Indiana. Shipping Interests.

Answer of the shipping interests of Indiana and the Indianapolis Freight Bureau to the remarks of Mr. G. J. Grammer at conference held on November 19th, 1906, between the Indiana Railroad Commission and special committees representing the raliroads and commercial bodies of larger cities of the state online

. (page 1 of 8)
Online LibraryIndiana. Shipping InterestsAnswer of the shipping interests of Indiana and the Indianapolis Freight Bureau to the remarks of Mr. G. J. Grammer at conference held on November 19th, 1906, between the Indiana Railroad Commission and special committees representing the raliroads and commercial bodies of larger cities of the state → online text (page 1 of 8)
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J



ANSWER



-OF THE-



SHIPPING INTERESTS of INDIANA



AND THE



INDIANAPOLIS FREIGHT BUREAU



-TO



Remarks of Mr. G. J. Grammer



At Conference held on November 19th, 1906, between

the Indiana Railroad Commission and Special

Committees representing the railroads and

commercial bodies of larger cities of the

State regarding Class Rates in

the State of Indiana



PART I. CLASS RATES IN INDIANA
PART II. INTERSTATE RATES



PART I.



ft Statement from the Shipping
Interests of Indiana






LIBRARY
*U OF RAILWA E



PART I.



A STATEMENT FROM THE SHIPPING INTERESTS

OF INDIANA.

In connection with the question of revised class rates
in Indiana, which was the subject of discussion in several
conferences between railroad officials, State Railroad
Commission and representatives of shipping interests, at-
tention is called to the remarks of Mr. G. J. Gramnier,
speaking for the railroads, on the occasion of the last con-
ference held, November 19th, 1906, attacking the attitude
^ i and fairness of the shippers, and which have been printed
and are being widely circulated throughout the state. As
► a speech, prepared for the occasion, if allowed to rest
there, no serious or public notice would have been deemed
^necessary on the part of the shipping interests, but since
^.it has been dressed up and changed for publication by
omissions and additions and distributed broadcast in
v ' pamphlet form as a campaign document intended to pre-
judice its readers in regard to existing freight rates, and
the frequency with which it charges the shipping interests
with bad faith and lack of common sense or honest mo-
tives, it becomes necessary and is the duty of the shippers
to make a plain and candid reply to that address.

In order that correct understanding of the situation
may obtain, it is necessarv to brieflv review the case and
show clearly what led up to these conferences:

Complaints, extending back man t y months, had been
made to the initial roads by interested shippers of Indi-
anapolis regarding the unfairness and inequalities in class
rates, requesting that needed adjustments be made in their
tariffs. Xo steps were being taken by the railroads to rem-
; edy matters and no indication that anything would b*
5 done. Finally notice was given by shippers that the con-
ditions complained of would be presented in an action to
be brought before the State Railroad Commission. The
r n interested roads requested that such action be not taken,
and asked for a conference with the shippers. This re-
^ quest was complied with and conference was held Oct.



15th, ;n the office of ilit- [ndianapolis Freight Bureau,
there being present the traffic officials of the Big Pour,
Vandalia, L E. & W. and C, II. & I ». Railways. It ^
admitted by the railroad representatives that class rates
not only as affecting [ndianapolis but throughout the
were not properly adjusted and needed revision, and
that ir was the desire of the roads to adopt a uniform
mileage scale of rates on a lower hasis than were in effect
- in- questions arose of ;i contingent character ami to dis-
pose of such the meeting repaired to the State Hon
where an interview was had with mip of the Commission-

- with tin- result thai assurance was given by the rail-
roads thai they would arrange for an early meeting of

Qtral Freight Association roads in Indiana to prepare
the revised scale of mileage rates above mentioned, and
siiluiiir same f<>r consideration at another conference to be
called.

TIi.- second conference was held Oct. 29th, there being
present tin- Commission, a Committee of traffic officials
representing the Central Freight Association roads and
representatives of shipping interests from various cities
and districts of iiir state. The railroads submitted their
revised schedule of rates and to the astonishment of those
presenl representing shipping interests if was diclosed that
the figures presented were not in keeping with the promise
made at previous conference; they were not on a lower

It-, hut were actually higher rates for distances up to 70
miles and tin- same rates for distances over 7<» miles that
have been in effect on several of tin- roads for the past 20
years or thereabouts. The proffer of those figures by the
railroads seemed to he in had faith, calculated to precipi-
tate a situation to further and indefinitely delay any ad-
justment in rat< s

