"Just and Reasonable"

The Johnson Administration said that it was inflationary. Transportation Secretary Alan S. Boyd said that it would "ultimately be reflected in the cost of thousands of consumer items, food, housing, and the support of our vital effort in Viet Nam." The Department of Agriculture denounced it as a move that would make the U.S. farmer carry "an unjust and unreasonable burden." Yet the Interstate Commerce Commission, after long and careful consideration, last week overrode such complaints, granted to U.S. railways a $300 million increase in freight rates.

Behind the ICC decision was the hard fact that the railroads' case was economically--if not politically--persuasive. Industry representatives noted that the last general freight-rate hike came in 1960, when the ICC authorized a paltry 1.5% increase. Since then, operating costs have soared. So far this year, eleven railroad unions averaged 6% wage boosts, and six shop unions, led by the militant International Association of

Machinists, are demanding 6.5% more. Last month the shop unions backed up their demands with a walkout that paralyzed rail traffic for two days before President Johnson, with hasty congressional sanction, ordered a 90-day cooling-off period. The railroads' working capital is lower than it has been in 20 years, and their return on investment capital this year will be a scant 3.5%. Deciding that the industry complaints were "just and reasonable," the ICC unanimously agreed to give the railroads most of the money they sought.

The increases are highest--about 5% --for carload or less-than-carload shipments of general merchandise. On such bulk goods as iron ore, grain, coal and pulpwood, which make up much of the railroad business, the increases average about 3%--somewhat less than the carriers requested. Even that much may not be allowed ultimately. Terming last week's decision a temporary one, the ICC ordered the roads to draw up a master tariff list, which the commission will examine and make final changes on in October.

"Big John." Last week, as the railroads convened in Chicago to begin working out their master tariff list, even some of the authorized increases seemed likely to be dropped. The Chicago & North Western announced that it will not add on the penny-per-hundred-lbs. increase in grain rates allowed by the ICC; the decision left competing Midwest railroads little choice but to main tain their old rate. Similarly, the Southern Railway said that old rates will remain on the grain hauled in its 100-ton "Big John" hopper cars.

In the case of other increases, the consumer, as Secretary Boyd warned, is ultimately going to bear the burden. Some industries, notably meat packers, steel companies and chemical firms, said that competition and the threat of Government pressure might force them to absorb the higher rates. But most said they would pass the price increases along.

This file is automatically generated by a robot program, so reader's discretion is required.