HomeMy WebLinkAboutThe Signal, 1921-9-22, Page 6-aeaseamtreoar Iv mu--
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6—Ttrureda7. September 2•2,
IINEMPLOYME
AND TS
The indicator of true prosper! is mployment. The presence
of - unemploye l men, unemployed- ach'nery, unemployed railway
equipment, and unemployed capital 1 : C nada is reason enough,
therefore, for every large Canadian bus' s terest to study its Vela-
, tion to the general problem-- to see whet ' er n thing. in its power
remains to he done to advance the genera ► roe city of th country.
w companies ave�been specially In this connection the railway c pa pe y in-
terested. Freight Rates touch everyone, and," because they touch
everyone, are always close to the public consciousness and more.con-
veniently:attacked than the true causes of depression which are less
easily discerned and more difficult, if not indeed impossible, to control.
1. Freight Rates and Unemplayment:
With a large part of the world's population idle, or only
partially efficient awing to wars or disturbed political conditions
—with inventors in many parts of the world almost afraid to
ems's. their inventions, organizers afraid -to organize, capital
hesitating to invest—a corresponding proportion of world pro-
. duction is missing. The total of goods available 'for the world
, is leas than normal. Those who do not produce --speaking gen-
erally—cannot buy ! Few purchasers—few sales; few sales—
little employment. T§ia is the great wyrld-wide fundamental of
}I the unemployment situation.
The condition jx international, not local to Canada. If
Canadian railway rates were alleteri ining factor in making. the
sale prices of our export goods, in other words if Canadian prices
were higher in international markets then the goods of our com-
petitors, then railway rates would be contributing to unemploy-
ment in Canada by depressing our sales abroad, lowering the
number of our customers, and the orders ming to our •ro-
ducera.
But in the first place the real effect of fre. on price
making is a debatable point. This is proven
(1) by the fact that prices fell last fall aft; th rates were
increased instead of rising as the retail trod had pr, esied ;
(2) by the feet that a 10 per cent. duction on estern
Boal rates, offered in order to stimula coal movement t • the
summer months, was followed by. a a rop in the coal ton . ge
offering instead of an inerease.• -
in the second place, serumfor the.yyrposes of argument\
they did have serious effect, C nadiau export rates are -lower and
not higher than the rates in onntfies with which Canada may be
compared. Mile for mile a haul from western Canadian points
to the head of navigation is cheaper than in the United States.
The export rate on gfain is lower than it was last August.
in other words, in internationa oma! 1 ion on tier chid •
items of export, Canada is helped by her railway rates. So far
as international trade is concerned, they, are alleviating unem-
ployment rather than aggravating it!
Inside Canada the same is true. Although it is a very
diflicnit point to prove or disprove, therailways of 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 immediate prospect of a blanket decrease
in the United States !
II. The Trend of Freight Rates:
With the exception of war and post-war conditions—the
whole tendency' -of freight rates in this eanntry, a9 in any other
progressive country of itis kind, is downward. As Canada's
population rises, as our iAdiistries multiply and the density of
traffic becomes more nearly like that of older countries, some of
the nrincipal costs of railway service can be subdivided among a
greater number of shippers and travellers, levying on each, there-
fore, a smaller fraction of these costs than before. For twenty
years prior to the war, traffie was on the increase. For twenty
years, therefore, the railways have been adjusting rates down-
ward—quite apart from special decreases put in effect by the
Board of Railway Commissioners. These revisions have been
skillfully applied'by experienced, practical economists—that is,
by the Freight Traffic experts of the railways, whose business it.
is to know all branches of industry intimately, so that the benefit
of these voluntary rate adjustments would go to "key coin -
GODRBICH, ONT.
—M
-FRSIGflT RATES
RAILWAYS
Furthermore, the railways while joining with everyone else in the general agitation for
deflation of prices and wages --found themselves recently in the anomalous position of demur-
ring when it was proposed to lower railway rates. They were made to appear as though they
were endeavoring with hand to put wages down and with the cther hand to keep rates up,
thereby securing for t
own treasuries instal~oi passing on to the Canadian public, any
saving effected on the wagi,.olls. They were placed in the equivocal position of having urged
blanket increases of rates when wages went up—and of opposing blanket decreases when
wages were seemingly decreased.
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 unemployment, outlin-
ing 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 for
future weakening of confidence between the public and the carriers.
modities," thus stimulating fcrther growth of the country, in-
crease in truffle, and in the end. further reductions of rates. The
difference between giving a red'c•tiun to a "key industry" rather
than spreading over all kinds •.f goods is illustrated in the ease
of a certain small railway whirr. by concentrating rate reductions
on lumber enabled the mills of that region to remain open and
the people to remain at work, ‘vhereas if the effect of the reduc-
tions had been scattered over ,ill the goods carried by that road—
each family would have been utile to save a small handful of
silver in a year (provided the decreased rates had been passed
on as decreased prices by atorek pers)—but there wuuld have
been almost no employment ! .
So much for the day to day reductions arranged on thous
ands of articles by the Traffic Departments of the roads. In 1907
a substantial reduction in Eastern rates was made. In 1914 a
very m erial cut was applied in the West. So that the trans-
eontinen lines entered the wear period with a depressed earn-
ing power. • ~
Now wb all—evei the railways --see the desirability for
low freight ra ,'there are certain limits beyond which no one
urges reductionsi Of curse there are theorists such as Mr.