The Commission announced the conference adjourned
and requested the representatives of the shipping inter, - .
present to hold a meeting and prepare a schedule of mile-
ites which in their judgment would be fair and rea-
sonable, co] o be furnished the Commission and the
railroads, and those figures to be the Bubject for consider-
ation at a third conference to he called. There were many
shipping interests from all parts of the vt;ite represented
in the meeting, and a committee was appointed to prepare
ale "f ra1



The Committee devoted much time and careful con-
sideration to the work, and were guided by reliable data
and records in determining upon the essential factors en-
tering into the making of reasonable and fairly remunera-
tive rates, and that there might not be anything hidden
or ambiguous in the figures, the schedules as drawn up pre-
sented clearly the detail upon which the rates were con-
structed, showing the factors of terminal and hauling
charges; also the percentage adjustment between the sev-
eral classes. The Committee, realizing the importance of
the work, exercised the further care in calling a meeting
of all the shipping interests represented at the previous
meeting and many additional shippers to consider and
pass upon the proposed scale and after careful examina-
tion and discussion, the figures and bases were approved.

The third conference was held Nov. 19th, and the pro-
posed schedule of mileage rates presented carried with it
the endorsement of a large number of individual shippers,
aud the commercial bodies of cities throughout the state,
who were represented and actively interested and partici-
pating in the preparation of the work.

This then brings the matter up to the point where Mr.
Grammer appeared and to correctly weigh the fairness of
his statements and to locate any element of bad faith ap-
pearing in the negotiations, the following facts should be
kept in mind :

The railroads asked for the conference.

They acknowledged the rates were wrong.

They promised a reduced scale of rates.

They offered instead an absolutely unfair scale.

That led to request to shippers to prepare a scale.

In opening his address, Mr. Grammer declares he had
no greater mission or anything of more importance than
to be at the meeting to discuss the proposed rates ; yet im-
mediately upon completing the reading of his paper he hur-
riedly left the room, thereby denying any one present the
privilege of interrogating him on any of the remarkable
statements and pointed assertions contained in his re-
marks. Was the conference of no further interest or im-
portance to him after he had his say, or did he deem
it wise to avoid annoyance and possible embarrassment in
attempting to explain and justify some of the statements
made?



The shipping interests were there prepared to explain
and justify the fairness of their figures and hear the rail-
road representatives explain their rates, but the latter
would neither discuss their own rates uor those the ship-
pers had bo offer. Mr. Grammer declares the shippers of
the Btate are devoid of common sense and actuated by un-
fair motives in this connection; he tells them, on pages
24 and 25, thai present rates are low and they had better
enjoy them while they lasl for ii is likely the railroads
will advance the rates H» to 15 per rent, .n an early day.
u thai statenienl made in earnest, and docs he think the
public would submit?

Much of the address is entirely irrelevant bo the ques-
tion under consideration, but lei us notice whal is present-
ed touching the issue, i. <•., class rates in Indiana.

Under the caption, "Exhibit B," a comparison of rates
is offered. In iliis connection ii is important t<» call atten-
tion bo the fact thai in all discussions regarding adjust-
ment in class rates in iliis territory the railroads fall back
on the C. F. A. scale .-is an argument, when it fits their pur-
pose, especially is thai scale referred i«» on shorl distances,
i. <•., •".<• miles ;niil under, and Mr. Grammer refers t<> it.
page L2, pointing oul thai "'•_:<• is the highest ia t « * for 30
miles under the Ohio law; thai the Pennsylvania line and
other roads in Indiana have published their tariffs ac-
cordingly, which have been in eifecl continuously during
the pasl 20 years, and are in effect today, "'-.e firsl class
rate for :'><» miles.

In framing his "Exhibil \>" referred to, he very
adroitly omits a comparison of rates <m •"><> miles distance.
Had he made such ;i comparison ii would shew that our
proposed 1st class rate for 30 miles is "'-.e. the same as
published by several of the roads and now in effect. This
is importanl and the omission should not be overlooked or
regarded as accidental. It would have injured the pur-
pose and effect of "Exhibil B" bo have shown our rate for
thai particular distance the same .-is now in effect on a
number of the roads. Ii might even suggest that the ship-
pers are not altogether foolish nor acting in bad faith in
proposing for thai distance the currenl rate. Too much
weight cannot be given to the Importance attaching to the



rate fixed for 30 miles, since it must serve as a key to the
whole scale. Once over that distance the roads felt no
restraint and were free to fix rates as they pleased, al-
though legal restraint should be exercised over rates for
all distances.

