The Yale expositor., 1916-12-21

Toau otoCks onouiu nepTesent tNCtuaI
Value and Be Stable as Government
Bonds.
Washington, Dec. IL. - William J..
Bryan, who startled the country ten
years ago by advocating government
ownership OF railroads, appeared be-
fore the Newlands Joint Committee on
Interstate Commerce last week in sup
port OF the claim that the states should
be allowed to retain authority over the
regulation of all transportation lines
within their borders. Mr. Bryan ex.
planned that he had long regarded gov
ernment ownership as inevitable, but
only because Of railroad opposition to
effective regulation.
Against Government Ownership.
Personally cannot say that de-
sire government ownership" he ex-
planned, because l lean to the indi-
vidual idea rather than to the collec-
tive idea; that is, 1 believe that gov.
10 Only
where competition is impossible"
Alfred p. Thorn, counsel to the Rail
way Executives Advisory Committee
previously had presented before the
members OF the Newlands Committee
as one Of his reasons for urging bet
ter balanced and more, systematic reg
ulation OF railroads ths argument that
this is the only alternative to govern
ment ownership. Calling attention to
the restrictions imposed upon the
transportation lines by conflicting state
laws and regulations, to the practical
cessation OF new construction and to the
impossibility under existing conditions
OF securing the new capital needed for
extensions and betterments OF railway
facilities, he warned the Congressmen
that unless they provided a fair and
reasonable system Of regulation that
would enable the railroads to meet the
growing needs OF the country's bust
ness the national government would
be compelled to take over the owner
ship OF the lines with all the evils at
tendant upon such system.
Preservation Of Composition.
Mr.. Bryan, on the other hand, holds
that the further extension Of federal
authority over the railroads would be
q step In the direction OF government
ownership. He advanced the view that
the Capitalization of control In the
hands of the national government
would impose too great burden upon
the regulating body, would offer strong
temptation to railroads to interfere IT
politics and would encourage the gen
eral movement toward centra 'lzatior
Of power in the federal government al
the expense Of the states. He said that
he did not object to consultations OF
railroad lines so long as they did moi
destroy competition, that he knew OF
no complaint against great railway
systems because of their size and that
he believed that the preservation OF
competition was the test to be applied
to all consultations.
Regulation Of Securities.
Mr.. Bryan declared himself In favol
OF national regulation of railway stocl
and bond issues, but added that he saw
no reason why that should exclude tn,
states from acting on the same sub
ject as TO state corporations. IL woult
like to see the stock of railroad, a,
long as 1t is in private hands, made al
substantial and as unvarying as th,
value Of government bond" he as
serted.
He suggested that railroad capitah
zation be readjusted to equalize It will
actual valuation OF the property rel
resented, making due allowance FOL
equities, and that when this was dont
the roads should be allowed to carr
sufficient income to keep their stoch
at par and to create a surplus. The
latter, he tentatively proposed, might
be allowed to amount to % per cent
Of the capital.
Railway Earnings Low.
This subject of railroad capitalization
and the amount OF railroad earnings
received further attention from the
committee during its recent sessions
In answer TO questions by Senator
Cummins, Mr.. Thorn submitted figures
showing the net earnings Of the roads
in recent years. These figures show
that during the FIVE years from 1905
to 1910 the average net earnings were
6.25 per cent Of the net capitalization,
while for the FIVE years from 1910 to
1915 the average was only 4.56 per
cent. The total earnings on the stock,
computed by adding to the net oper.
ating income the income from the Sc
curities owned and deducting bond In
terest, were for 1910, 100 per cent;
for 1911, GIT per cent; for 1912, 4.97
per cent; for 1913, 5.9a per cent; for
1914. 4.O6 per cent; for 1915, 3.44 per
cent thus showing an almost contin-
uous decrease throughout this six year
period. 1t was announced that Hal
ford Erickson, formerly chairman OF
the Wisconsin Railroad Commission,
would submit more complete informa-
tion on this subject to the Committee
at a later date.