Per ct. int.New capitalInterest onpaym'ts newYear.(a)borrowed.funded debt.borrow'gs.1898$ 390,803,025$ 237,578,70660.791899215,039,851241,657,53547.761900215,039,851242,998,285113.001901512,559,403252,594,80849.281902471,578,658260,295,84755.201903427,358,965268,830,56462.901904325,078,790282,118,43886.781905635,304,659294,803,88446.401906514,638,170305,337,75459.331907708,351,929323,733,75145.70——————————————Total$4,706,650,122$2,709,949,57257.58(a) Accurate data for payments to capital in 1897 are not available.
FROM THE VIEWPOINT OF THE PURCHASER OF THE SERVICES.
So far the extent and significance of the changes in the value, or purchasing power, of money have been considered from the point of view of those who produce and sell railway transportation. But equally striking changes will appear and similar conclusions are inevitable when recent history is reviewed in the aspect which it presents to those whose earnings are devoted, in part, to the purchase of the services which the railways supply. For the important consideration to the wage-earner who wishes to travel by rail or who buys commodities that have been so carried, or to the producer whose products must go to market over railway routes, is not, how much money must be paid for the railway services, but, rather, how much labor must be expended, or what quantity of his goods must be produced, in order to obtain that sum of money. If the earnings of a particular wage-earner have increased from fifty to seventy-two cents per hour, a railway service is cheaper, to him, if it costs twelve cents than it was at ten cents when his earnings were on the fifty-cent basis, for he now procures with the fruit of ten minutes' toil what formerly cost the result of twelve minutes' labor. In Bulletin No. 77, just issued by the United States Bureau of Labor, the official statistician presents data showing the relative wages per hour of many different classes of wage-earners, not including railway employees, in 1897 and 1907. Whilethese data show that wages have almost uniformly advanced (there are ten somewhat questionable exceptions among the 342 classes) the data supplied by the Interstate Commerce Commission show that during the same period average railway freight rates have declined from 7.98 mills to 7.59 mills per ton per mile, or 4.89 per cent. A table presenting and based upon these official statistics and showing the relative wages per hour of the various classes of labor, in 1897 and 1907, the percentage increase in wages rates per hour and the increased command over railway freight services which these wage-earners have obtained through the combined effect of higher wages and lower ton-mile rates is given in Appendix C[F]. In studying the data presented in this appendix it should be borne in mind that the wages are relative and not absolute. They mean, for example, that the average male blacksmith in the agricultural implement industry was paid, in 1907, $1.25 for the same quality and period of labor for which he was paid a little less than ninety-six cents, in 1897. This increase amounted to 30.58 per cent. of the wages rate of 1897, and, combined with a decreased cost of railway freight service of 4.89 per cent., which made 95.11 cents go as far in purchasing the latter in 1907 as one dollar would go in 1897, gave him 37.29 per cent. greater command over railway freight services.
In an earlier bulletin, No. 75, published during the current year, the Bureau of Labor continued its "index numbers," which show, in similar manner, the average relative wholesale prices of the commodities entering into the ordinary budget of family expenditures. For the purpose of presenting the changes in these prices on a uniform basis the Bureau represents the averages for the ten years from 1890 to 1899, inclusive, as one hundred per cent. and reduces the averages for each year to percentages of the averages for the basic period. The following table presents these figures for the year 1897 to 1907, inclusive:
Relative Wholesale Prices.ClothsFuelMetalsFarmandandandYear.Products.Food.Clothing.Lighting.Implements.1890-1899100.00100.00100.00100.00100.00189785.287.791.186.486.6189896.194.493.495.486.41899100.098.396.7105.0114.71900109.5104.2106.8120.9120.51901116.9105.9101.0119.5111.91902130.5111.3102.0134.3117.21903118.8107.1106.6149.3117.61904126.2107.2109.8132.6109.61905124.2108.7112.0128.8122.51906123.6112.6120.0131.9135.21907137.1117.8126.7135.0143.4Lumber andHouseBuildingDrugs andFurnishingMiscell-All Com-YearMaterials.Chemicals.Goods.aneous.modities.1890-1899100.00100.00100.00100.00100.00189794.494.489.892.189.7189895.8106.692.092.493.41899105.8111.395.197.7101.71900115.7115.7106.1109.8110.51901116.7115.2110.9107.4108.51902118.8114.2112.2114.1112.91903121.4112.6113.0113.6113.61904122.7110.0111.7111.7113.01905127.7109.1109.1112.8115.91906140.1101.2111.0121.1122.51907146.9109.6118.5127.1129.5
From the data in the foregoing table, which show advances averaging nearly forty-five per cent., the following table, indicating the present purchasing power over railway freight service of each class of articles, in a manner similar to that adopted to measure the increased power of labor to buy railway freight transportation, has been derived:
Increased powerRelative prices.to purchaserailwayCommodities.Increasefreight services1897.1907.per cent.per cent.Farm products85.2137.160.9269.19Food87.7117.834.3241.22Cloths and clothing91.1126.739.0846.23Fuel and lighting96.4135.040.0447.24Metals and implements86.6143.465.5974.10Lumber and building materials90.4146.962.5070.85Drugs and chemicals94.4109.616.1022.07House furnishing goods89.8118.531.9638.74Miscellaneous92.1127.138.0045.00All commodities89.7129.544.3751.79
AGRICULTURAL PRODUCTS AND FREIGHT RATES.
