New-York tribune., 1914-11-16
WANTS NATION AS
PARTNER in ROADS
Federal Part Ownership
Would Solve Problem,
YOakum Says.

A proposition Of a co-partnership be-
tween the federal government and the
railroads, looking TO the assistance Of
the government in enabling the rail
roads to borrow money for develop
ment at low rates of interest, is sug-
gested in a letter which b. +. Yoakum,
chairman of the board of directors of
the Frisco Railroad, has written TO
Judge Judson c. Clements, of the In
terstate Commerce Commission.
Mr.. Yoakum, in stating that his po-
sition on the question of the relations
between the government and the rail
roads appears TO be misunderstood. de
clares he is in favor of government
o-partnership as distinguished from
government ownership, and says that
the cost of money is as much an ex-
pense to the railroads as the cost OF
improvement and repairs.
The government, he points out, has
paid only per cent for the money
necessary to the construction of the
Panama Canal, and will pay the same
rate for money to build the projected
Alaskan railroad.
"The federal government" he con-
tinues, "is now regulating the expenses
and revenues Of railroads. 1t should
go a step further and safely aid them
in future financing, and in consider
alton therefor enjoy a share of the
profits, with representation on the
boards of directors.
~ shall not attempt TO 60 into detail
as 10 the special charters, but there
are no real difficulties in making them
absolutely safe for the government
profitable for the people and advan-
tageous TO the railroads. The change
of securities should be gradual through
the creation of low interest bearing
recommendation bond to take the
place of the underlying higher interest
bearing railroad bonds as they may ma
ture, or they could be exchanged under
a refunding process. Each transaction
should be approved by the Interstate
Commerce Commission, always provid-
ed that the net earnings Of the rail
road must be at least two and a half
times the interest on the government
railroad bonds exchanged for the pres
ent underlying bonds.
"These new bonds should be a first
lien on the property. All junior mort
gage bonds and the stock would be
subject to these new bonds, for which
the government would not be respon-
sible, but would, under equitable terms
TO be agreed upon, share in the profits
with the stockholders.
"At a rough estimate, in the course
Of few years one-half of the present
underlying bonds, or about S5,000,0 ,000,-
600. would be exchanged or refunded
into a lower interest bond. A large
proportion of these old bonds bear
per cent and per cent, and a few
per cent interest; therefore, under the
proposed system there would eventu-
ally be a saving to the railroads OF
approximately S100,000,000 a year in
interest alone.
"This is on the assumption that such
a covernment-railroad bond, being 9
first lien, would be as attractive to
bankers and investors as the present
3 per cent government Panama Cana
bonds. If in this way the railroads OF
the country can save S100,OO0,OOO
year in the item of interest. under my
estimate it would insure the govern
ment receiving as its share under the
proposed co-partnership arrangement
probably from S15,OOO,OOO to s2O,OOO,OOC
year. .bo.. .ou
ernment ownership of railroads. 1t is
merely a question Of what is the best
thing to do to arrive at a solution
that will give the best and most eco
nomic service and establish the most
profitable and satisfactory relations
between the public and the railroads
Il feel confident that the owners OF
railroads would be willing to sell to
the government at reasonable price
but, even so, the government will be
reluctant TO undertake the business
of operating properties whose reve
nues are about three times the pres
ent income of the government through
taxation.
al favor the use of the governments
proposed share Of railroad prohts toI
the upkeep of country roads. Under
srecial federal charters the people
share could be deposited with the
Treasurer Of the United States, ano
through him distributed to the states
in proportion to the mileage OF the
railroad in each state, for the upkeeI
OF the wagon roads.
"The government could not expenc
its share Of the profits with greater
benefit to the public, especially the
farming interests. favor such a plan
because 1t is simple and requires nc
investment by the government
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