Mr. Grammer says, page 14, that our proposed rates
for Indiana are 40 per cent, lower than the Ohio Scale.
That is not the case. The onlv scale known as "Ohio
Scale" is that governing distances, 30 miles and under,
and as pointed out our proposed 1st class rate for 30 miles
is 7y 2 c, which is exactly the rate under the so-called "Ohio
Scale,'' and the same as now in effect on several of the
roads in Indiana.

When it is borne in mind that this 7^c rate, first
class for 30 miles, has been the published tariff on several
important roads during all these years, certainly the im-
proved commercial conditions of today with the largely in-
creased volume of tonnage, the increased carrying capacity
and minimum of cars, and the increased hauling capacity
of engines would seem to justify not only the continuance,
but a substantial reduction of the rate, and as our pro-
posed scale is based on a graduated ratio of increase ac-
cording to distance, necessarily the rates for distances
under 30 miles are less, as are rates for greater distances
proportionately higher.

The onlv real discussion of our figures bv Mr. Gram-
mer is contained in one paragraph — page 11 — where he
dwells on the 5-mile haul— and cites a f 10,000.00 shipment
of silk for that distance. Was this for effect? Does the
gentleman know of any such shipment ever moving a total
distance of 5 miles in Indiana or anv other state? Whv
limit the argument to silk and for 5-mile hauls. The rail-
roads do not look for sustaining revenue on 5-mile or 10-
mile hauls. Take distances approximating a fair average
haul, say 40, 50 or 60 miles and note the revenue per ton
mile which our figures would yield — as compared with
revenue derived from all traffic.

On page 14, Mr. Grammer shows that the Lake Shore,
Rig Four and Pensylvania lines freight traffic is carried on
rates which yield an average rate per ton mile of about
.005, that is 5 mills, or y% cent per ton per mile. Now refer



-



: 1


2


3


4


5


6


20c






L2c






11










:.




6






3.5




.i




4




L.66




4.25


... i . t




2.25


•■>


i .::.






• •






1.4






H6


l.J


1.1


1.33








1.7


1.6


1.3


32


2.66


2.5


1.7


i .5


1 .1'




J 6


2. 1


1 .6


l .."


1 .1


2.9






1.5


i.::


1 .1


n —




L'.l


1.4


l . 25


1


£ - ■


2 2


2


1. 1


1.2


1


2.64




2


1.36


1.14


.93


2.6


2.1


1.93


1.33


1.13


.93


.. .>


1.8


1.65


1.15


.93


.8


1 .96


i .«;


1.44


1


.n4


.68


1 .8


1.4.;


1.33




. i i


.63


I .68


!.:::


1.2


.86


. i


.6



our proposed rates, "Exhibit A" and note the following
inn mill' revenue on the basis of those rates

ton mil.

"

..
..

"
"

..
..

It will be noted thai up t" 130 miles, which is above
the average haul for local freighl within the state 1 1 1 « *
revenue derived docs qoI go below 1 cent per ton mile as
;iLiainst the average earnings on all traffic of i oC mention-
ed i'.\ Mr. Grammer ami our lowest rate for tin- great-
distance, •'!•""»" miles, yields 6-10 eellts per Ion ]»iT mile.

This >lio\\ s that our lowest proposed rate pays more per
ton per mile than the average rate prevailing on the Lake
Shore, Big Four and Pennsylvania lines and it is self evi-
dent thai ;in average rate per ton mile under our proposed
rates for the several classes would be considerably great-
er than for the |uw est elnss.

<»n page 1 I it is stated that rates in Indiana are made

V.-iy low t.i prOted the traffic of the state. Hues this llieatl

that the lower basis of class rates from [ndianapolis south-
hound and east bound, within the stale, ate made for the
reason stated while ;i much higher scale of rates is main-
tained wesl and northbound for similar distances over
different divisions of the same roads. Is there any fair-
ness or consistency in such adjustment of rates?

Also on pages I 1 ami 1.". reference is made to the vasr
tonnage moved from one particular station in Ohio on the
Lake Shore Ry. ami from certain two points on the Penn-
sylvania lines in Ohio also the tonnage moving from the
Pittsburg district. What bearing has all this upon the



<)

question we have under consideration, viz: class rates in
Indiana? If Mr. Grammer would state what that large
tonnage consists of — it would reveal the fact that such ton-
nage is not moved on classification rates, but on commodity
rates and on lower scale than class rates. So that such
statistics need not be introduced to confuse and improperly
influence consideration of the only issue under discussion,
i. c local class rates in Indiana.

