Waiting for the Day

After the second drink of bourbon, a Southerner is apt to start talking about those awful freight rates. The subject is no joke in the South. For Southerners claim, and with rebel yells, that discriminatory freight rates have stunted their economic growth and made them mere colonials of the imperial East.

The problem is an old one, almost as old as railroads themselves. When the roads first started expanding after the Civil War, they charged whatever the traffic would bear. In the South & West, where roads were few and traffic was light, they fixed high rates. By the time the ICC got around to codifying the rates in 1928, the regional pattern was set and the ICC accepted it. In the South, rates averaged 37% over the East; in the West, 53%.

The South & West have been fighting ever since to get the rates down. They claimed that their high rates were part of a dark conspiracy contrived by eastern capital. They cited examples to show how they had been handicapped (a manufacturer in New York could ship the 852 miles into Louisville for less than an Atlanta manufacturer, only 449 miles away). Even Canadian shippers could reach the rich eastern markets, over equal distances, at a cheaper rate.

As a result, said the South & West, the Northeast had prospered at their expense. With only 16% of the U.S. land area, the East had 55% of the nation's workers, 76% of the manufacturing. Its average income ran 20% above the national level.

The big industrial advantage of the East & North could not be pinned on transportation costs alone. Industry had grown and spread there for many reasons. But in 1945 the ICC agreed that freight rates helped to preserve the advantage. The ICC ordered freight rates on manufactured goods raised 10% in the East, cut 10% everywhere else east of the Rockies.

Arrested Development. Last week, by a 7-to-2 decision, the Supreme Court upheld the ICC's decision. Said Justice William O. Douglas, for the majority: "The effect of the discriminatory rates is not only to impede established industries but to prevent the establishment of new ones, to arrest the development of a state or region, to make it difficult for an agricultural economy to evolve into an industrial one. . . ."

The decision was only a small step toward complete equalization. The manufactured goods affected by the order are only a bare 4% of the carloads moved each year, only 6% of the railroads' annual revenue.

Southern railroaders grumbled that they could not afford the loss in revenue the cuts would cause; Northerners complained that a boost in their rates merely to help the South & West was a penalty for efficiency and natural advantages.

But the South & West were jubilant. Still pending were suits brought by Georgia's ex-Governor Ellis Arnall and the Department of Justice, which would try to narrow the gap between North & South still more. The ICC was planning for the day when every type of freight would move at a standard mile-for-mile rate everywhere in the U.S. When that day came, the effects on the economy of the U.S. would be incalculable.

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