Part 20
The region with rates above the average in 1897 had 45.23 per cent. of the total ton-mileage in that year, and 48.07 per cent. in the year 1907. Of the total increase in traffic movement 49.98 per cent. was in this region. The precise effect that these changes in the geographical distribution of ton-mileage would have had upon the average ton-mile rate for the whole country is shown by the computation set forth in the following table:
Product of ton-mileage of Ton mileage Ton-mile rates of 1907 and ton-mile Group of 1907. 1897 in mills. rates of 1897.
I 6,511,166,971 12.02 $ 78,264,226.99 II 63,455,243,659 6.75 428,322,894.70 III 47,994,909,002 6.05 290,369,199.46 IV 11,418,243,141 6.48 73,990,215.55 V 17,397,321,360 8.64 150,312,856.55 VI 44,318,734,155 8.55 378,925,177.03 VII 9,300,234,849 11.48 106,766,696.07 VIII 17,406,430,971 10.79 187,815,390.18 IX 7,546,655,555 10.40 78,485,217.77 X 11,252,450,440 12.75 143,468,743.11 --------------- ----- ----------------- United States 236,601,390,103 -- $1,916,720,617.41
By dividing the aggregate of the products in the last column of the foregoing by the total ton-mileage shown in the second column, an average is obtained which represents the ton-mile rate that would have resulted in 1907 had the traffic of each group in that year moved in precisely the same volume in which it actually moved and had the average rates in each group been exactly the same as they were in 1897. This shows that, under the conditions assumed, the average ton-mile rate for the whole country would have been 8.10 mills or 0.12 mill higher than in 1897. This advance of 1.50 per cent. would have been wholly due to the more rapid growth of traffic in the regions of normally higher rates. The chief significance of so small a change in so long a period is, really, to indicate that the ton-mile unit, so far from being of rapidly changing character, is actually, at least as far as it might be assumed to be affected by changes in the location of traffic movement, a fairly stable unit and thus an excellent measure of the rise or fall in rates. Whether the same conclusion is to be derived from a study of the changes in the proportion of the total movement made up of commodities of different grades and naturally taking different rates is now to be made the subject of inquiry.
Publication of the classified statistics of tonnage necessary for such an inquiry was begun by the Interstate Commerce Commission with the report for the year 1899. Consequently it is not practicable to extend the inquiry to a period prior to that year. The following statement shows the number of tons of freight of each of the classes of commodities named which were received by the railways for transportation in 1899, 1903 and 1907 and the proportion of the tonnage in each class to the total number of tons carried:
Tons. Class of commodity. 1899. 1903. 1907. Products of agriculture 50,073,963 61,056,212 77,030,071 Products of animals 13,774,964 16,802,893 20,473,486 Products of mines 227,453,154 329,335,621 476,899,638 Products of forest 48,122,447 74,559,980 101,617,724 Manufactures 54,415,205 91,980,903 137,621,443 Merchandise 19,844,735 29,949,022 34,718,487 Miscellaneous 23,197,155 35,116,027 44,824,123 ----------- ----------- ----------- Total 441,881,623 638,800,658 893,184,972
{table continued} Percentage of total tonnage. Class of commodity. 1899. 1903. 1907. Products of agriculture 11.33 9.56 8.62 Products of animals 3.12 2.63 2.29 Products of mines 51.47 51.56 53.59 Products of forest 10.89 11.67 11.38 Manufactures 13.45 14.39 15.41 Merchandise 4.49 4.69 3.89 Miscellaneous 5.25 5.50 5.02 ------ ------ ------ Total 100.00 100.00 100.00
It should be observed that the foregoing statement represents tons received for shipment regardless of the distance carried and, in consequence, does not throw the light upon traffic movement that would be available if it were possible to know the ton-mileage of each class of commodities. Nevertheless, the data undoubtedly convey some information as to the character of the ton-mile unit during the different years and the nature of the changes in its quality which are in progress. This will be made more evident by the following table showing comparisons for the years 1899 and 1907:
Tons. Increase. Class of commodity. 1899. 1907. Amount. Per cent.
