The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-04-11
THE FEDERAL INcORPORA.
TON OF RAILROADS.
Why II Is Preferable 70 Government
Ownership.

~ , '' 80
present system Of railroad regulation
gress is about to considers how II
should he recast or whether Govern
ment ownership Is preferable. My be-
lief is that neither course should be
adopted. ! believe we should begin
all over again. My proposition is Fed
eral incorporation. directors named by
a Federal railroad board. prohibition
OF state regulation. 3 per cent. on the
capital stock to be guaranteed by the
Government, with a possible extra
3 per cent. to the stockholders IL
earned, all yer 6 per cent to go to
the Government. The elements Of the
problem are as follows:
Moncy-Mr. Prouty Of the Inter-
state Commerce Commission recently
said that regulation would break down.
II at all. because investors would not
purchase railroad securities. One bill
ion dollars a yea Is required for nee
essary railroad extensions. equipment.
Improvements and terminals. At pres
ent the investors will not furnish the
money. They prefer industrials. for
eign loans. State and city bonds. Even
In these flush times Of easy money the
railroads cannot get the money. Gov
eminent ownership Of course could
furnish the money. My plan would
equally well furnish it. because a Gov
eminent bond.
Erccssirc Re0uIntion-Some forty
n State commissions are hammering
away at the railroads and have almost
ruined them. Practically everybody
believes that 1t should be stopped. OF
course Government ownership would
stop 1t. Federal incorporation would
equally well stop 1t. because Congress
In the Federal charters could prohibit
State regulation Of such railroads..
Determinations aud Rcbufcs-These
would a with Government owner
ship. They would cas- equally we'll
with Federal incorporation with a
Federal railroad board naming the di-
rectors, because the public would have
control through that board.
Wustcful Com pctition-President Rip.
ley OF the Atchison. Topeka and Santa
Fe recently pointed u that every
night Ave passenger trains start from
Chicago to Kansas City on five COM
peting railroads, and yet one Ia enough
for the traffic; and that six trains
start FROM Chicago to Omaha and five
to st. Paul. where one would suffice.
Four twenty hour trains pass between
New York and Chicago daily. All of
them are dangerous TO life. All econ
omists now admit that real railroad
competition is a thing Of the past. In
fact railroad competition at present
IL criminal competition. competition in
giving secret rebates and discrimina-
tons with a dash Of graft in them.
Every few weeks there is a Govern
ment prosecution and a railroad con
viction and a heavy fne. A short
time ago the Supreme Court susSAned
fines aggregating over 5000 900 on the
Jersey Central alone. Government
ownership would end this. but Federal
Incorporation and a Federal railroad
board naming the directors would
equally we'll end IT,. Wasteful and
criminal competition would cease in
either case because the public would
have control. Furthermore. railroad
monopoly would become public mo-
nopo,y. For instance, the New York
Central Railroads monopoly OF freight
,rackage in New York city. now about
to he rivetcd down. TO the unwise
exclusion Of trunk lines terminating
in Jersey City. would be controlled by
this Federal railroad board and many
ambitious designs thwarted.
Wdstetul Regulation and Lifioation-
New York state alone in 1914 eX-
pended s3.792, SS474 on It's two COM
missions. Forty-nve States have sim
liar commissions. Then there are rail
rnad officers. employees and clerks
who do nothing but attend commission
hearings. Then there are the lawyers,
The annual expense OF all this would
pay the interest on "A vast sum-. which
might better I've Invested in railroad
needs. Government ownership would
eliminate this, but equally so would
Federal Incorporation with a prohibit
tion against state regulation
CpHFict RrfU''H the RIilrOGdS ana
.thr PGbliC When the railroads w're
lc.Ug constructed they We're very pop
ullr. They opened mp the country
Theft conflict began, resulting N state
and Federal regulation. That conflict
will continue because IL is due to di-
J versity OF interests. There will be ne
peace until tho public fully controls
the railroads. At present little inside
oligarchies Of railroad men control
them. The stockholders have no con-
troll. This cannot continue. Govern
ment ownership would put an end to
this conflict between the railroads and
tho pIplic, hut equally well would Fed
era incorporation do 50, by reason oi
the Federal railroad board controllinr
the railroads in the interest of The
public
The above sin elements Of the rail.
road problem favor Government own
rrship A.. a solution. but equally wei
would favor my proposition as "A so'u-
ton. Let MS turn now to i've Other
clements where Government owner
ship would do harm. while | believe
my proposition would do good
Politics This is the unanswcrahlt
objection To Government ownership
Politics for many years was con
trullcd hy the railroads so far as they
were interested. Then politics attacked
the railroads and IN still attackih-
them. Politics under Government
ownership would control tho railroads
About 1000. 000 railroad employees a.
voters would favor the party that IA
Nored them. and that vote might holt
the balance of political power and de-
muraliZc the Government. tW his