The Goodland republic., 1907-04-12
THE TROUBLE WITH RAILROADS
WATERED STOCKS, SAYS A EURO
PEAN BANKER
ROosevelt's Regulation Program Has
Nothing to Do With Fan in
Stocks, His Opinion.

The New York Times prints an IN
teresting interview Of two columns with
Hans Schuster a director OF the Dres-
dner Bank, one Of the largest In Ger
many, on the business situation in this
country, with particular reference to
the railroads Mr.. Schuster says that
Germany does not regard President
RoOsevelt's regulation program as
having anything 10 DO with the stock
market situation; its causes are much
more general. in fact, world wide. His
statement begins as follows:
ct is q most interesting situation
which you have here at present Ny
present trip to this country, in fact,
was largely for the purpose Of look
ing into conditions here and Of learn
ing at first hand what people here
thought Of the situation, particularly
in the matter Of the movement toward
greater control Of the railroads by the
government
This is a matter that we view
abroad very much more calmly than
you do here. This for the very good
reason that we have gone through all
this and gone, in fact, much beyond.
In Germany, Italy, and some other
countries on the continent we passed
through this period Of government
control of the railroads and finally
came to the purchase Of the railroad
lines by the government In France,
in cases where the government does
not already own the railroads, ar
rangements have been made to take
them over at the expiration Of their
concessions. In Germany itself the
idea Of government ownership has
gone much beyond anything proposed
here There is scarcely a municipal
ity that does not own its waterwOrks,
and many own their tramways, their
electric light plants and other public
utilities"
The German banker states that dis
closures here caused European bank
ers to doubt whether American cor
poration finance is as sound as it
should be.
Then too, things undoubtedly have
been done to aggravate this feeling Of
distrust. You know, of course, to
what ! refer, the manner of the dec
laratiOn Of the Union and Southern
Pacific dividends. I do not mean to
say that the dividends being paid by
those roads are not justified by their
earnings, but they ought to have been
declared under other circumstances.
Corporations the size Of the Southern
and Union Pacific, which together
have a capital close to 100000, 900,
cannot be regarded as private con-
Germs and they ought not to be man
aged as such. The public is entitled
to be prepared for the steps taken in
the management Of such corporations,
Such corporations must necessarily
take the public, to a considerable ex-
tent, into their confidence.
Now I find in going over the sit
uatiOn with people here that they
think that this movement for gov
ernment control Of the railroads,
closer government control and super
vision, is one Of the causes Of the de-
cline in prices which has taken place.
I do not think that this is the case.
The real cause Of the recent trouble
was that the demands for capital
greatly exceeded the supply Of cap
ital and retrenchment became neces-
sary- Prices simply had to come
down. It may be that the distrust
arising from the railroad situation
helped to put prices a little lower
than they would have gone other
wise, or in the absence of this dis
trust, the recovery might have come a
little sooner, but the relations Of the
government to the railroads had moth
ing to do with the decline itself. The
plain fact is that capital is not avail
able for the continuance of trade on
the scale that has prevailed. Your
railroads borrowed all they could bor-
row They borrowed capital at per
cent, at 5 y per cent, then at per
cent and even per cent It was
thought, apparently, that by advanc-
ing the interest rate you could always
borrow, but when the capital is not
there it cannot be had II so per cent
interest were offered.