American Falls press. [volume] (American Falls, Idaho) 1907-1937, 1916-02-10
GOVERNMENT OWNERSHIP DISCUSSED.

GOVERNMENT OWNERSHIP DISCUSSED.
| am going to submit to you some views on the subject
of government ownership as well as the operation of
transportation lines and other public service utilities, al
though the whole subject is much too comprehensive to
treat in the time allotted. l do not intend to speak in anv
sense in a partisan way, but l cannot fail to call attention
to the fact that the reason why the subject seems to me,
just now, to be of urgent Importance is the recommended
lions by the present administration of additional activi-
ties in this direction.
Before taking up the question of railroads and the ex-
per1ences which different countries have had in their
building and operation, / want to lay down the general
proposition that governmental operations are relatively
eXtraVagant; passenger rates are prOpOrtionately less
ened while freight rates are increased and that generally
speaking, governments are not suited to engage in ither
economical or efficient business operations.
Let us consider the contention made BIZ those advocat-
ing government ownership that the cost of capital would
be materially less than it is under private control. I'm
%doubtedly there is something to be said in favor of This
contention provided the issue of bonded Indebtedness bv
a government does not become so large that it's bonds do
not sell readily. If we were to take over the railroads of
the United States, what would be the cost to the govern
ment? In taking over railroads in Europe by govern
ments, from twenty to twenty-five times the net earnings
Tor a period OF years has been considered a fair price for
SO dong. IT a similar method were adopted in this coun-
try 1t would make the cost to the United States about fiji
teen billion dollars. 1 think no one will contend that the
United States can issue Indebtedness to that amount. or
to any considerable part of it, without materially increas-
ing the rate which it would be necessary to pay for the
money, and | am not confident that it could be done in a
reasonably short time without paying as high a raN as
the bonded Indebtedness and the net returns on stock av-
eraged during the past year, which, if true, would seem to
remove the possibility of a saving on account of a lower
government rate than paid by corporations. Furthermore
If the government owned the railroads, there would be a
loss OF taxes amounting to about one hundred and ten mil
lions of dollars a year, this being a very considerable item
in the revenues of most of the states.
In the past one of the strongest arguments in favor of
government ownership has been that it would prevent
determinations between persons, places and communities
but under our present railroad laws / do not think that
there is enough complaint on this score to warrant taking
such action unless the other reasons for so doing are over
whelming.. There are other considerations which relate
IN fms nh1QO n nrpCCurQ for rQclIfS IN prtuota1y oxro
ed corporations goads traffic managers to the highest
state of activity and efficiency. If they do not get as good
frequently, are retired. When we turn to government
controlled railroads all this has changed. The taxpayer
may be called on when the results are not satisfactory.
Therefore there is no particular pressure for results and
it is the experience in all affairs of life that you do not get
efficiency unless there is some pressure or some personal
emolument resulting from it.
Any such system as the civil service applied to our
railroads would be fatal. One of the distinct weaknesses
of the civil service is that men cannot get a suitable re-
ward for unusual activity or intelligent effort, Promo
ton comes to the mediocre as we'll as to the efficient, and
nothing could be more subservient to the best results in
the operation of railroads than the putting of mediocre
men in positions of high executive responsibility.
Development and Improvement of railroads are much
more apt to result from competition than from monopoly.
Generally speaking, there is a kind of stagnation and stu
pldlty in governmental monopoly which would be impos-
sible in the case of private control. For example there
were four different guages used In building the steam
railways of Australia, the result being that it has been
necessary to transfer freight and passengers at the sub
Vioio LuieS dI d very large expense. IL is proposed W
change this, however, to one guage, but it is estimated
that it will cost practically twenty-five per cent of the orr
ginal cost of the roads to correct this stupid action.
Before taking any such important step as the ownership
and operation by the government of public utilities, we
should carefully examine the experiences and results OBJ
tanned by those who have already tried out the same oper-
ations. The Western Railroad of France was taken over
by the French government in 1908, since which time the
following results have been obtained: Within three years
the number of employees has been increased Is per cent.
During that time the operating expenses increased from