The Birmingham age-herald., 1907-03-28

understood the sentiment that prevails
 among the people, who really hold in their hands the policies and destiny of the United States. As 1 look at it, the plans and purposes of President Roosevelt so far as they have found expression in the
 enactment of last year, or may seek eX- presson in further legislation, really are
 based upon clear comprehension of the public demands and a thoroughly sane | conservatism. In other words, some | measure of public corporate control | speaking, of course, with reference to tho general principles, and not referring to 1 the details-will prove the best if not the | only safeguard against the preposterous 1 proposal for government ownership for all our systems of transportation and all other schemes of undisguised socialism. Peril In States Hostility. 'ro my mind the most serious and diff | fieult phase of the situation, and the greatest menace to the needed develop
 ment of our railroad systems, is the hos tile attitude of the states Serious trou- ble is likely to arise unless by some | means tolerably harmonious action as between federal and state authorities can be brought about. Our internal commerce | Is in no sense localized It Is interlaced | and interdependent from one end of the land to the other. For all political pur- poses division of the country into states answers alike geenral and local needs.
 But with reference to commercial needs state lines are purely artificial distinc- tions.
 "Manifestly such control as the states may continue to exercise must be subor- dinated to that larger control which be- longs to the federal government. For this reason l have long believed that actual tf.1x.a nat1f | we'll considered and workable laws, control which satisfies the demands of in terstate commerce, will tend strongly to restrain the legislative activities of states within proper limitations. If federal au- | thority is feeble and easily evaded at | tempts constantly will be made to remedy defects by state laws, after ill-considered and drastic"
 Reincorporate or License Roads. MT Knapp was asked to state explicitly exactly what remedy he had in mind "The reincorporation of our railroads under an act of Congress-" he said, Cor some plan of federal license such as has been proposed, although it would not limit the actual power of the states, nevertheless, as a practical matter, would have A potent influence in preventing lm- proper legislation by the states, ana bring state laws into harmony with hationai laws Moreover, I am inclined to anticl- nate as cases arise in the future, as well bv inc principles announced and the authority upheld, greatly restrict the practical field of state control
 Every important railroad is built TOT and serves the purpose of both state and interstate carriage. But the two kinds of traffic as measured by the mere geography of the movement, cannot in fact be separated either as respects the operations of the carrying roads or the revenues derived from the entire business. | The truth is the operations and earnings | of a railroad system are incapable or any | such division. A railroad represents l great public service unit of operation ana | revenue Therefore the supreme court | may hold, and I believe will hold. that | any action by the states, which. while | ostensibly directed only against part | of the traffic, really affects the whole | operation of the road, is in contraven- | ton of the power of Congress under | the constitution.
 of a state law which limits passenger | rates in a sparsely settled state to a | maximum of 2 csnts a mile or requires under heavy penalties, the movement of | state traffic at a minimum number of | miles per day, works out burden upon | the interstate business of the carriers | within those states, why should not that | be held in derogation of the power of 1 Congress under the common clause?"
 Favor Government Valuation Plan.
 Mir. Knapp then turned to the question | of the advisabilty of the government | making an official valuation of railroad l property.
 | "I notice in some quarters" he said, | "eyidence of alarm at the proposition
 | to have an official valuation of railroad | properties under an act of Congress- But | I fail to see any ground of apprehension l oh, | Whether as relating to a basis for de- | termining what charges are reasonable 1 or as relating to the control of future
 l issue of securities, my own judgment is | that such valuation would be in the | interest of the railroads and those whose money is invested In their securities. | First, I think we must accept what | has been done without trying to undo it, 1 and therefore would not favor any legis- | lation respecting the issue of securities or the valuation of properties which would | in any way. directly or indirectly, at | tack the validity or affect the value of l securities now outstanding. They should | rest upon their merits and be regarded as distinctly excepted from the scope | of the legislation upon the subject. All | things considered 1t Is better to condone
 so far as need be the errors if not the
 rascalities of the past, but certainly we | should prevent their repetition.
 | SeCurItIeS muSt INOt 0C SHSdPCHCu. "There are two reasons why we should | adopt this course. One is that these se- | curities. even if they do represent more | or less water, are not in the hands of the | men really responsible for the fictitious | and unwarrantable values, but have passed into the hands of honest investors | who have bought in good faith. The other | is that as the country grows, and 1t is | growing fast. each railroad system de- I velops and its actual value, in practically | all cases, will presently come to be the | aeregate of it's securities, as has already | occurred in most instances.
 "So, instead of trying to punish, as if | we succeed we would bring disaster and | loss to the innocent, with all the demor- | alization and uncertainty which any eff | fort of that kind would produce, It would | be much wiser, I think. to say: Well. | let it go. The road will grow to it, and we will be satisfied to prevent a recur- renee of that sort of fnanciering in the | future.
 While railroad extension and improve | ment should be encouraged by allowing | those who invest their money to make a liberal return, there should be some re-