East Oregonian : E.O. (Pendleton, OR) 1888-current, 1913-04-05
.BRANDEIS BACKS
UP LA TOILETTE
CHAMPIONS SENATOR'S
ACT REGARDING RAILROADS

Morgan and Company and Other
Bankers Have Monopoly of Selling
TO Many Railroads the Money They
Need at Rates of the Bankers Own
Fixing.
Boston, Mass, April 5.-Louis ID.
Brandeis, the peoples lawyer" who
once declared he could save the rail
roads of the country millions of dol
lars every day, in a statement writ
ten to the United Press, today
championed Senator La Follete's act
providing for the physical valuation
of railroads by the Interstate Com
merce Commission. He insisted that
before the people can know whether
the money they pay to railroads is
honestly and necessarily spent, inter-
locking dircctorates must be abolish
ed and a federal bureau of railroad
costs established.
Mr. Brandeis charges that ]. P.
Morgan & Company and other bank
ers have a monopoly of selling to
many railroads the money they need,
at rates of the bankers own fixing.
CBy Louis d. Brandeis.)
The La Toilette Act providing for
the physical valuation of railroads
by the interstate commerce commits
sion, is a great step forward. The
senator's seven-year fight has been
nobly won. The act is but another
application of La Follette's favorite
motto: "Ye shall know the truth,
and the truth shall make you free"
Everybody admits that the value
of railroad property is one of the
elements to be taken into considera-
tion bv the Interstate Commerce COM
mission in fixing rates, and every
body has been obliged to admit that
the commission was without reliable
data bearing upon this value. Under
the La Toilette act the public Will
a least be furnished with the best
evidence of value obtainable.
But there is more truth which must
be known before La Follette's task
of securing to the people just rail-
road rates. is completed. To secure
just and reasonable rates, other steps
must be taken. We must know, be
cause the actual value of railroad
property, the actual cost of opera
ton and the cost of current construc-
ton and of new equipment. The
railroad reports give us now state
ment of what they spend each year;
but the public has no means of know
ing whether this amount has been
well spent
In the calendar year 1912 the rail-
roads collected from the American
people in gross earnings, $3,O45,77S,-
327, most of which has been spent in
some way. About one-third of that
amount has gone in interest and divi-
dends and taxes. The physical val
uation would help us to know what
part of that interest and dividend Is
paid on capital which is water. About
two-thirds of the years revenues Is
paid out for operating expenses. 1t
is at least equally important to know
what part of the revenue has been
spent unnecessarily: what part has
been wasted throuhg dishonesty, and
what part through inefficiency. Be
sides the $2,000,000,o00 of current
revenues spent in operation, there are
each year expended hundreds of mil
lions in new construction or the pur-
chase of equipment What part OF
the money will be spent for new con-
struction or equipment rs efficiently
and honestly spent? Until we know
all this, we cannot know whether
rates are just and reasonable.
1t1x-
has paid out money, has ceased to be
assurance that it was necessarily
paid out. Interlocking directorates
may have led to the making of many
contracts unnecessarily burdensome
to the railroads. for on many of our
railroads interlocking directorates
control a large part of the expendi-
ture.
j. P. Morgan & Co. and other bank
ers. have a monopoly of selling many
railroads the money they need at
rates of the bankers own fixing. Di-
rectors of the steel trust are directors
of railroad companies, owning over
one-half of the total railroad mileage
in the United States. Directors of
equipment companies have places
likewise on boards of railroad COM
panies. The United States Commits
sioner of Corporations has shown
how the Standard OH Trust compell-
ed nearly every railroad in the coun-
try to purchase its oil at extortionate
prices.
Before the railroads can kno<
what expenditures are needful, the
great step taken in the La Toilette
physical valuation act must be sup
plemented by two others: First, in
terlocking directorates must be abol-
ished; second, a federal bureau OF
railroad costs must be established
through which the actual and neces-
sary cost of operating each railroad
can be determined.
PULLMAN DEAN VISITS o. A. G.