Bernard`Shaw, wbelieved that all railway service should be
free. But leaving de %pews so far in advance, as yet, of p
opinion, it is assumed lt` 'most.people that a railway will give
service at•least coat—b ause, of course, even free railways
be paid fur by the taxlaver—when their managements a
lowed to show their mettle by meeting the obligations of
properties out of their earnings. It is usually recognized
these obligations fall into two`groups : -- --.--=N '
Group i.—To pay their emp
plies of materials such a* coal,
placements.
.lanuan. For the first 6 months of 1921 as compared to the flat
8 months of 1920 the volume of traffic on the most fortunately
situated Canadian road fell 26.72 per cent. ! And its revenue
•
on this b?ssiaasa, la spit.of the higher rates, fell 11.14 per cent. !
The net result of the changes has been a state of emergency
.in the offices of even- the wet fortunately situated of all ('an-
adian roads. Wages could paid and hills met on time. Even
the usual dividend was paid .and a very slight surplus—one of
the factors in maintaining the reputation of Canadian railway
securities, was earned ! But this was only done by deferring
work that must ultimately be done on current account. Such
economies cannot long be eontlnned wittout eating too far into
the broad safety margin which t1i Canadian roads maintain ! s
Nothing but slackened speed of trap and reduced Canadian in-
dustrial efficiency can result -if Ittp •g nave to be long con
tinned. Falling traffic still'"further aggravates the condition.
Maintenance cannot eontinue to be sacrificed to protect the credit
of our railway securities,! Neither can be neglected !
• In May the managements approached the task of reducing
their wage bills.. For ,the tirsj time In man, years it *as the
managements and not the men who were take g the initiative.
They had been forced to adopt the war -time inc ares, granted in
rs ofipthe
public the trotted States—where 9'2 per cent. of itis me h
beat railway unions lie. Therefore when the reserve rvemegt was
must undertaken in that country tbe`C'tnadian roads at o e gave due
re al- notice and a provisional and.eonditional decrease of 10
their per cent.—corresponding to the same movement In the United
that Staten—was put in effect, tentstivel$, as from July 13th. This
reduction has not been accepted by the United States member-
ahip of the unions, where a vote is being taken,on the question—
reduction
nor 1>w,the Canadian membership, who have applied for a Board
red re- of Conciliation. Even resource of the managements wilt be
used to sustain this imperatively necessary and only too moderate
reduction of their wage bilis—which account for 60 per cent. of
rat MaY thi cost` -o -f operation—they are compelled ttregard the matter
as still unsettled and therefore not to be considered as a basis
__-th&reducUuL�0Lralr►fY rptt4—view which a majority of
the Board of Railway Commissioners bas just expressed in its
judgment.
yees; to pay for current
to pay fr repairs u
Group If. -To -pay. such a wage or hire for the use
of -thr
capital which built these railwaya as will make Canadian
securities always ajesirable, and easily marketed, whether
bonds or stocks. This involves more than the mere payment-lir—
the
aymen 'Otthe established rate of dividend in the case of privately owned
roads. It involves the earning also of some ittirplus—a safety
margin of income over expenditure, which will ensure int estors
of complete fety. This principle of a surplus was definitely
established b ,the judgment of the. Board of Railway Commis-
sioners in 1914, under the chairmanship of Sir Henry Drayton—
and upheld by its 'udRment of 1920, when the matter oat; again
considered exhaust' els., (tn this principle rests Canada's ability
to enter the money arkets wherever she may need and feel
confident of bringing back funds for extending her railways as
she may requirein the li't're.
War. conditions, followipg the Western and Eastern rate
adjustments. brought the railway managements sharply np
against these fundamental problems. Comparing the Goverrn-
mRent's figures for 11)07 against 1919 --the last year for whieh the
Railway "Blue Book i. available—tae wage bill of th;erre ilways
rose 306 per cent. ('nal 345 per eent. ! Ties 320 cent. 1
:But neither the volume of traffic nor the Reale of freight rates
increased in cmnparable degree durhig that period ! The actual
revenue per ton per mile !vrbieh is the real proof or disproof of
the matter) advanced only 20 per cent. over 1907. The year
1920 enlarged the diserep,tncy, although an increase of 35 per
cent. on Western lines and 40 r cent. in the East was supposed
to yield enough additional �t�1vlpnne to meet the increased wages.
The increased wages were affective from May 1st—the increased
rates not until September 1. The egectivenesa of that increase
depended oa-tae volume of traffic remaining at a fairly high
level. it dill so for a time then -began to drop. Today it is
very low: .1vevertheles. a 5 per cent. decrease was applied in
III. Tn-onclusion : .
The railway managements weleorhe deflation of railway
rates and are working steadily trywvard that end. On two
grounds, however, they asked that/any general decrease be de-
ferred :
First.—Beoeuse the so -c
assured and cannot be until
States, where 92 per cen
where no general ffeig
are settled.
Second:—Beet -tile- ulama of traffic in the immediate
future is problem 'cal and any serious decline, if coupled with
a decrease in r es, would have very grave effect on even the
most favorahl situated managements.
The r ' ways have spoken against blanket decreases on the
grounds at it would be in the intereats of the country as a
whole concentrate any beneficial effect to be expected, on
"key commodities" rather than distribute them over all classes
of Dods, thereby benefitting only the distributors.
They have been aetuated throughout by the desire to assist
•
in the process of deflation—objecting only when that proeess
might seem to threaten their solvency and injure them—and
through them—the ultimate interests of the Canadian public.
ed
wage decreases are not yet
e parallel decreases in the United
of the union membership lies (and
rate reductions have been ordered),
The RAILWAY "ASCIATION of Canada
263 ST. JAMES STREET, MONTREAL, P. Q.
1