The statistician to the United States Department of Agriculture obtains annually a very large number of reports from farmers as to prices obtained for their products and these are carefully tabulated. The results show the average prices, at the farms, of the principal agricultural products. The following table shows the increased prices obtained for such products, and the increased power which these producers enjoy, per unit of their products, to purchase railway freight services:
Increased powerPrices.to purchaserailwayProduct.Value ofIncreasefreight servicescrop of 1907.Unit.1897.1907.per cent.per cent.Corn$1,336,901,000Bushel$0.263$0.51696.20106.28Wheat554,437,000".808.8748.1713.73Oats334,568,000".212.443108.96119.70Barley102,290,000".377.66676.6685.74Rye23,068,000".447.73163.5371.94Buckwheat9,975,000".421.69865.8074.32Potatoes184,184,000".547.61812.9818.79Hay773,507,000Ton6.6211.6876.4485.51Cotton613,630,436Pound.066.10457.5865.68———————Total$3,932,560,436
Detailed tables presenting the data from which the foregoing averages for the whole country have been derived and showing prices and purchasing power over freight service are given in Appendix D[G]. These tables disclose the uniformity, throughout theUnited States, of the advance in agricultural prices and of the augmented command of agricultural producers over railway freight service.
FARM ANIMALS AND FREIGHT RATES.
The Department of Agriculture of the United States also collects data concerning the value of farm animals and annually publishes the average values reported for the first day of each successive year. All classes of farm animals have increased in value since 1897 and each represents a great command over railway freight services, for the sum representing the average value of each animal will now buy much more freight transportation than it would in 1897. This is shown by the following table:
Increased powerPrices.to purchaserailwayJanuary 1,January 1,January 1,Increasefreight services1908.1897.1908.per cent.per cent.Horses$1,867,530,000$31.51$ 93.41196.45211.69Mules416,939,00041.66107.76158.67171.97Milch cows650,057,00023.1630.6732.4339.24Cattle, exceptmilch cows845,938,00016.6516.891.446.65Sheep211,736,0001.823.88113.19124.15Swine339,030,0004.106.0547.5655.14——————————————————Total$4,331,230,000————
In considering the foregoing the fact that the prices relate solely to animals on farms should be borne in mind. They are doubtless somewhat lower than for animals elsewhere located, but prices of the latter have probably moved in the same direction and in about the same extent.[H]
RAILWAY RATES IN 1897 AND AT PRESENT MEASURED IN MONEY.
