The sun., 1916-11-24
Mismanasement ana Crimcs.

rates that are too high.
MismanaGement ana Crimes.
"Some men may appear at this hear
Ing to try to show acknowledgement and
crimes and that present ills are due to
the faulty MANAGEMENT OF tho roads
themselves. But what remedy does that
theory present for the existing situa-
tion? The man who takes that view
turns his bach on tho political situation.
lie turns his back on the future and Is
looking backward. The paramount Ques-
ton before you gentlemen is that there
Ii a lack of facilities. These must be
provided. Gentlemen cannot be heard
here merely as the Jealous guardians of
local rights unless they can show that
the local agencies they are speaking for
can supply the adequate facilities de-
manded."
Turning to the joint commission men-
bers again Mr.. Thorn inquired: Has
there been nc sign OF menace to your
transportation facilities?
"Have we learned nothing from 1907.
when there was increase OF business
but lack Of cars and lack Of tracks which
brought on the panic of plenty? Have
we forgotten hat the panic Of 1907 was
not q panic OF scarcity but was due to
inability OF communities to deal with
oIc diOtutT DcCtuSe VI ant vi hues
Quate transportation facilitiesy
Railroad Building Suspended.
The speaker directed the attention of
the Joint commission TO the suspension OF
railway building in the United States.
Have we failed to take notice Of
the fact that there were fewer miles OF
railroads built in the United States last
year than In any year since 1sis. ex-
cept during the ciyil war y~criod?' he
asked. Less han 1000 n lies Of rail-
roads were built last year In this coun-
try. Do We appreciate the fact that In
this suspension OF railroad construction
we may find the answer to the great
question Of the high cost OF living?'
The speaker said this was the para
mount question before the people. Poll
teal panaceas had failed. he pointed
out. One political party declared the
trusts were to blame, but the Clayton
anti-trust act was passed and pricef
continued to vi Another party pro-
posed to remedy the trouble through
tariff revision. That. too. had failed to
bring relief. why not come back and
consider the fundamental reasons? Why
not consider whether the high cost Of
living may not have some relation to
supply" -.
Mr.. Thorn urged that railroads should
be projected Into new and undeveloped
|. territory. He read a report OF the In
equality OF railroad mileage as between
sections Of the country, showing the
mileage per 100 square miles. In some
OF the new States like Idaho he pointed
out that II was ri~diculously low.
Due 20 had statesmanship.
viii the country long be satisfied
with a craftsmanship that halts rail-
road construction at such "A point OF
Inequality he asked. There is but
one conclusion TO be drawn from the
figures ! have read OF railroad mileage
and that Is 1t is not adequate for the
present needs OF the country and there
IL no system at present to supply them
Explaining the difficulties of railroad
construction h speaker said
mo railroad Is ever finished except In
a community that Is dead. Improve
mcnt OF transportation facilities must
keep pace with the growth of commerce.
The Pennsylvania Railroad with its
splendid equipment Is not a completed
property. MOI can the railroads be cx-
pected under present conditions to give
the necessary improved facilities from
net earnings. II n man believes they
can be he SHOULD open his eyes.
Private investors must be attracted.
That means new money. new credit.
pause TO ask YOU gentlemen whether you
believe this question OF credit for the
railroads In a purely private one
whether railroads are interested to any
extent like the publicc The question OF
railroad credit is not a private interest.
II credit fails either the facilities fail or
the Government must take the problem
over and supply them"
Government Ovuer.hiu.
Then the speaker told the Joint com
mittee mat II ever Government owner
ship must come, of necessity Il will be
because the Government must supply
the credit that private interests have
been unable to do. That brings us TO the
question whether railroad credit H. on a
sufiicient basis to supply the public need.
Has the line Of safety In credit been ex-
ceeded?
MIR. Thorn explained that some wit
nesses would be introduced to show that
the credit could not be strained beyond
the point where the bonded debt. repre-
sehting the hxed charges. was greater
than the stock. Some witnesses believed
the percentage of fixed charges could "a
higher. No contention has conn TO me
that II can safely go higher than sixty
10 ~lorty-that Is. a bonded debt OF 60
per cent. and a capitalization OF 40. Mr.
Thorn reviewed the history OF railroad
financing In the United states for the
last sixteen years. showing that tho
percentage or the bonded debt. as related
to stock Interest. hasd grown steadily
from about 1880 In 1900 TO Sis in 1914
and was probably G5 to IS now.
rs there nothing in that statement OF
the situation to bid us pause and In.
quire whittier we are tending? Whethe,
present methods of regulating are such
TO encourage investment In railroad se.
curities? Where will that rowin per.
centage lead us?
The percentage OF fixed charges will
relation 10 stock IL so great that W,
must inquire where II will end"
MI Thorn expressed the opinion that
In order to finance railroad properties
uhder present conditions stock should be
able 10 return 8 per cent. on the invest.
ment and pass 3 per cent, to surplus.
What -Rrs- the conditions of the rail.
roads or the country measured by this
~tandard p he asked. "Thirty-nine rail.
roads with 47.363 miles of tracks could
qualify under this test. One hundred and
thirty-seven. having mileage OF ls5.2lo
could not be financed on any such ba sis. -
The speaker invited the Joint commit.
tee to consider some OF the other condI.
lions that AFFECT American railroad
credit at this time" He asked what ter.
ritory or the country Is now furn!shine
the money TO finance It's railroad sys,
TENS.
south Shy Of II. u. Investments.
He took the South az an Illustration
and showed that he ipcono INV raturn.