On page 22 appears the statement that coincident with
increase of operating expenses there has been a correspond-
ing decrease in rates. This certainly does not apply to
class rates — the subject of this discussion — on the con-
trary advances were effected by revision of Official Classi-
fication issued January 1, 1900, and with the exception
of partial recession under Kules 25 and 26, the increases
still stand.

The comparisons of rates in other states shown in
"Exhibit R" do not necessarily prove anything beyond the
fact that class rates in those districts, the same as in In-
diana, are held on too high a scale, compared with com-
modity rates — and when reference is made to the low aver-
age rate per ton mile on all traffic mentioned in the ad-
dress, it only emphasizes the true condition of things — ■
that is that general merchandise and manufactured articles
paying class rates are made to bear the burden for the
benefit of commodities carried on the low average rates —
and it is not apparent why this should be so to such a
disproportionate extent. The only tendency towards low-
er rates has been in commodity tariffs and not in the class
rates and this is the situation now presented to the rail-
roads of Indiana. The shippers and receivers in other
states will no doubt look after their interests in due time.
On page 25, Mr. Grammer says there is not a railroad
in Indiana that earns to exceed its fixed charges on state
traffic. The statement is altogether ambiguous as applied
to the question under consideration, since it includes a
very large tonnage of coal and other commodities which
are not carried on classification rates and these various
commodity rates covered by special or commodity tar-
iffs, have been very materiallv reduced during recent
years, but classification rates, as covered bv class rate
tariffs, have not only not been reduced during that per-
iod, but have been advanced bv changes in classification



LO

as above explained. Further, in tliis Banie connection Mr.
G rammer appears to speak for all [ndiana roads. Can
the gentleman state whether or not the accounts of the
railroads are so kepi as to show separately the revenue
derived from freight moving within the state from the
total revenues? Has lie such figures and will he present
them or refer us to the records where such statistics can
be found? h would prove to !>•■ information of the great-
est value in the public and heretofore unobtainable.

On page 26 mention is made of the co-operation neces-
sary between the railroads and patrons. Thai is good
doctrine ;iu<l thai w;is the sentimenl mosl earnestly ex-
pressed by the shippers al thai rery meeting, h was em-
phatically stated thai every shipper in this state wishes
rates established thai would show a profit, no1 a loss,
to the railroad companies, and thai if the railroads would
indicate wherein the rates proposed by the shippers com-
mittee would show ;i hiss, i hcv stood ready to change them.
Bui liuw (hies the co-operation theory work mit in prac-
tice? Does iiui the patron generally secure the short
end? Take a situation like the case under discussion,
the shipping interests patienl and suffering under un-
just rates demand relict', the co-operation of interest dis-
appears, the roads resist and refuse the petitions of their
patrons, then impugn their motives, charge had faith,
characterize their ideas as absurd without giving figures
to prove the assertion, and finally tell them presenl rates
arc hi\\ enough and more likely in be advanced than
reduced, h is jusl such unyielding and defiant attitude
"ii the pari of the railroads which has caused the agita-
tion and produced the many rate makers mentioned on
page ' s <it' i he address.

In his speech, page 29, Mr. Grammer says: "We have

not c • here to -.i\ our way is the only way,'* etc., yet

i' would be difficult to construe his remarks and actions
as .i svhole in harmony with the expression quoted. Of
course the conference Tailed of agreement and the situa-
tion remains unchanged with the railroads charging the
high rates complained of and nol only no prospeel of any
voluntary action on their pari to relieve conditions, bul
we are told the presenl rates may be advanced.

This committee, representing generally the shippers
of Indiana, hut especially the local shippers throughout



11

the state was selected at the suggestion and on the request
of the Indiana Railroad Commission. Its intelligence has
been questioned, its knowledge of the subject has been de-
nied, and even its motives have been impugned. To such
"arguments" of assertion and declamation it does not
make serious reply.

The committee, simply stands on and pins its faith
to a few fundamental propositions, in contending for a re-
duction of class freight rates throughout Indiana.

First, there has been no reduction in local rates for
twenty-five years, while through rates and commodity
rates have been substantially reduced.

Second, the deA r elopment and evolution of the railway
business has had the effect to greatly increase the freight
carrying capacity of all railroads, without a correspond-
ing increase in the cost of carriage.

