The Nonpartisan Leader Newspaper, April 18, 1921, Page 5

. “The Crime of 1920 and What 'It Cost L8 How the People Were Robbed of Four Billion Dollars—The Relation Between Freight Rates and Farm Prices BY E. B. FUSSELL 7] AILROAD companies get 35 per cent more for-hauling a ton of freight than they ever got before. They get $12 for a passenger trip that formerly cost $8 to $10 and $3 for a sleeper ticket that formerly cost $2, this in addition to what the government gets for a war tax on the tickets, and then pays back to the railroads, as will be shown later. And yet the railroads are before congress at t};e - present time, claiming that they are losing more money than ever before and begging congress for additional cash, although they already owe the gov- ernment $1,292,000,000 and are collecting $7,000,- 000,000 a year from the people. Why the railroads are in this condition and what it means to the people of the United States will be . told as briefly as possible in this and a succeeding article. Let us start with the time the United States en- tered the war. For years previously the railroads had been systematically “looted” by their managers and trackage and equipment had been left unre- paired. Instead of using their earnings to keep their track and equipment up the railroad owners (who the owners were.will be shown later) used this money to pay dividends on watered stock. The result was that when it was necessary to transport troops and equipment for war purposes the rail- roads broke down. Finally, on January 1, 1918, the - government took over the railroads. It agreed to pay for them a rental of $75,000,000 a month (con- siderably more than the roads were earning at the time). G For 26 months the government operated the rail- roads. During this period the majority of the rail- road managers were kept by the government as government employes. These managers were nat- urally anxious to have the railroads returned to their owners and set out to discredit government ownership. Senator La Follette said in a recent speech in the senate: “I have gone over the affidavits of men who were in the shops whe told under oath of the orders they were required to execute or quit the service, orders which blockaded transportation, orders which under- mined or retarded work, orders which destroyed material. Engines were left standing out in the dead of winter in 1918 after they came into the hands of the government on January 1, with the water in the pipes permitted to freeze and burst them, and that at a time when the government did not have an extra engine. “Treason to the government? If you would hunt it out you can find it there try- ing to hamper this engine of war, trans- portation, and to discredit government op- eration. Every effort was made that was possible, when McAdoo came to the direc- tor generalship of the railroads, to break down his system. I repeat that sabotage was practiced and say that I have the proof. GOVERNMENT HAD TO REBUILD RAILROADS “But notwithstanding the normal diffi- culties incident to carrying on a transpor- tation system for a great war, in the face of the artificial and malicious obstructions interposed by men in high places to make the system fail, that man McAdoo worked out the problem.” McAdoo did work out the problem, as Senator La Follette says. But it took some money to do it. . The government took over a broken- down system. In December, 1917, the last month the railroads were operated.under private control, they were spending only $60,000,000 a month for maintenance of equipment and $23,000,000 a month for maintenance of way and structures, a total of $83,000,000. In December, 1918, a year later, the government was spending $109,- 000,000 for maintenance of equipment and $70,000,000 for maintenance of way and structures, a total of $179,000,000, or near- - not a part of the operating expense. ‘agreement by which the government took over the farm price of Wheat Aug.l_k 1920 Do you know what “The crime of 1920"” was? Wisconsin readers know. It was the theft of more than $4,000,000,000 from the people by the Esch-Cummins law. At least half of this money, prob- ably more, was taken from the farmers of the United States. How this money was taken is told in this article. What became of this money will be told in the next issue of the Leader. 1y $100,000,000 a month more than the railroads had been spending. ; In addition to spending approximately $100,000,- 000 a month more than the railroads had spent for maintenance and repairs, the government spent during the period of federal control $1,100,000,000 for permanent improvements and betterments. Of this amount $350,000,000 was for 100,000 new freight cars, 2,000 engines and other equipment needed by the railroads, and $750,000,000 was for new trackage, buildings, etc. All of this $1,100,- 000,000 was for permanent improvements and was Under the railroads it was to be repaid by the railroads for all money spent for permanent improvements, while money spent for maintenance and operation was to be pajd by the government. GOVERNMENT DEFICIT SMALL COMPARED TO EXPENDITURES After