The Barre daily times. (Barre, Vt.) 1897-1959, 1913-12-16
MUST SPEND
MONEY RIGHT
Prouty on the Increase of
Rates by the
Railroads
HE ADVOCATES
FEDERAL CONTROL
Of Securities and Urges All
to Help Work of How
ard Elliott


state commerce commission, delivered a
the Lotus club dinner Of New York Sat
urday, relative to railroad rates and rail
road security regulation, has caused les
comment in Washington than outside
where the attitude of the commission il
not so we'll known. 1t is thoroughly un
derstood here that the commission hal
long thought that the regulation OF rail
way stocks and bonds is an absolutely
| imperative step if the government is Z
regulate the railroads adequately. At
tention is called to the recommendations
made by the commission in its report on
the New England railroads last June, Mr.
Prouty making the report for the COM
mission:
'sNo student OF the railroad problem
can doubt that most prolific source OF
financial disaster and complication to
railroads in the past has been the desire
and ability of railroad managers to en-
gage in enterprises outside the legitimate
operation of their railroads, especially by
the acquisition of other railroads and
their securities. The evil which results,
| first, to the investing public, and finally,
| to the general public, cannot be corrected
after the transaction has taken place i
| 1t can be easily and effectively prohib-
tied. In our opinion the following prop
ositions lie at the foundation of all ade-
quate regulation of interstate railroads.
81. Every interstate railroad should
be prohibited from expanding money or
mourning liability or acquiring property
not in the operation of its railroad or in
the legitimate improvement, extension or
development of that railroad,
"2. No interstate railroad should be
permitted to lease or purchase any other
railroad, nor TO acquire the stocks or
securities of any other railroad, nor to
guarantee the same, directly or Indirect
ly, without the approval of the federal
government.
80. No stocks or bonds should be is
sued by an interstate railroad except for
the purposes sanctioned in the two pre-
ceding paragraphs, and none should be
issued without the approval of the fed
eral government"
In Connection with the quotations of his
remarks, Mr.. Prouty says that in some
instances a wholly wrong impression was
given. especially as to his purported OPP
position to Howard Elliott, also a speak
er at the dinner. He denies emphatically
that anything in his remarks before the
club could be fairly taken as forecasting
the action of the interstate commerce
commission on the question of the five
per cent. increase in freight rates sought
by the railroads north of the Potomac
nd ,,r II Nf
sippi. Mr.. Prouty was understood by
some to say that he was opposed to
granting the increase, and on this mis-
understanding were based public asser-
tions that the commission would refuse
the request of the railroads. Mr.. Prouty
asserted Sunday that he did not say he
was opposed to the increase, and no one
had a right to take his address as ex-
pressing the views of the commission.
I'm the first place" Mr.. Prouty said,
II am not chairman of the interstate
commerce commission. have not stud
led the present request for increase of
rates at all fully, and do not know how
should vote on the question if | were
actively member of the commission
How the commission will vote certainly
do not know. They will have hearings
and Investigations for eight months be-
fore they can decide.
what | did say at the Lotos club
dinner" Mr.. Prouty went on, "was that
the railroads would have difficult time
in securing substantial increase of
freight rates, in my opinion, until they
were able to show that they would use
the money obtained for proper purposes.
They cannot show this, / fear, until
there is government supervision of rail
road securities. My argument on Satur-
day night was an advocacy in a gen.
eral way of such government supervi-
sion. / have advocated it for fifteen
years and did not say anything new.
Briefly, my position, which is absolutely
is that the railroads will al
ways have a very difficult time getting
extra money until there is positive as
surance that the extra money will be
used rightly, and the only way we can
get the assurance is through federal laws
railroad securities and invest
ments with government supervision OF
them.
"This has no direct bearing on the
one immediate request of the railroads.
was thinking particularly of the New
Haven railroads past history when !
government supervision.
meant to be understood as meaning that
the government wanted some assurance
that the future policy of the New Ha-
ven would be different from its past be-
fore it granted the New Haven more
money. In our recent investigation of
the New Ravens affairs we found rec
ords of grossly improper practices in
the management of the road. We found
inflated capitalization, money used for
improper purposes, investments made in |
trolley lines, the Boston & Maine, and |
elsewhere that should never have been
made. In fact, the powers that were did |
everything with the New Haven except |
run railroad.