managements are allowed to show their mettle by meeting the obligations ot their properties out of their earnings. It is usually recognized that these obligations fall into two groups: service can be subdivided among a greater number or shippers and travellers, levying on each, therefore, a smaller fraction of these costs than before. For twenty years prior to the war, traffic was {on the increase. For twenty years, therefore, the railways have been ad- justing rates downward-quite apart from special deereases put in et-. dept by the Board of! Railway Commissioner’s. These revisions have been skillfully applied by experienced, practical economists-that is, by the Freight Traffic experts of the railways, whose businessyiltlis to know all branches ot industry intimately, so that the benetit"6 these voluntary rate adjustments would go to "key commodities," thus stim- ulating further growth of the country, increase in traffic, anddn the end, further reductions of rates, The difference between giving a reduction to a "key industry" rather than spreading over all kinds of goods is illustrated in the case of a certain small railway which by concentrating rate reductions " lumber enabled the mills of that region to remain open and the people to remain at work, whereas if the effect of the reductions had been scattered over all the goods carried by that road each family would have been able to save a small hand- ful of silver in a year (provided the decreased rates had been named on as decreased prices by sstorekeepers)--but there would have been almost no employment'. 1 So much tbr the day to day reductions arranged on thousands of articles by the Traffic Departments of the roads. In 1907 a sub- stantial reduction in Eastern rates was made. In 1914 a. very ma- terial cut was applied in the West. So that the transcontinental lines entered the war period with a depressed earning power. 11. The Trend bf Freight Rates tendency of' country of it our industrie like that ot service can Inside Canada the same is true. Although it is a very difficult point to prove or disprove, the railways ot Canada are sincere in claiming that, by and large, goods are carried more cheaply in Canada than in the United States. Canada had one blanket reduction of 5 per cent. last January, whereas there is still no decrease, nor im- mediate prospect ot a blanket decrease in the United States! Group I.--.') pay their employees; to pay for current supplies at materials such as coal, etc.; to pay for repairs and replacements. I (2) by the tact that a 10 per cent. reduction dn western goal rates, offered in order to stimulate coal movement in the Bummer months, was followed by a drop in the coal tonnage offering instead of an increase. - - In other words, in international competition on her chief items ot export, Canada is helped by her railway rates. So tar as interna- tional trade is concerned, they are alleviating unemployment rather than aggravating it! V In the second place, assuming for the purposes of argument they did haVe serious effect, Canadian export rates are lower and not higher than the rates in countries with which panada may be com- pared. Mile for mile the haul from western ~Canadian points to' the tread of navigation is cheaper than in the United States. The "- port rate on grain is lower than it was last August. The condition is international railway rates were a determining our export goods, in other words international markets than the go rates would be contributing to um our sales abroad, lowering the I orders coming to our producers. "With, a large part of the world's population idle, or only partially efficient owing to wars or disturbed political conditions-with inven- tors in many parts of the world almost afraid to expose their inven- tions, organizers afraid to organize, capital hesistatingsto invest-a corresponding proportion of world production is missing. The total ot goods available for the world is less than normal. Those who do not produce-speaking genertiny---carinot buy! Few purchasers-- few sales; few sales-little employment. This is the great world-wide fundamental ot the unemployment situation. . Freight Rates and Unemployment Wit t ot older can be su I countrie ubdivided 263 St. James Street nternational, not local to Canada. It Canadian determining factor in making the sale prices ot other words, it Canadian prices were higher in than the goods of our competitors, then railway uting to unemployment in Canada by depressing 'ering the number ot our customers, and the mada IS reason CHOU SOI study its ity ot of th mains to 11n m m war' conditions-the whole as in any other progressive anada's populatipp rises, as traffic becomes more nearly ) principal costs of railway er number of shippers and taller fraction of these costs the war. traffic was on the nploye 1t1 )Vment n n THE INDEPENDENT, GRIMSBY, ONTARIO :d railway equipment, therefore, for every 0 the general problem , done to, advance the The esence O _ The following statement is offered, therefore, with a view to exhibiting what the railways believe to be the true relation of railway freight rates to the question of tnemployment, outlining the history of Canadian rates, explaining something of the groundwork of ratemaking and clearing up the seeming anomalies referred to, so that none may remain as possible