Railroad Freight Rates

July 9, 1931

Report Outline
Public Reaction to Proposed Increase in Rates
Evolution of Federal Control of Railroad Rates
Pre-War and Post-War Trends of Freight Rates
Petition of Railroads for 15 Per Cent Increase
Financial Experience of the Railroads Since 1920
Special Focus

Public Reaction to Proposed Increase in Rates

Faced with steadily declining revenues, the railroads of the United States joined in a petition to the Interstate Commerce Commission, June 17, 1931, to authorize a general increase of 15 per cent in all railroad freight rates. They estimated that such an increase, if granted, would provide them with approximately $400,000,000 of additional revenue annually. The existence of an “emergency threatening serious impairment of their financial resources and their capacity to assure the public a continuance of efficient and adequate service” was put forward by the carriers as ground for early and favorable action upon their application by the Interstate Commerce Commission. Public hearings on the application are to begin July 15. A final decision by the Commission is not expected before fall.

The railroads asked permission to make a percentage increase of all freight rates and charges, with the exception of such commodities as coal and coke, to which a different method would be applied to preserve existing differentials. In response to a query from the Interstate Commerce Commission, their intention to raise all rates was confirmed by the carriers with the sole qualification that, as in past instances of a change in the entire rate structure of the country, it might, be found necessary to make some readjustments to meet competition. The railroads said further, replying to a specific question of the Commission, that they were prepared to apply the proposed 15 per cent increase to all existing rates on grain, cotton, other agricultural products, iron and steel products, petroleum, lumber, and automobiles. The opinion had previously been expressed that exception would be made in the ease of rates on certain products in this list which were recently reduced to enable the rail carriers to cope more effectively with motor truck competition.

Announcement of the proposed rate increase brought many protests, particularly from those engaged in the production and merchandising of agricultural products. Expressions of approval, on the other hand, came from the board of directors of the Chamber of Commerce of the United States, from some local chambers of commerce and individual business men, and from sources interested in protecting the values of railroad securities. If is contended by opponents of the increase that agriculture and business arc utterly unable at this time to shoulder the burden of higher transportation costs. Certain proponents of the move hold, on the contrary, that an increase in rates would be an aid to business recovery.

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