Democratic Sentinel, Volume 15, Number 33, Rensselaer, Jasper County, 4 September 1891 — PROTECTION WATERS IT [ARTICLE]

PROTECTION WATERS IT

RAILROAD CHARGES INCREASED BY THE TARIFF. Prelection's Cheek—Thn tTse'ess Wool Tar-ill—-Profits In Foreign Trade—Hamilton ▼a. McKinley—A Point About Nee Ilea— Reform Notes. Watered by Protection Our farmers very justly complain that railroads are very « f ten capitalized at much more than their actual value, and then proceed to charge freight rates high enough to earn dividends upon their watered stock. This complaint is, In many cases, only too well founded; yet the men who make it often overlook the fact that they themselves have a very deep pecuniary interest in cheapening the legitimate expenses of railtoad bal'd ng and equipment. Even a railroad honestly capitalized at its actual cost has to earn dividends upon a mu h larger capital than would be otherwise necessary, owing to the artificial values cau ed by the protective tariff. . There are some farmers who fancy that the price of steel rails, for example, is no concern of theirs. But they must see that it does concern them, since whatever increases the cost of making railroad becomes an element In fixing freight and passenger charges. The New York Commercial Bulletin, one of the highest authorities in business matters has recently said: “When it is considered that th » materials and labor required in the construction and operating of our roads are increased in cost on an average probab y fully 30 per cent through the operation of the protective Silicy, it will be seen that our transportion is costing us s >me $325,000,000 per annum more than it need,” and it went on: "that ($325,000,000) needless tax has to be paid out of our products and labor, ana thereby becomes an embargo noon our whole comm rci and industry, and an obstruction to our competition for the commerce of the world. ” A correspondent having askel for further explanation of this, the Bulletin answered in part a follows: “In applying this 30 per cent, ratio to the enhancement of the cost of railroad construction and transportation, we aimed to be large y within the truth, as will appear from the fact that for the years 1805, 1875, 1880, and 1885 the duty on Iron rails averaged 40 per cent., and home-made rails must have ranged above foreign prices approximately in about that ratio. For the period between 1863 and 1890—the epoch of high duties—the cost of railroad constructed, as it is expressed in the stocks and debts of the companies, has amounted to 8,500 millions; and, therefore, taking the enhancement of cost of construction at only 30 per cent., we have during that period incorporated into our railroad system no less than 2,550 millions of virtually fictitious capital, or nearly double the present amount of the national debt; upon which the roads, not being responsible for this artificial increase of their outlay, demand with some show of right that they must be allowed to earn interest. Allowing them only 4 per cent, on this compulsory inflation, it follows that the protective policy is now forcing upon the railroads a necessity for exacting from the public, for capital account alone, $102,000,000 per annum tnore than would have been required in the absence of that policy. This item was embraced in the aggregate of $325,000,000 given in our remarks of the 15th Inst, based on the fact that every item among which the 1.080 millions of current gross earnings is disbursed has been directly or indirectly subject to the inflating effect of the tariff. “We hardly know how to make it plainer to our correspondents than we already have how this artificial increase of the cost of rail transportation ‘has to be paid out of our productsand labor.’ What else is there but products and labor to, provide the means of paying for transportation service? The cost of transportation has to be added to the cost of labor and products, thereby enhancing the price of both; and so far as there is any artificial augmentation of this element of cost there is clearly so much abnormal embargo upon both our Industries and our trade; which must be an obstruction to our competing with nations which are less subject to tariff impediments. “And just here lies the fundamental blunder, the fatal weakness, of protection. Whatever producers may be supposed to gain through the tariff raising prices, they cannot but lose through a corresponding increase in the cost of labor, plant, materials, management and all other outlays, and the result of the artificial contrivance is simply nil. For the device diverts a large amount of capital and labor from pursuits for which we have the best facilities to those for which we have the worst; and the net result is a waste of productive power and a failure to turn the national resource into the most natural current and to the best account. Protection is simply an attempt to subvert and counteract natural laws; and as such it can never benefit the Industry at large of any country, although it may be so contrived as to help some interests to the corresponding detriment of others.”