Products of agriculture 50,073,963 77,030,071 26,956,108 53.83 Products of animals 13,774,964 20,473,846 6,698,522 48.63 Products of mines 227,453,154 476,899,638 249,446,484 109.67 Products of forest 48,122,447 101,617,724 53,495,277 111.16 Manufactures 59,415,205 137,621,443 78,206,238 131.63 Merchandise 19,844,735 34,718,487 14,873,752 74.95 Miscellaneous 23,197,155 44,824,123 21,626,968 93.23 ----------- ----------- ----------- ------ Total 441,881,623 893,184,972 451,303,349 102.13
Obviously the effect of the increases shown in the foregoing upon the quality of the average ton-mile must be in proportion as they have exceeded or fallen short of the average increase shown at the foot of the last column. There is no question that, in general, products of agriculture, animals, forests and mines are low-grade commodities, or that, on the other hand, the commodities classed as manufactures, merchandise and miscellaneous are high-grade articles. An increase in excess of the general average increase in the first four classes named would tend to lower the quality of the average ton-mile while the opposite effect, that is, a raising of the quality, would result if the last three classes should increase more rapidly than the increase in all tonnage. Adopting this classification, the following shows the respective increases in high-grade and low-grade tonnage:
Tons. Increase. Class of commodity. 1899. 1907. Amount. Per cent.
High-grade 102,457,095 217,164,053 114,706,958 111.96 Low-grade 339,424,528 676,020,919 336,596,391 99.17 ----------- ----------- ----------- ------ Total 441,881,623 893,184,972 451,303,349 102.13
The considerably greater increase in the tonnage of high-grade articles indicated by the foregoing is scarcely within the possible margin of error in the classification, but, in any event, what the figures certainly prove is the absence of any actually far-reaching change in the typical or average unit of traffic. That this conclusion extends to traffic movement is clearly probable.
PRICES AND ACTUAL RATES.
Comparisons between actual prices of commodities shipped by rail and typical freight charges on the same articles, for 1897 and 1907, demonstrate the fact that while prices have almost uniformly advanced the greater number of rates have remained stationary while among those which have changed the reductions are as numerous as the advances and exceed the latter in extent and importance.
[Mr. McCain here presents a table compiled from reports of the Bureau of Labor of the actual prices of commodities and the rates between principal points of shipment, occupying pp. 50-58 of his pamphlet.]
Examination of prices collected and reported by the Bureau of Labor, giving the prices in 1899 and 1907 of 229 articles, shows that among these 204 prices or 89.08 per cent. of the total were increased. The rates on forty-nine of these articles were advanced an average of 13.14 per cent. and the rates on forty-eight of them were reduced an average of 16.44 per cent. Other conclusions are shown in the following summary table:
Aggregate Average Per cent. percentage changes, Item. Number. of total. of changes. per cent.
Prices-- Advanced 204 89.08 11,340 55.59 Reduced 13 5.68 330 25.38 Unchanged 12 5.24 -- -- Total 229 100.00 -- --
Rates advanced-- Prices advanced 44 19.22 606 13.77 Prices reduced 3 1.31 30 10.00 Prices unchanged 2 .87 8 4.00 Total 49 21.40 644 13.14
Rates reduced-- Prices advanced 42 18.34 708 16.86 Prices reduced 3 1.31 33 11.00 Prices unchanged 3 1.31 48 16.00 Total 48 20.96 789 16.44
Rates unchanged-- Prices advanced 118 51.52 -- -- Prices reduced 7 3.06 -- -- Prices unchanged 7 3.06 -- -- Total 132 57.64 -- --
The foregoing shows that while prices were advanced for 204 out of 229 articles, or 89.08 per cent. of the entire number included in the table, the freight rates on the same articles, as expressed in money, were advanced in but forty-nine instances, or 21.40 per cent. of the total, money rates were reduced in forty-eight instances, or 20.96 per cent. of the total, and remained stationary in 118 instances, or 57.64 per cent. of the total. Of the rates advanced forty-four were in cases in which the prices had also advanced, and of the rates reduced forty-two applied to articles which had advanced in price. Even as to the commodities which had advanced in price, the average advance being over fifty-five per cent., money rates were advanced in but forty-four instances out of 204 and the average advance was but 13.77 per cent. and there were forty-two reductions in money rates, such reductions averaging 16.86 per cent.
SIGNIFICANCE OF THE DEPRECIATION OF MONEY.