Throughout the foregoing discussion reference has frequently been made to what has been assumed to be a typical shipment, that is, a fifteen-ton carload of fourth class freight transported between Chicago and New York. The typical service rendered in moving this shipment would have brought the railways gross receipts of $105.00, in 1897 or in any of the intermediate years, and would bring the same amount now. The period in question, however, haswitnessed many thousands of changes in railway rates on particular commodities and between particular points, and, confining the discussion for the present to the mere expression of rates in terms of money, it is necessary to inquire whether the general level of all rates has been raised or lowered and how far the change, if any is discovered, has gone in either direction. Now, it is manifestly impossible to correlate all rates in a single tabulation, and, giving to each its proper weight in the determination of a final average, thus establish definitely and with complete precision the relation between the money rates of 1897 and those at the present time. The number of different articles shipped and the great number of different points at which each article may enter into the aggregate of traffic movement or to which it may be destined, as well as the elusive character of the factors which would indicate the relative weight properly to be allowed to each separate rate, wholly preclude the adoption of such a method. Fortunately, however, American railway accountants long ago adopted a measure of traffic movement, which was later officially sanctioned by its adoption for the same purpose by the Interstate Commerce Commission, and which, when compared with the gross receipts from freight service, results in an average that throws great light upon the movement or absence of movement in the general level of the rates charged. When the weight of any shipment, expressed in tons, is multiplied by the distance which it is carried, expressed in miles, the resulting product gives a measure of the service performed, in units which are designated as "ton-miles." When the ton-miles (or ton-mileage) of all shipments are aggregated the total represents the sum of all services. The result of dividing the revenue from a particular shipment by its ton-mileage is the average rate per ton per mile for that shipment and if the sum representing the aggregate gross receipts from all railway freight services is divided by the aggregate ton-mileage of those services the quotient obtained is the average ton-mile rate for all services. During the period from 1897 to 1907 these data have been compiled annually by the Interstate Commerce Commission under the direction of Professor Henry C. Adams, its statistician. The average rates thus established are given both for the United States as a whole and for each of ten districts or groups. The following table shows these averages as they are given in the successive annual statistical reports of the Commission:
TABLE LEGENDREGION:A ==Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut.B ==New Jersey, Delaware, Maryland, New York, east of Buffalo, Pennsylvania, east of Pittsburgh, West Virginia, North of Parkersburg.C ==New York, west of Buffalo, Pennsylvania, west of Pittsburgh, Michigan, lower Peninsula, Ohio, Indiana.D ==West Virginia, south of Parkersburg, Virginia, North Carolina and South Carolina.E ==Kentucky, Tennessee, Georgia, Florida, Alabama, Mississippi, Louisiana, east of Mississippi River.F ==Illinois, Wisconsin, Minnesota, Iowa, Missouri, north of St. Louis and Kansas City, South and North Dakota, east of Missouri river, Michigan, upper Peninsula.G ==Nebraska, Wyoming, Montana, North and South Dakota, east of Missouri River, Colorado, north of Denver.H ==Arkansas, Indian Territory, Oklahoma Territory, Kansas, Colorado, south of Denver, Texas, Panhandle, New Mexico, north of Santa Fe.I ==Texas, except Panhandle, Louisiana, west of Mississippi River, New Mexico, north of Santa Fe.J ==Washington, Oregon, Idaho, California, Arizona, Nevada, Utah, New Mexico, western portion.
Year and average rate in mills per ton per mile.Group.Region.189718981899190019011902190319041905190619071908(a)I.A12.0211.7611.2311.5211.5111.7211.6711.9611.7911.7211.4511.10II.B6.756.175.826.136.466.646.676.866.656.506.556.43III.C6.055.785.295.465.685.766.076.206.075.945.985.94IV.D6.485.925.945.956.416.507.147.166.916.907.036.96V.E8.648.358.078.088.028.168.278.518.398.138.278.25VI.F8.558.268.218.067.897.877.747.797.667.457.437.35VII.G11.4811.5711.0110.6410.439.949.809.649.008.949.339.42VIII.H10.799.619.689.649.719.789.629.989.889.479.669.53IX.I10.4010.4210.659.3810.189.849.7410.0010.9610.0910.5110.02X.J12.7511.4611.3610.6710.5510.3710.0510.3610.9811.0311.6312.04United States7.987.537.247.297.507.577.637.807.667.487.597.5(a) Average for 1908 added from 21st annual Report of Prof. Adams. S. T.
The foregoing shows that the average rates per ton per mile, expressed in money, were lower in every group but one, as well as in the whole country, in 1907 than they were in 1897. The average for the whole country was lower in 1907 than in any other year shown except the years 1898 to 1902, inclusive, and for three of those years the difference was less than one-tenth of one mill. The decrease in the general average from 1897 to 1907 was 4.89 per cent. and the increase from 1899, the year of the lowest average, was 4.83 per cent.
