The Washington herald., 1914-03-29

dition of the railroads OF the country an
poses of rehabilitation. He said, in part
/ desire to talk for a short time about'
certain phases OF the railroad question
which have been under general discus
sion of late, and on that account moT-
or less in the public mind. and part OF
what shall say in that connection VIII
apply more particularly TO those rali-
roads located east Of the mississippi and
north OF the Ohio and Potomac Rivers.
and in that part of the United States
which traffic men are accustomed 10
speak of as official classification terri
tory
II has gradually come about that un-
der existing conditions the rates and
charges now in effect in official classin-
cation territory. do not yield sunicieh'
revenue to properly meet the SITUATION
and the railroads are endeaVorine' AT
the present time to obtain permission
to advance their freight rates appFoHi-
mateIy 5 per cent ] shall not recite tne
causes which have brought ABOUT the
present situation. because ] assume you
of the subject Neither is il my purpose
TO emphasize, at this time. the argu-
ments that have been presented IN the
case now before the Interstate COM
merce Commission, but ! cannot discuss
my subject fully and freely unless TO
some extent use is made Of information
which has already been developed III
that connection.
Heavy Loss in Net Earnings
In the present rate case, II has been
shown. for instance, in statements pre-
sented to the Interstate Commerce Com
mission. that thirty-five roads in ofhciai
classification territory have actually add
ed 10 their property investment since
1910 for additional facilities and equip
ment, over $50 .OOO. 900. but as result Of
operations in 1913. although the gross
earnings after paying operating expenses
and taxes, were actually Sl6.ul," less
than in 1910. showing that not only hah
these particular companies failed 10 earn
any return whatever upon the new capl-
tai invested. but they actually mad Slo.-
81 OO0 less net as return upon their
previous investment. than was the case
before the large additional amount or
money had been put into the plant. ana
OF course " Is uUnfttSNhlN ~ SoF -
YOU. as business men. that no business
enterprise caa continue on such basis.
billion n Year Needed.
II has been stated by men who have
given this matter careful consideration
that the growing needs Of the commerce
Of this country will require an additional
expenditure by the railroads for new
equipment and facilities. Of upwards OF a
billion dollars a year for some years 10
come. and under existing conditions. the
only wav in which such money can be OBJ
tanned is through private enterprise
actuated. of course. by the desire for Pri-
vate gain. Men having money to invest
will not put IL in railroads unless they
believe that money so invested will upon
the whole bring as safe and satisfactory
return as might be expected IL invested
in other directions. and railroad invest
ments must be made sufficiently attrac'
tive to secure new capital. else develop
ment, which means new cars. new en-
Eines, new stations, new tracks and Other
facilities will cease. and nothing car
more effectually check. If not absolutely
stop the growth Of commerce than insult
fiCient transportation facilities.
How to Obtain Capital.
How may the new capital needed be OBJ
tanned? How may railroad investments
be made attractive? By permitting the
railroads to impose such reasonable
charges for service performed as will
with economical and intelligent opera.
tion, yield sufficient net TO pay fair and
reasonable return upon the capital re-
quired.
1t is beyond doubt that there has been
a more or less general feeling of hostility
toward the railroads. and il was due,
among other things. to the fact that the
railroads exercised at times, We will say
or at least they were supposed 10 have
done SO. a control over some OF the peO-
pies representatives and public officers
that was not in harmony with our demo
cratic ideas of government. They showed
Partially between shippers and between
communities. as regards rates. passenger
fares, and conditions OF service. They
were not sufficiently cOnsiderate of the
rights of others, and. further. financial
transactions Of an Objectionable character
were suspected and disclosed in numerous
instances. All this finally developed a
feeling OF pronounced hostility on the
part of the public generally toward the
railroads and those who represented
them. and this feeling found expression
from time to time in laws. framed 10 cor
rect the things complained Of.
Powers of the !. {. c.
The Interstate Commerce Commission,
which came into existence in 1887. was
the result OF a nationwide demand that
certain abuses should lie corrected. The
things chiefly complained OF at that time
were, as l have suggested. the misuse OF
passes, the granting OF rebates. the haul
ing of freight a longer distance for a less
amount than was charged for a shorter
distance. and the evils connected with
the so-called pooling system, etC.-all. ]
may say, the natural fruits of competi-
tiOn. The commission, then established
has been given the power to correct the
things above referred TO. The Interstate
Commerce Commission is one OF the most
powerful bodies of the kind In the world.
and in II the people have the strongest
possible guarantee against misuse OF
power by the railroads in the future.
As matters exist today. the railroads
are obliged to keep their accounts in &C.
cordance with methods prescribed by the
Interstate Commerce Commission; they
are, in fact, prohibited by law from keep.
ing them in any other way. and ther
books must be open at all times for in
spection. Under such conditions, ii Ii
practically impossible for dishonest meth.
ndS IN ha fnllnrad y 4.