It has now been fully demonstrated (first) that the railways have to pay much more, probably not less on the average than twenty-five per cent. more, for everything they require in the conduct of their business, including labor, than they did ten years ago, (second) that those who make use of railway services receive much more, probably not less on the average than twenty-five per cent. more, for their labor or for the commodities which they produce than they did ten years ago, (third) that average rates per ton per mile for railway freight transportation, expressed in money, that is to say, in dollars and decimal fractions of dollars, are now somewhat lower than they were in 1897 or formerly, and (fourth) that the ton-mile unit is a highly stable one as to quality and that in consequence of this stability the ton-mile rates accurately answer the question whether rates, expressed in money, have remained stationary, have advanced or have declined. The latter conclusion has been supplemented and re-enforced by data from the classifications and rate schedules which tend strongly to prove the same fact. Therefore, it has been made plainly apparent that there has been a decline in money rates since 1897. But railways require money only to remunerate the highly skilled labor they employ, to purchase necessary materials and supplies, to pay taxes and to compensate the capital they use. Consequently money is worth to the railway corporation, as to the wage-earner, only what it will buy for the satisfaction of wants. A dollar which will pay for less labor or buy less fuel for locomotives is worth less to the railway just as a dollar that will buy less bread or clothing is worth less to the man who works for wages or receives it as interest on his savings. It has long been realized that any effort to study the question of wages, throughout an extended period, which fails to take into consideration the purchasing power of the money received is worse than valueless, because it is deceptive and misleading. It has been generally recognized also that any effort to consider the condition of particular classes of producers by comparisons of the prices obtained for their products at different periods, as that of farmers by the prices of corn and wheat, is similarly dangerous unless these prices are turned into quantities of the commodities which such producers must purchase.
[In elucidating this obvious point Mr. McCain cites such authorities as Adam Smith, John Stuart Mill, President Hadley of Yale, Professor Frank W. Taussig of Harvard, and then continues.]
A rapid decrease in the purchasing power of the money they receive has brought about, within a single decade, a reduction in railway freight rates that cannot be less than twenty-five per cent. This reduction began almost imperceptibly at a time when American railway rates were already lower than ever before in the history of railways and lower than anywhere else in the world. It has proceeded, concurrently with the fall in the real value (that is in the purchasing power) of the American dollar, but in such subtle form that only when its consequences threaten the stability of the American railway system, the wages of railway employes and the prosperity of the great rail-manufacturing, car-building and other allied industries is its real significance and extent perceived even by those most immediately interested. That such a threat now hangs over the railway industry of America and every employe and industry dependent upon it is too plain for argument. The situation is acute and nothing but a prompt adjustment of the rates obtained for the services rendered to offset, partially, at least, the loss in the value of the money received will prevent disaster. That such an adjustment, if effected now, will, at best, be tardy and belated is evident from the facts herein presented, which show that prices in every other industry and the wages of all artisans were long ago adjusted to this fundamental condition.
APPENDIX B
Statement showing prices of railway supplies purchased in 1897 and 1907 as disclosed by the records of various Eastern railways. It should be noted that the quality of the supplies, made the basis of this statement, may have changed somewhat between 1897 and 1907, but in few instances would the allowance for this source of variation materially affect the results.
Prices. Increase. Class. 1897. 1907. Per cent.
Locomotives-- Mogul $10,181.00 $14,111.00 38.6 10-Wheel passenger 11,026.00 15,734.00 42.7 Atlantic not built 16,236.00 -- Pacific not built 19,580.00 -- Prairie not built 16,468.00 -- 8-Wheel passenger 10,243.00 13,581.00 32.5 6-Wheel switcher 9,392.00 12,098.00 28.8
Cars (1899-1907)-- Hopper 475.00 1,185.00 -- Box 783.00 1,110.00 -- 490.00 844.00 -- 519.00 897.00 --
Note.--The prices of cars shown above are typical prices paid by different roads in the respective years and employed in the same service. As the cars purchased in 1907 are of more modern construction, better quality and larger capacity than those purchased in 1899, no accurate comparison can be made or percentage of increased cost shown.
(1902-1907)--
100,000 lbs. Capacity Box Car with Steel Underframe and wood superstructure $1,043.49 $1,148.88 10.09 100,000 lbs. Capacity Composite Gondola Car with Steel Under- frame and wood superstructure 1,021.62 1,148.45 12.42 100,000 lbs. Capacity Composite Flat Car with Steel Underframe and wood floor 953.23 1,010.60 6.02 100,000 lbs. Capacity, all steel Hopper Cars 1,002.22 1,076.05 7.47