spending this $100,000,000 a month addi- tional for maintenance, after paying the railroads $75,000,000 a month for rental and after increasing the pay of railroad workers, the government prac- tically broke even on operation of railroads, in spite of the sabotage of the railroad managers. During 26 months of government management the deficit for operation of railroads was slightly less than $28,000,000 2 month—a large sum, but small com- pared with the $100,000,000 a month additional that - the government was spending for maintenance. With the war ended, however, the railroad own- ers (we will tell who they were later) were deter- mined to get their properties back. Newspapers throughout the United States began making a ter- rible outery against the government’s loss of $28,- 000,000 a month. Lobbyists from all over the coun- i HOW THE LAW WORKED | New York price of Wheaf Sept 1920 SCP‘LI 1920 Aug. . 1920 The above diagram shows graphically how the Esch-Cummins law de- creased prices to the producer and at the same time increased prices to the eonsumer. The first upright line at the left shows the farm price of ‘wheat before the increased railroad rates went into effect and the next line the price after they went into effect. Similarly the next two upright lines show the New York price of wheat before and after the increased rates became effective. PAGE FIVE . e \ N ff. J3% try urged congress to “turn the railroads back to their owners.”*. Even the heads of farmers’ or- ganizations were imposed upon or induced by the interests that owned the railroads to take their part and the record discloses that J. R. Howard, presi- dent of the American Farm Bureau federation, and the leaders of the National Grange appeared at Washington, together with the millionaire bankers, to urge congress to end the period of government control, return the railroads to their owmners and end the expense of $28,000,000 a month that the government was then bearing. Finally, in February, 1920, congress passed the Esch-Cummins act. The Esch-Cummins act provided: THE PRINCIPAL PROVISIONS OF THE ESCH-CUMMINS LAW 1. That the railroads should be returned to their owners March 1, 1920. 2. That for six months after the roads were re- turned the government should guarantee the rail- roads against loss. 3. That railroad rates should be increased so that after the end of the six months’ guaranty period the railroads should make at least 5% to 6 per cent (as much more as they could) from earnings. 4. That a special $300,000,000 fund should be pro- vided to be loaned to the railroads at 6 per cent interest. Under the Esch-Cummins law the roads were re- turned to their owners March 1. During the six months’ guaranty period the losses of the railroads, under private management, were $631,000,000, or more than $105,000,000 a month, as compared with the $28,000,000 a month deficit un- der government management. While the railroads were operating under the six months’ guaranty the interstate commerce commis- sion gave the railroads authority to increase their passenger rates 20 per cent, to increase their freight rates 35 per cent and to increase sleeper rates 50 per cent. This permission was granted July 31, 1920, and the new rates went into effect August 26, 1920. The revenues of the railroads under government control during the war were in round figures $5,000,- 000,000 a year. The increased freight rates raised the revenues of the railroads to an estimated $7,000,000,000 a year. y The extra $2,000,000,000 a year meant an extra $20 from every man, woman and child in the United States, an average of $100 from each family of five. Farmers doubtless paid more than the average $100 per family. This is how the money was collected from farmers: Farmers usually sell their cotton, their wheat or their corn at their local railroad station. The price at the local station is the price at the world market, minus the cost of transportation and whatever profits may be taken by middlemen. If the price of wheat at Liverpool, for instance, is $3 and it costs 50 cents to ship to Liverpool, the farmer will get $2.50, with the middle- men’s profits deducted in addition. But if v the price of transportation to Liverpool is increased to $1, the farmer will get only $2, with the middlemen’s profits deducted in addition. The moment that increased freight rates were put into effect a sensational decrease in the price of all farm products began. The following figures are taken from the Monthly Crop Reporter of the United States department of agriculture. On August 1, 1920, the average farm price paid for a bushel of wheat was $2.32; on September 1, after the new rates had gone into effect, the price was $2.18. Cotton drop- ped from 36.8 cents a pound to 31.1 cents in the same month; potatoes from $3.02 to $1.84 per bushel, apples from $1.98 to $1.37 per bushel and other farm products in pro- portion. The decrease in the month ‘was really greater than indicated, for world prices in some lines were actually rising at this period. Again taking the official United (Continued on page 16) L R A T A T T B U8 Tt P 5 S S BB A 3 b i 8