Excerpt from Louis D. Brandeis

BRIEF ON BEHALF OF THE TRAFFIC COMMITTEE OF COMMERCIAL ORGANIZATIONS OF THE ATLANTIC SEABORD

Vol. 8, pp. 4818-4820
8. The proposed increases in class rates would seriously increase the
cost of living.

There has been a persistent effort to make the public believe that
the proposed freight rate increases cciild be made without being felt
by the consumer, and that in some way the increased costs would be
absorbed by the manufacturer or merchant.
For instance, it was contended that on a pair of shoes the additional
burden would be only half a cent.
Such statements are wholly misleading. In the first place, the in-
crease paid by the consumer is not a single increase on the freight of
a finished article, but is the aggregation of increases, including not
merely the increase on raw material and supplies, but the increases on
innumerable articles which directly or indirectly enter into the cost
of doing business, including ultimately increases in wages demanded
by increased cost of living.
In the next place increased burdens on the manufacturer or dealer,
except where necessarily absorbed by them in diminution of profits,
are apt to reappear in an exaggerated form in the prices to the con-
sumer. For instance, 10 cents additional per ton to the anthracite
coal miner awarded after the 1902 strike is said to have resulted in
a 25 cents per ton additional price to the dealer and a 50 cents per
ton additional price to the consumer.

LDB here inserts earlier testimony by Ives

Ives (Rec., pp. 4475-4476):
 
Mr. BRANDEIS. Something has been said here about the Increases in the class
rates and particularly the higher class rates affecting only luxuries. What Is
the fact?
MR. IVES. I must admit that I received the impression that the traffic officers
of the railroads, or some of those who testified, had the impression that the
maJority of the articles moving in the classification were either luxuries or very
high-priced necessities in which the freight was of so small a moment that it
could be ignored. Stich is not the case, as an examination of the freight received
at any medium-sized station on the roads of ainy of these carriers or an ex-
amination of the billing will show. It includes all of the commonest necessities
of life, boots and shoes-not only meaning shoes that are sold for $3.50, $4, and
$5 a pair, but those that sell for $1 and $1.50 a pair. Also dry goods. It does
not mean simply ribbons and laces. We would be glad to see ribbons and laces
bear their proper share of the burden of transportation. But it means the
commonest kinds of cheap prints, cheap underclothing, overalls, oil clothing,
and all those articles of commerce that are among the barest necessities of life.
It also includes such articles as the common metals which are shipped In bars
and rods at less-than-carload rates under classification. Not iron and steel.
Well, I think they are also moving now under classification, but brass and cop-
per, all those articles on which the nmargin is so small that an ad-vance in the
freight rate will oftentimes prohibit the sale and stop the commerce, especially
when there Is not a similar advance made anywhere else.


It should be noted also that as the freight rate is imposed by weight
and not by value the added burden bears particularly heavily on the
poorer classes, who not only spend a much larger proportion of their
income in the necessaries of life, but who purchase a coarser, heavier,
and less valuable article.
A demonstrable instance of the increased cost of living through in-
creased rates is found in the increased price of food products to the
inhabitants of Boston.

Ives (Rec., pp..4476-4477):

Mr. BRANDEIS. How does this increase affect, if at all, the cost of the food
products ?
Mr. IvEs. It Is proposed to raise the rate on butter, eggs, cheese, meats, and
dressed poultry 20 per cent. The chamber of commerce reports in Boston
show, I think it Is, something like a million pounds, I won't say exactly, l)ut
several hundred million pounds of these articles, oil which I estimate the in-
crease in rates to be between $300,000 and $400,000, which caln only colmie out of
the consumer of those articles in mny opinion.
Mr. BRANDEIS. And that translated hito the Individual family In Boston would
be how much?
Mr. IVES. A family of five, I believe, is usually considered a normal family?
MR. BRANDEIS. Yes.
Mr. IVES. Three or four hundred thousand dollars with 600,000 I)opulation
would be $2.60 a head onl the basis of at family of five.
Mr. BRANDEIS. Assuming the increase was no greater than the exact amount
represented by the freight increase?
Mr. IVES. Yes; which is rarely the case.

9. The proposed increase in ciass rates through elimination of com-
petition between the East and West will tend further to increase
the cost of living.

Competition between manufacturers located in different commnu-
nities is obviously desirable. It is a benefit to the, West that it should
be subject to the competition of the East. It is a benefit to the East
that it is subject to the competition of the West. This is a benefit
which extends alike to the manufacturers, -who by competition are
made to exert themselves with greater vigilance, as well as to the con-
sumer, who gets the benefits of the extra exertion and of the necessary
moderation in the manufacturers' profits.
Within the United States, at least, it is desirable that there should
be the greatest possible interchange of commerce; but it is equally
clear that important freight increases upon long-distance business will
operate as an effective barrier to such interchange.

Ives (Rec., p. 4476):

Mr. IVES. The result of that can only be one thing. It eliminates the compe-
tition of the eastern shipper ultimately. It makes it at least more difficult for
him to compete, and it makes it thus easier for his competitor; and in the end
the consumer is going to foot the bill.