New-York tribune., 1907-06-22

failed to advance at period of increased prices
for every other commodity. There began 10 de-
yelop a socialistic tendency in state legislatures
and a paternal attitude at the Capitol that prom
ised TO be of serious importance 10 the hoIoeIs oL
railway securities Some fifteen or twenty states
began to discuss the arbitrary reduction or passeh
ger fares by edct Of legislation. In but one OF Two
of these states there any attempt at serious
inquiry the justice or wisdom OF the proposeu
measures The matter was given no more con
sideration in most cases than were any Oh d nun nun
dred measures OF minor Importance. II was a PCt
ular thing with voters to legislate for reductloh
of railway fares; therefore, II was good pohucs 10
legisate That was the circle Of reasoning, ana IL
seemed not worth while to move out of that circle
inquire what the effect in the long run would De-
apply the standards OF justice TO the question:
From Washington there started an lhnuehce
of most momentous character. There developed
a national tendency toward a more vigorous con-
troll OF common carriers by the federal govern
ment. Practices which had grown up IN railWdS
management particularly in reference TO rebates
and discrimination. were beyond question elnic-
ally indefensible. Indeed, there came 10 the
whole country awakening in Commercial! ethlcs.
and railway managers quite as well as the gem
eral public with clearer vision the relation
of common carrier to the commonwealth
In the rank growth of the railway system
stimulated as 1t has been by a flood OF trat1o
beyond the ability of the roads to carry and by
an issuance of securities that ran into such enor-
nous totals that mems minds almost lost the true
import OF the hgures-in that rank growth IL Is
indeed small wonder that methods and pracuceS
should have come into existence which needed the
pruning and direction that can only come from
Crystallized national public opinion backed oy eI-
fective and rigorous legislation.
But here a subject as vast and perhaps
more intricate, than any that legislative mind had
ever before encountered. 1t was one approach
with the aid of all the intelligence all the eX-
perence. all the patience that 1t was possible 10
command; and with that spirit of justice ana
fairness, and historical knowledge that would
put in true perspective present bad practices that
would comprehend the surroundings under which
they began and the nature of their development.
and would curb them with wisdom and without
prejudice, with equity and without passion Never
was it more desirable, and for the welfare or the
whole people, that their representatives should
avoid demagoguery, rise above class pandering and
be influenced neither by vindictive spirit nor an
unfair desire for political advantage.
WHERE ROADS WERE AT FAULT.
1t too much to hope that such a problem as
this could be approached with perfect wisdom and
fairness. The railroads In many cases had been
controlled by operators whose attitude toward the
public had been very far what they hoped
the public's attitude would be toward them. They
had furnished good ground for passion. prejudice
and unfarness to flourish in. when the public
the publics representatives should at last about
the regulation OF the railway situation. In view
of all that has been done and has been omitted by
railway managers, II is perhaps surprising that
there has into the field of railroad legislation
and regulation much vindictiveness unfairness ana
haste 1t is, perhaps. not TO be wondered at that
there has in some quarters been a disposition 10
get action first Of all, and discuss the justice and
wisdom OF the action afterward; TO show results.
10 make examples of wrongdoers. TO meet arbitrary
and unfair practices with arbitrary and unjust
legislation
Indeed, I believe the historian OF some future
day Will. while recognizing the evils OF some
tnat those evils We're almost the inevitable result
OF this hurried development this enormous growth.
such historian Will recognize that the railways
passed through an evolution that had no prece-
dence TO guide Il. that the evils complained
OF were mainly the inevitable results OF the
stiles that railway managers were under. It will
be taken into account that lawmakers had forced
the railway systems develop under a false
theory that railways can be controlled and regu-
lated by competition. although in their economic
nature we are even now beginning 10 that they
must necessarily be largely monopolistic.
The historian win see. I believe. that in tho
main "hat Is bad IN our present railway system
has been a natural and inevitable result OF en-
vronment and legislation. He Will see. too that
the attempts 70 regulate although sometimes
crude. sometimes vindIctive and predatory. some
times harsh and unfair Will have been the
whole working toward a situation IN which right
principles. more clearly understood. and correct
commercial ethics. more generally perceived. came
into more dominant control He will that both
legislation and the public attitude were. after all.
about all that might have been reasonably eX-
peeted. considering what the public mad encoun-
tered.
At the present moment. however. We are IN the
very midst OF the dilemma The holders OF rail
way securities have been profoundly shocked at
tho possibilities which the future unfolds 10 them
II legislatures can without inquiry opportunity
for protest. reduce TO any point that a politician
feels IS personally desirable To him the rate
railway may charge for its services, then the term
security IS no longer 10 b" applied to the Obligation
OF railway company
The overwhelming possibilities tha, might lie in
unfair legislation were beginning 10 be borne into
the minds OF investors. and the tmidity which that
understanding brought added TO the worldwide
money stringency which has already been men
toned
PUBLIC CONFIDENCE SHAKEN.
At the same time. q third factor OF Importance
was evolved The public had had It's mind in
famed by "a thousand magazine articles and un-
counted neuspaper broadsides on political and
mercial graft. Many OF these articles had some
foundation. but IN many cases they were eNagger-
ated used TO point general conclusions that
were not warranted by the development OF SPECIFIC
facts. The public had had It's confidence shaken
and It's suspicious aroused in regard to the intes-
rity and good faith back Of the actions of all men
IN positions OF power and influence, either in the
field or politics or of finance.
on the other hand. railroad managers had not
always seen clearly their responsibility rs trustees
for all the security holders whom they represented
They had not sharply discerned their hduciary re-
sponsibNites While showing an all-encompassinS
genius for the development and management or the
properties which they controlled, 1t was not. per
haps unnatural that tfay camo sometimes 10 re
gard the thing that they created as their own Tor
without their genius and financial strength 1t would
not have existed In any event. practices had
grown up the financial side Of the management
Of properties that open to some OF as sharp
criticism as lay against the operating side These
practices had grown up from much the same causes
as had the bad practices In operation The de-
velopment had been too rapid. the growth was TOO
rank II vas impossible that securities cou!u DC
issued In an outcoming stream where NpV.OOO was
the unit and 10000 900 not extraordinary figure
without some laxness developing II morally
impossible that q financial development rapid
could go without mistakes being made or practices
growing up that would be open 10 criticism. And
so Il public with it's suspicious OF every one and
everything already fnfamed. was quick 10 miscon-
strue. to magnify and to distort actions which
sometimes open to honest criticism and some
times were only the inevitable though innocent
effect a too rapid growth.
Here then, the elements the consideration
Of which eliminated in the panic OF three months
ago There was first a money market from which
had been drawn every available dollar OF credit 70
put in fixed forms OF investment in connection
with the rebuilding Of the railroads Tnrough
enormous waste Of capital by war and calamity
that condition of the money market had become