The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-05-17
Railroad Rates and Ownership.

One way Of describing the railroad
problem which the country has on Its
hands Is to say that the railways
have too many creditors and too few
owners. They owe too much money
In proportion to their equities.
In recent months the dim beginnings
Of a public policy which suggests a
prospect Of eventual change for the
better In this regard have been dis.
cernible, and everybody understands
that the railway problem is In essence
a question Of remuneratdve rates for
railroad service. The new public
policy indicated looks toward a more
liberal Government regulation which
will allow the railroads to charge
money making rates for the service
they render, but the new policy IL
still In a formative stage.
II. PARKER WILLIS, secretary Of the
Fedora! Reserve Board, seems to have
made an earnest effort TO contribute
toward the solution Of the railway
problem in an article which appears
in the Rdilnav Age Gazette. Yet II
Is doubtful II he has lent much real
assistance. Appar ently he looks at
the problem wrong end to.
According to Mr.. WILLIS the new
Federal banking system is going to
aus such changes in the general
disposition Of banking funds that the
railroads will be compelled to finance
themselves otherwise than through the
sale of short term notes to bankers,
a rather desperate e~Npedient to which
they have increasingly resorted In
recent years. In consequence of the
transformation Of banking practice
Mr.. WILLIS thinks that the railroads
will have TO sell securities which the
public will take. Then when rail-
road securities enjoy more popular
distribution the people will see TO II
that the railroads are better treated
by the Government regulators In re-
spect Of rates:
TOO much railroad capital a been
derived from the banks and financial in
stitutions. 1t 10 necessary TO get the
shares and obligations Of the railroads
make the people really and In fact the
proprietors Of the transportation lines,
When in this sense the railroads have
been popularIzed benefit will result. The
people who aye holders OF the securities
will recognize the claims OF those who
look to the railroads for earnings as well
as to those who look TO them for &C.
~commodation. When this result has
been attained the so-called rate prob
lem will have disappeared"
Others have had a vision Of a more
widespread public interest in the for
tunes Of the railroads through a
widely diffused ownership OF railway
securities. Most of these Missionaries
do exactly what Mr.. WILLIS has done.
They put the cart before the horse.
They say in substance that II more
railroad shares and obligations were
In the hands of the public and less in
the hands Of bankers the railroads
would be assured Of mor liberal
rates. The facts are that II regula-
ton had been less oppressive there
would now he Il better diffusion Of
railroad securities. Railroad stocks.
notes and bonds cannO be put into
the hands Of the public in order to
solve the rate problem. The rate prob
lem must he solved to bring about
more general public ownership Of rail-
road sha res and obligations.
For years past the railroads have
had to finance themselves by increas.
ing to the banking commu
nifty for accommodation on short term
notes because they could not sell other
securities, especially stocks, to the
public to anything like a needfui or
desirable extent. The best kind OF
financing which the railroads could
do for their own interest and for the
public interest would he through the
sale of shares, but political oppression
Of the common carriers has been so
severe that the sale Of stocks has
been almost precluded except by proc
esses of indlrection.
Impairment Of the investment at.
fractions of the railroads wen went
50 far as to make the disposition OF
long time bonds extremely difficult.
There was nothing left for the rail-
roads to do but to go to the money
lenders.
II a new and sane policy Of rail-
road regulation is developed a greater
distribution Of railroad securities will
Inevitably result. This distribution
will help to keep the rate problem
solved, but rates must he dealt with
fairly In the first place.