The Washington herald., 1914-10-22
Another Point Of View.

The Interstate Commerce Commission, which is
now listening to the appeal of the managers of the
Eastern railroads for permission to increase rates.
viii be told by competent authority that there is an
other point of view for their consideration than that
of the railway managers themselves 1t is the point
of view of security holders of manufacturers some
of whom are Shippers, it is true and of the busi-
ness interests of the United States as whole
The investment bankers of the United States
render an important service for it is chiefly through
their instrumentaty that securities are offered to and
absorbed by the public. The investment bankers of
the United States not concerned, technically
per se in railway management operation but they
have vital in the quality and character of the
securities which they offer to the public 1t is by
their aid that surplus funds great or small, in the
possession of the public exchanged for securi-
ties And in that way capital which otherwise would
not be employed is made available
1t has been stated by who is of high authority
that the whole financial structure of the country is
interviewer with railway securities that to affect rail-
way securities adversely inevitably to injure or i'm
peril the whole structure
This is point of view which in earlier hearings
has been brought only incidentally to the attention
of the Interstate Commerce Commission.
There is no doubt that within the past four or
five years the attitude of the American investor and
to some extent the investor of Europe toward the
American railway securities has not been entirely
favorable Some timidity has characterized it and
that is the chief reason why the American railways
which need fresh supplies of capital are compelled
pay high rates of interest and even then to market
short-time securities, running for one two three
years This is of itself expensive financing.
The fact that there is a steadily decreasing per-
centage of railway earnings to the gross earn
ings is rot to be denied. The investment bankers
of the United States the owners of securities and
such business organizations find their chief mar
kets with the railway companies grievousy con-
cerned this steady decrease in the percentage of
net earnings.
Investment bankers have had constant proof of the
feeling OF investors who withhold their capital from
railway investment because they are apprehensive
that the falling off in net earnings is be continued
If the question were put y all sincerity to the
investment bankers who deal chiefly in bonds: What
is the feeling of your clients respecting the govern
ments relation to the railroads? the almost unani-
nous reply would be that they now have the pro-
found conviction that both the Federal and the State
governments are antagonstic to the American rail-
road systems. This view may be unreasonable but
it exists, and so long it does exist the unques-
oned fact will be that railroad credit must pay the
penalty 1t is this feeling that has led of the
eading railway managers to believe, as they have
publicly stated they believe that unless opportunity
be given for the restoration of confidence in the
earning power of the American railroads it is inevi
able that the government or later, must
AXE the American railroad systems
This is point of view which is likely to be pre-
;ented to the Interstate Commerce Commission at
The important hearing in progress. The COM
mission will undoubtedly in all Sincerity and earnest
ness give due consideration to it.