The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-09-10
quences Of any disaster overtaking

mission Is demanded by the conditions
which the war has created for the
railroads. The problem with which
the Government Is confronted in this
respect Is not n simple matter of rate
increases or reductions to he deter.
mined according tn some academic
theory Of asonablcncss II Is u prob.
lem on the one hand of assuring n
suhiclcncy of railroad income to sus-
tain the values OF railroad capltaiza-
ton which have become incorporated
in the country's financial structure. and
on the other Of facilitating those finan
clal provisions which the railroads
must make TO take care of maturing
security issues as well as to supply the
funds to keep railway property In good
! shape
The contraction ~ foreign and
n large shrinkage OF traffic on which
rates have been calculated by the
| Interstate Commerce Commission with
choeseparing accuracy TO make rail.
road earning power balance railroad
expenditure aud leave nothing over
Unless diminishing traffic is offset By
some factor Of expansion In earnings
the funds out of which railroad inter.
est charges and dividends have been
| paid must become dangerously made
uuatc. The problem Is further com
plicatcd by the total of between $500.
100000 and $500. 100000 of railway Sc
rurty issues which mature before the
end of next wear and have to be taken
up or refunded.
Already the extension Of moderate
amounts of railroad notes. which have
| fallen due In the last few weeks. has
been arranged on basis OF price which
suggests that the railroads will have
need Of all the credit that they can oh
tain to negotiate capital provision on
any terms. Nor in the reckoning of the
railroad problem should the fact he
overlooked that diminishing supplies Of
| capital are going to he subjected all
over the world to desperate demands
The railroads will have not only to
| h''N INV ''ihi''AANi'ii w ~ 'uA'
whose credit is not afflicted by gov
ernmental restrictions, but will come
| into competition with Governments Of
all kinds. domestic and foreign, whose
| offers for capital will he backed by the
taxing power. from the exercise Of
which the railroads themselves will
| suffer.
| Something like 5000. 900. 900 Of Amer
lean railroad securities are in default
to-day. 1t Is not desirable that there
should be any drastic curtailment OF
dividends, which can only mean a de.
crease of public buying power and
heavier pressure OF railroad securities
for sale. in addition to those which
Europe Is ready to return To this coun-
! try as chance occurs. 1t is even less
/ desirable that there should he any con-
siderable expansion of defaults in rail
road interest payments.
II the Government will but forthwith
shape public policy toward the rail.
roads along constructive lines much
hardship and worse can be averted. A
|
eralizing freight and passenger rates,
ard 1t Is no longer Eastern rates only
which are in question. but rates all
over the country. Help can also be
rendered by liberalizing the provisions
Of the Federal reserve act so as to fur
nlsh accommodation for short term
railroad borrowings, and to admit bank
| loans on railroad securities to reds.
count. Presumably In other ways also.
as the emergency may suggest. Gov
eminent policy can assume constrllc-
| tive appearance which will be OF incal-
culable benefit to the widespread inter
ests involved in the preservation Of
railroad solyency.
| A tremendous total OF fiduciary as
sets is denoted by railroad securities
held by life insurance companies, saw
ings banks, trust companies and other
institutions, as well as in other lodg-
ments. and without regarding at all the
| factor of European holdings OF Ameri-
| can railroad stocks. bonds and notes. II
Is clear that Washington has been
asked to direct It's notice to no problem
Of greater concern to the public wei
fare than the problem OF relief for rail
road finance. II relief IL intelligcntly
supplied it will contemplate even more
than support for the common carriers
| in the war emergency. II will see In
railroad enterprise one OF the greatest
stimulants OF enterprise generally, and
will perceive the helpful use which can
he made of present American resources
to contribute to the employment of Ia
Dor and productive capacity through
encouragement to the railroad indus.
try.
| Free City Markets.