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whole is greater than any part. In the last analysis, the stockholders and bondholders of the railways must come to a realization of the fact that they have placed their interests in the keeping of the people of the Nation, and that their profits must depend on the sense of justice of that people. Fortunately, there is no reason to expect from the people the slightest failure to respect the real rights of capital. But that modifications of railway policy are likely to be insisted upon, is not only likely, but inevitable. These modifications will be along the line of revisions of rates, the adoption of the principle that the railway must be used as a tool in the development of the Nation along rational and just lines, and not abritrary ones, and in the conservation of the national resources—among which one of the most important, if not the most important, is the fertility of the soil.
RATES AND LIVING COST.
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 re
ceives 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 T H E 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 determsned 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 buttermaker 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 Öf 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 com: pared 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#: to promote German export trade, and discourage the entry of specified im
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 privatelyowned 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 inter