The Nonpartisan Leader Newspaper, September 5, 1921, Page 3

IN THE INTEREST OF A SQUARE DEAL FOR THE FARMERS lis, Minn, der t M 3, 1879, D —— e S Y v TNonparti8sn Teader A MAGAZINE THAT DARES TO PRINT THE TRUTH D! iol dit Entered as_second-class matter at the postoffice at One year, $1.50. Classified rates on classified page; Minneapolis, nn., under the act of March 3, 5 i other advertising rates on application. Member Audil Publication address, 427 Sixth avenue 8., Minneapolis, s Bureau of Circulations. -S. C._ Beckwith Special Minn, Address all remittances to The Nonpartisan Published at Minneapolis, Minn., Every Two Weeks Agency, advertising representatives, New York, Chicago, Leader, Box 2072, Minneapolls, Minn. OLIVER S. MORRIS, Editor. St. Louis, Kansas City. VOL. 13, NO. 5 MINNEAPOLIS, MINNESOTA, SEPTEMBER 5, 1921 WHOLE NUMBER 280 Railroads Nervous About Lower Rate Agitation well as business men, demand that railroad rates be cut to a pre-war basis. Railroad managers see that this demand is making headway. Hence the national advertising campaign the railroad executives are now conducting. The ads, published in farm papers to convince the farmers that rates are not too high in com- parison with railroad costs, and that the wages of RAILROAD shippers in general and farmers in particular, as railroad workers must be further cut before rates Argvl‘lfment ~can be reduced any, are typical of the unsound argu- on Wages pents transportation corporations are making. Not Sound As a matter of fact, the railroad labor board a few weeks ago made a cut of 12 per cent in railroad wages. The advertisement of the Association of Railroad Execu- tives, published in'the last issue of the Nonpartisan Leader, admits this. But it fails to state that this wholesale cut in wages means the railroads will save $400,000,- 000 a year. Did the railroads, when this wage cut was made a few weeks ago, cut rates in proportion to their savings by reason of the lower wages? No, they did not! Then what assur- ance is there that further wage cuts will bring down rates? l THE “FIXERS” FORGOT GASOLINE! I THE BATTERIES AND COILS SEEM OK- BUT THE GENERATOR DON'T CHARGE --_ recent official valuation of 18 railroads by the interstate commerce commission showed that their actual value was just HALF of their “book” or “property investment” value. Yet it was practically this “bogk’:c };)rt ‘;llr)lroperty investtrtnoeri{t” vahlle of tlfie rai{- roads tha e government took in valuing the rail- El;alse V?-hll_e roads for rate purposes last year! eason 10 From this evidence it is reasonable to suppose Book Losses that an actual physical valuation of all the rail- roads would show much the same result, and that the railroads are now making 6 per cent or more on a fair valuation. In the absence of such an actual physical valuation covering all lines, there is no evidence that the roads,'if they admit making 8 per . cent now, are not really making twice that. The amount of divi- dends paid is not a fair measure of railroad profits. A small divi- dend on watered stock might be a large or excessive one on stock not . issued in excess of the value of the property. Remember that. * * * * * HE inside details of the proposed new grab of the railroads are surprising. They are asking to be financed WAIT A MINUTE, by the government*to the tune - We have repeatedly pointed out that the big increase in rail- road rates a year ago under the Esch.- Cummins transportation act was only partially to cover increased wages. It was an- . nounced by the interstate com- merce commission at the time that the great rate raise was granted, that the additional rev- enue the railroads would get un- der the new rates was estimated . at $1,500,000,000 a year, while the railroad wage raises grant- ed just prior would cost the roads only $500,000,000 a year. The roads got rate raises that were “intended to bring them three times more additional rev- enue than necessary to cover higher wages for railroad work- ers. But that railroad wage boost has practically been wiped out by the recent reduction in rail- road wages. The 12 per cent re- duction in wages made the other day saves the roads $400,000,000 a year. Wages are practically back to where they were before the wage raise of a year ago, yet rates are 20 to 30 per cent higher than they were -at.- that time. Wages have practically gone back to the basis existing before ¥ the Esch-Cummins law resulted in the sweeping 1921 increase in rates. Yet these sweeping increases are still in effect. Under these circumstances what right have the railroads to expect farmers to ~put any confidence in the wage argument ? * * * * * HE fallacy of the railroad arguments about impending bank- l ruptey (see railroad ads now running in farm papers, includ- ing the Leader) lies in the fact that they figure their profits or lack of profits on an excessively inflated valuation. Their adver- tising practically admits that railroads will make 3 per cent this year. But obviously 3 per cent on a valuation DOUBLE what it should be, is 6 per cent on a FAIR valuation. And if railroad own- ers are making 6 per cent they are making more than any one else is at this time—even 8 per cent, which they admit they are making, is more than farmers and most business men are making. The issue of the Leader for August 8 reported the fact that a THIS NEW. TARIFF, SELF-STARTER WILL SURELY MAKE HER GO! —Drawn expressly for the Leader by John M. Baer. - I'LL FIX HER! i N of another half-billion dollars. o3 Al President Harding says there is “moral obligation” on the part of the government to give the rail- roads this cash, but the moral obligation can more reasonably be supposed to be No “Moral the promises of == . . 9 the Republican Obligation party to big busi- by People npess during the campaign last year. Harding, as a president S| elected by a party which made 5: all kinds of promises to big busi- ness, is perhaps “morally obli- gated” to help the railroad get this new financial grant, but there is no such obligation on the part of the people or the gov- ernment. = When government operation of the transportation system ended on March 1, 1920, the rail- roads, according to the United States railroad administration, owed the government about $1,- 677,000,000 for additions and improvements put in during gov- ernment operation. At the same time the same authority esti- mated that the government owed the roads about $661,000,000 on various claims of the lines. So that, as accounts then stood, the railroads owed the government INVESTIGATE \T, AGAINS __fifi_"?_.—_ E _ “a cool billion dollars—the difference between what Uncle Sam had coming from the railroads and what he owed the railroads. But since then— * * * * * O OFFSET as far as possible what they owed the govern- ment for improvements and additions during government op- eration, the roads brought all kinds of outrageous and vir- tually fraudulent claims for “wear and tear,” etc. Some of these claims the government has agreed to pay and the roads to accept at 30 cents on the dollar. The government has not agreed to the others, but even when these disputed claims are settled the roads will owe Uncle Sam hundreds of millions. \ - Now it would be perfectly fair for the government to accept Jailroad paper, bearing interest, for what they owe the govern- ment. This would give them time to pay it. But instead of a legit- imate “funding operation” such as that. President Harding pro- PAGE THREE £ . R T A N O A B A R S S A A i T T