So far as the quality of the ton-mile unit is affected by changes in the geographical distribution of traffic the tendency between 1897 and 1907 was toward a higher quality, for traffic movement grew more rapidly in the regions where rates are normally higher than it did in the regions of lower rates. In the following statement the groups used by the Interstate Commerce Commission are arranged with the group in which ton-mileage increased most rapidly from 1897 to 1907 at the top, the group that increased next most rapidly in the second line, and so on to the group that increased least rapidly at the bottom:
Average rate per tonTons of freight carried one mile.Increase,per mile in mills.Group.1897.1907.per cent.In 1897.In 1907.X3,133,623,73411,252,450,440259.0912.7511.63VII2,633,860,9589,300,234,849253.1011.489.33VIII6,333,591,46317,406,430,971174.8310.799.66III17,587,334,60947,994,909,002172.896.055.98V6,802,119,48917,397,321,360155.768.648.27VI17,393,471,48044,318,734,155154.808.557.43IX3,165,108,5617,546,655,555138.4310.4010.51IV4,936,635,04611,418,243,141131.306.487.03II29,579,613,55963,455,243,659114.526.756.55I3,573,663,3266,511,166,97182.2012.0211.45—————————————————————U. S.95,139,022,225236,601,390,103148.697.987.59
It will be noted from the foregoing that the group in which the average rates were highest in both 1897 and 1907 shows the most rapid increase in traffic movement and that, with few exceptions, the regions of higher rates show more rapid augmentation of ton-mileage. This is exactly what might have been anticipated, for the highest average rates are usually to be found in the regions most scantily populated and, as these regions are filling up and are therefore those most rapidly growing in population and industry, theynaturally show the greatest relative increases in freight tonnage. The only notable exception is furnished by New England, a region of high development, but where traffic movement is largely of a character which imposes higher average rates. In the following table the traffic increase is given for the regions that had ton-mile rate averages above and below the average for the whole country, in 1897:
Ton mileage.Increase.In 1897.In 1907.per cent.Ton mile rates above the average43,035,439,011113,732,994,301164.28Ton mile rates below the average52,103,583,214122,868,395,802135.82——————————————-———Total95,139,022,255236,601,390,103148.69
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 ofton-mileage ofTon mileageTon-mile rates of1907 and ton-mileGroupof 1907.1897 in mills.rates of 1897.I6,511,166,97112.02$ 78,264,226.99II63,455,243,6596.75428,322,894.70III47,994,909,0026.05290,369,199.46IV11,418,243,1416.4873,990,215.55V17,397,321,3608.64150,312,856.55VI44,318,734,1558.55378,925,177.03VII9,300,234,84911.48106,766,696.07VIII17,406,430,97110.79187,815,390.18IX7,546,655,55510.4078,485,217.77X11,252,450,44012.75143,468,743.11—————————————————United States236,601,390,103—$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, theaverage 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:
Percentage ofTons.total tonnage.Class of commodity.1899.1903.1907.1899.1903.1907.Products of agriculture50,073,96361,056,21277,030,07111.339.568.62Products of animals13,774,96416,802,89320,473,4863.122.632.29Products of mines227,453,154329,335,621476,899,63851.4751.5653.59Products of forest48,122,44774,559,980101,617,72410.8911.6711.38Manufactures54,415,20591,980,903137,621,44313.4514.3915.41Merchandise19,844,73529,949,02234,718,4874.494.693.89Miscellaneous23,197,15535,116,02744,824,1235.255.505.02—————————————————————Total441,881,623638,800,658893,184,972100.00100.00100.00
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 changesin 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 agriculture50,073,96377,030,07126,956,10853.83Products of animals13,774,96420,473,8466,698,52248.63Products of mines227,453,154476,899,638249,446,484109.67Products of forest48,122,447101,617,72453,495,277111.16Manufactures59,415,205137,621,44378,206,238131.63Merchandise19,844,73534,718,48714,873,75274.95Miscellaneous23,197,15544,824,12321,626,96893.23—————-—————-—————-———Total441,881,623893,184,972451,303,349102.13
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-grade102,457,095217,164,053114,706,958111.96Low-grade339,424,528676,020,919336,596,39199.17——————————————————Total441,881,623893,184,972451,303,349102.13
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: