The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-11-16
YOAKUM'S POSITION
ON U. s. OWNERSHIP
Railroad Man Favors Copart-
ncrship in Letter to Jud-
son G. Clements.
IS FOR FEDERAL CHARTERS


Interstate Commerce Commission:
'Sr. Louis. Nov. l2. 1914.
DEAR JUDGE CLEMENTS. While testi-
flying before you few days ago Governor
Folk asked me IL thought the remedy for
existing conditions to be governmental
control OF securities or some other close
relation between the Government and the
railroads. | said that was getting into a
big question, but II he wanted my views
would give them briefly. which / did
Newspaper comment and personal let
tiers Indicate that my position as TO tho
relations between the Government and the
railroads appears to be isunderstood. |
am In favor OF a form OF Government CO.
partnership. az distinguished from Govern
ment ownership.
Il believe that co-partnership arrange
n,erts under special Federal charters TO
be granted TO railroads DESTROYS OF operat-
ing under a Federal license would be the
wisest solution of the present unsettled
conditions.
Taking all the requirements OF the $50
900 miles OF railroads In the United states
for the next ten years. including larger
and better facilities necessary to satisfy
the public. purchase of new equipment. ex-
tension of terminal facilities double
tracks safety signal appliances. reduction
OF grades, payment OF car trust certi1-
Gates. taking care OF note maturities, bond
refunding purposes, &c. the railroads will
need not less than $500 900 a year.
This does not include new construc-
ton. When the general situation improves
the railroads will I've able to borrow some
OF this needd money at from say . per
cent to 6i7 per cent. per annun.
The cost OF money Is just as much an
expense OF transportation as the cost Of
coal. ties, rails or other material used
in the construction. maintenance and
operation OF railroads and indeed Ia one
! Of the largest items Of expense the rail-
roads have 20 contend with.
The Government pays only per cent
FOR the money used In the construction
of the Panama Canal. which is rapidly
| becoming an important factor in trans
/ poriation. Ths canal would never have
! been built without Government credit and
consequent cheap money. The United
states has also authorized and Is now
preparing TO- the construction OF rail.
road in Alaska. / recognize that the
canal is a good and wise investment. and
that the Alaskan railroad will be equally
as good FOR the development OF that
| new country. In these two enterprises
tho Government lends its credit for con.
struction work and shoulders the deflci,
/ un;l they become self-susialning Re.
gardless OF any losses the public is the
/ gamer. The per cent. bonds sold tol
the construction OF the Panama Canal
and 10 be sold for the construction OF the
/ Alaskan railroad furnish good low rate
security for small investors, savings banks
| and like institutions.
The Federal Government is now reg.
ula:ing the expenses and revenues OF rail.
| roads II should go step further and
safely aid them IN future financing. and
! in consideration therefor enjoy a shar.
OF the prorits, Nltn representation on tn,
| boards Of directors
In this letter | shall not at,emp; e
I 20 into detail a. to these special charters
but there are no real difficulties in max.
Ing them absolutely safe for tn. Govern.
! ment, profitable for the people and ad
Nhntageots 20 the railroads The change
or securities should be gradual through
] the creation OF low interest bearing
Government railroad bond 10 take tn,
place or the underlying higher Interest
bearing railroad bonds as they may ma,
lure. or they could be exchanged unde,
a refunding process. Each transaction
should be approved by the Interstate Com,
inerce Commission. always provided thai
! me not earnings of the railroad mus
oe at east , times the interest on IN,
Government railroad bonds exchanged 70,
the present underlying bonds These new
ponds should be first lien on the prop
erty. All Junior mortgage bonds and
the stock would be subject to ,hes. now
bonds. on which the Government woulr
NOT De respor sible. but would under eaui-
table terms 10 he agreed upon snare IN
me profits with the stockholders
AT rough estimate. in the course o.
rev wears one-half OF the present un
deriving bonds. or ahou, $4,000 200 QUO
would be EXCHANGED or refunded Irtu
lower interest bond. A large proportion
OF these old bonds hear : per cent an,
per cent. and few PEI cent interest
therefore, under the proposed system Their,
4 "oud eventually he Saving 10 the rail
roads OF approximately 800 600 OOn
= year In interest alone This is or
the assumption that such n Government
railroad bond, being frst lien. woul,
he as attractive 20 bankers and investor,
as the present per cent Goverrmen
Panama Canal bonds n in this way th,
3 ra'lroad' or the country can save sfuo O00
ONO dollars year in the Item Of ir,o-est
under my estimate IL would insure m.
Government receiving as It's share u,,da
the prop-s"d ccpq -'rorship 4-rar-aran,
probably from 81. 1000. GOO 10 500 0oo GOA
! a year
u have no expenditures about Gov.rn.
ment ownership ~ railroads 7, is rpera,,
a question OF what 10 the best thlnr tc
90 TO arrive at a solution that Will give
the best and most economic service and
establish the most prof sbln and satiafa.
torv re'H'lons between tha rrblic ana ~
railroads. ! feel CONFIDENT that the ov-n.
ors ~ railroads. would he willing TO sell
20 IN" Govrr1ncn' II n reasonable price
hut cen so 'he Government will ne "a,
luctau' 20 wn1er'aka the Cuisines, a,
operating properties whose revenues az,
about three times tho present income O.
the Government through taxation
-! favor tho use o. the Government,
proposed share OF railroad profits for IN,
upkeep OF country roads.
I'VE have two million miles OF public
ROADS, or which over one million mile.
are post roads. In the Eastern State.
me average cost 10 improve public road,
Is about $4,000 per mile. In the middl,
West from 81, 900 to $4,000 per mile Tn.
cost OF maintenance Of public roads ir
Eastern States is given ~ $3.50 to ss7C
per mile. In the central States abou
5000 per mile I've total interest on coun
ty and state bonds and the cost Of main
tcnance, which IL paid by direct tax, I.
approximately sl0O,OOO,O0O Il year. anc
this tax Is increasing yoarly. In th
last two years the bonds issued and an
thorized for road purposes amounted u
more than sIh0,00o 00n, ard ~ ~,
course Of a very few wears the interes
on all the bonds issued for public high
way purposes, plus the cost OF main
tenance. will amour: to $3.50. 600 ,0OO
annually. But these improvements
are essential
Thu. | favor the creation out o
copaItncrship profits - fund to he ap
piled To dcfray the expense ~ countr,
roads therchS issscming taxation an,