1908. 1898. Increase. Pct. Ton mileage of mails handled by railroads 484,683,135 272,714,017 211,969,118 78 Postal revenues $191,478,663 $89,012,619 $102,466,044 115 Less paid to railroads 48,155,379 34,379,227 13,776,152 40 Net applicable to other expenditures 143,323,284 54,633,392 88,689,892 162 Other expenditures 160,196,507 63,654,297 96,542,210 152 Deficit 16,873,223 9,020,905 7,852,318 87 Per ton of mail handled by railroads (cents)-- Postal revenues 39.5 32.6 +6.9 Paid to railroads 9.9 12.6 -2.7 ---- ---- ---- Net applicable to other items 29.6 20.0 +9.6 Other expenditures 33.1 23.3 +9.4 ---- ---- ---- Deficit 3.5 3.3 +0.2 Note.--The increase in gross postal revenue per unit of mail handled by railroads is no doubt due to increase in city mail not handled by railroads. Chicago, Ill., March 1, 1909. THE DIMINISHED PURCHASING POWER OF RAILWAY EARNINGS BY C. C. MCCAIN. Chairman of the Trunk Line Association, New York, 1909; Formerly Auditor Interstate Commerce Commission. INTRODUCTION. The ten years or more which have elapsed since the resumption of industrial activity that began some time in 1897 have been characterized by changes in rates of wages for substantially all kinds of labor, and in the prices of most commodities which amount to a profound and material alteration in the value of money. Wages of railway labor, prices of railway materials and supplies and prices of commodities carried by railways and of those produced by the purchasers of railway transportation have rapidly increased. This is equivalent to a decrease in the value of the money in which railway charges are paid _for the appreciation of commodities is the depreciation of money_. Commodities cannot have generally augmented value without money having diminished value. Railway rates have not been adjusted to this diminished value of money. The involuntary and unsolicited reduction in railway rates has gone so far as seriously to threaten the stability of railway wages and that of the whole railway industry. Some adjustment through compensatory advances in money rates (_i. e._, nominal rates) is, therefore, absolutely necessary. The extent of the changes which have taken place, their relation to the problem of railway rates and the adjustments which they have made necessary are set forth in the following pages. TYPICAL UNCHANGED RATES.