Third, the local shippers are the only class patroniz-
ing this tremendous business, that has never reaped any
benefit from these economic improvements and labor sav-
ing processes. The local shipper and the public through
him has borne the heaviest burdens of railway discrimina-
tion for a quarter of a century. This class has not only
paid for its own service, but for all these years it has
helped to pay such exorbitant charges as enabled the rail-
roads to give many millions of dollars annually to the
powerful and favored shippers of the country. They have
been the Peters who have been regularly robbed to pay the
Pauls. They have been the victims of the railroad mana-
gers one favorite doctrine of the Scriptures: "To him that
hath it shall be given, and from him that hath not it shall
be taken, even that he seenieth to have." Through all these
years it has been the local shipper — the man who paid
from |1.50 to $2,00 per ton for a five-mile haul — who has
been the constant, if compulsory, friend of the railroad,
and what is his reward, according to Mr. Grammer? Not
only a refusal to lessen his burden but an actual threat to
increase it.

On page 18, Mr. Grammer's address in its printed
form, reads: "Ninety per cent, of the contention in this
country, from its inception and the agitation about rates,
has igrown up from the efforts of men who were the great-
est reeeipents of favors and have now suddenly become
great reformers." The address as delivered would read:



12

'Ninety-nine per cent of the contention in this country,
from it* inception and the agitation about rates, has grown
- 1 1 » from the efforts of aien \\li«> were almost the greatest
oeflciai ies. I saj that w ithout — "

Question. "Whal 'I" you mean by that?*'

Mr. Grammer. "1 mean what I say. Thai the various

c tnittees were headed by men who were responsible for

these conditions and when they were taken away by the
Elk ins Law, they suddenly became reformers. I challenge
the refutation of that statement. I know what I am talk-
ing about, for 1 paid i he bills."

These millions of freight rebates are m> longer paid to
the favored few. They now remain in tin- coffers of the
railroads, ts il nol fair and reasonable— is it any more
than common justice that a portion of these millions be
returned to the l«><;il shippers in the various states,
through a reduction in their freight rates?

To emphasize ili<- correctness of our contention in this
respect, we call attention here to statistics furnished by
the Inter-State Commerce Commission in its published
reports of income accounl statements from 852 railroads
representing an operated mileage of 220,000 miles, being
approximately 99 per cent. of the total mileage operated.
The report covers the year ending June 30th, 1906:

Earnings for year June 30, 1906, $2,319,760, 303.00

30, 1905, 2,082,482,406.00

rage Cross Earnings per mile, 1906, $10,543.00

" • i :»05 9.:.!ts.oii

Nel Earnings tor year June 30, 1906, $787 596 ^77 00

- 30, L905, 690.691. 151. 00

rage Net Earnings per mile, 1906. $3,580.00

1905. 3,183.00

Ratio of Operating Expense to Earnings, 1906, *66.05

19o:.. »66.78

Dividends paid, year June 30, 1906, $229,406,598.00

" 30, 1905 195,157,993.00

tn< In Dividends paid. 1906, J 1S.605.00
•I'-

.Mr. Grammer says the average rate of freight revenue
per ton per mile is only one-half cent. The schedule of
rates proposed by this committee carried a higher rate
than that for the cheapest class of freight, and of course,
the present schedule is much higher. Does that gentle-
man mean to insist, therefore, that the local shipper must
Dot unl\ pay for his own services, but musl pay the loss a
(if one-half cent is only a fair average return) caused bv



13

the long hauls? If such losses exist — which as a general
proposition this committee denies — why should the lo-
cal shipper pay it all? The answer is plain! Because
in local traffic one railroad has a monopoly of the
business! The local shipper pays it because he is com-
pelled to. There has heretofore been no escape if he got the
service — he must pay it or not ship his stuff.

Now it may be different. Under the auspices and au-
thority of the Indiana Railroad Commission, the railroads
can be compelled to deal fairly with this much abused
class of its patrons, and to that end, sufficient power
should be given to that body by the Legislature to insure
such a result.

The shippers' demand is first for equalized or impar-
tial rates, which will insure a fair field and no favor.
With equalized rates and no reduction the shipers' inter-
ests would not be menacd bcause they could shoulder
the excess charge upon the public. Millions of dollars
have been withdrawn from this state and from the peo-


1 3 4 5 6 7 8

Online LibraryIndiana. Shipping InterestsAnswer of the shipping interests of Indiana and the Indianapolis Freight Bureau to the remarks of Mr. G. J. Grammer at conference held on November 19th, 1906, between the Indiana Railroad Commission and special committees representing the raliroads and commercial bodies of larger cities of the state → online text (page 1 of 8)