causes tor future weakening of confidence between the public and the carriers. pJacea 1n the equ1v< when wages went u seemingly decreased lower railway rates DID an the ely or roads. _ Wages could be paid and bills met on time. Even the usual dividend was paid and a very slight surp1usr-one ot the factors in maintaining the reputation of Canadian railway securities, was earned! But this' was only done by deferring work that m st ulti- mately be done on current account. Such economies cannotIxong be continued without eating too far into the broad ,safety margin which the Canadian roads maintain! Nothing but slackened speed of trains and reduced Canadian industrial efficiency can result if these savings pave to be long continued. Falling traffic still further aggravates the condition. Maintenance cannot continue to be sacrificed to bro- tect the credit of our railway securities! Neither can be neglected! and reduced have to be 1 the condition tect the credi for a Board ot Coneili: be used to .sustain'tl ate reduction of their the cost of operation- unsettled and therefo duetion.ot railway r2 Railway Commissione in the o roads. _ dividend maintain wa courttry the 111. In Conclusion The railway managements welcome deflation of railway rates and are working steadily toward that end. On two grounds, however, they asked that any general decrease be deterred: been Stab 1?trstu.--Because the so-called wage decreases areGot yet assured and cannot be until the parallel decreases in the United States, where 92 per cent. ot the union membership lies (and where no general freight rate reductions have been ordered); are settled. syyrndorrBypuys tt is problematical and any rates, would have very uated managements. The railways have spoken against blanket decreases on the grounds that it would' be in the interests of the country as a. whole to concentrate any beneficial effect to be expected, on "key commodi- ties" rather than distribute them over all classes of goods, thereby benefitting only the distributors. Group IT..--'" pay. such a wage or hire for the use of the capital which built these railways as will make Canadian ra'ilway securities always desirable, and easily marketed whether as bonds or stocks. This involves more than the mere payment of the established rate of dividend in the case of privately owned roads. It involves the earn- ing also of some surplus-a safety margin 0; income over expenditure, which will assure investors of complete sa ety. This principle of a surplus was definitely established by the judgment of the Board of Railway Commissioners in 1914, under the chairmanship of Sir Henry Drayton-and upheld by its Judgment of 1920, when the matter was again considered exhaustively. On this principle rests Canada's abil- ity to enter the money markets wherever she may need and feel con- fident of bringing back funds for extending her railways af she mar 'require in the future. , orm 3 nited tlt It d nt In M The net tl forced th with on ffi W n here 1N re IT m tion : 0perat1on-stney are compelled to regard the m2 and therefore pot tq be considered as a basis I railway rates-a view which a majority of tl ommissioners has just expressed in its judgment public, equivoc went up tll roads maintain! Nothing b , Canadian industrial efficiency long continued. Falling tral m. Maintenance cannot conti: dit of our railway securities! m " O Montreal, P. II resu the man o In uly 15th member ot M nent SE th d guse the volume ot traffic in the immediate future of the ersmp or the unions, r by the Canadian m1 liatiqn. Every res0t this imperatively net air wage bills-which r--sthey are compelled fore pot tq be cousin rates-a view which n " ring for their own treasuries instead of passing on to any) saying effected on the wage rolls.' They were ll positiBn of having urged blanket increases of rates -and opposing blanket decreases when wages were 1(1 n They were made to appear as thout d to Pitt wages down and with the, otl ing for theirGwn treasuries instead w ny) saxLipg effected on the wage roll Dosition of having mired blanket in additional revenue to meet the increased wages. were effective from May Ist---' increased iber 1. The effectiveness of that increase de- of traffic remaining at a fairly high level. It began to drop. To-day it is very low. Never- gement approached the first time in many ye rn who were taking th th 'Ot serious' decline, if coupled with a decrease in grave effect on even the most favorably sit- ids at on This reductior , of the union W ot roughly nited St changes has been um he membership ot movement was , gave due notit sly 10 per cent 1011 has not Been accepted by the ions, where a vote is being taken ll membership, who have applied resource of the managements will r necessary and only too moder- hieh account tor 60 per cent. of alled to regard the matter as still onsidered as a basis for the re- hich a majority ot the Board of itely situated of W years it was the manage- the initiative. They had ',es granted in the United hip ot the railway unions it was undertaken in that re notice and a provisional 3r cent.---eorrespondirig to vas put in effect, tentativ- ' not been accepted by the here a vote is being taken bership, who have applied it wa tate of emergency of reducing their the " Canadian the usual actors in h they were en- :1er hand to keep SEVEN