The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-04-04
THE FEDERAL FRANCHISE.
II Does Not Mean Government Owner,
ship-ERect on Stockholders.

that Congress. In Incorporating Federal
railroad companies. shall insist hat
the directors shall he named by a Fed
eral Railroad Board. LEX" asserts
that this is practically Government
ownership. and that the Government
does not need to use a corporation any
moro than the Post Office does. and
hat every argument against Govern
ment ownership would apply to this
proposition, and that the ambition and
spirit of the railroad stan would he de-
stroycd by reason OF their positions
being subject to political changes. and
that investors when asked to purchase
railroad stock should have ownership
in fact. including the right to control
the policy by electing directors.
The trouble with this argument Is
that railroad stockholders do not con-
troll The policy or elect the directors.
All they care about is dividends. They
never think Of attending corporate
meetings and generally don't even
send In their proxy. There are thou
sands Of them and they are
to each other. The whole anage
fnent, control and policy is In the
hands Of a few insiders. Any railroad
stakeholder will tell you that. The
average railroad stakeholder Is u dead.
head In h enterprise. "a %nonentity. n
moribund quantity, and worst OF all
he doesn't care. lIe no more controls
the policy and elects tho directors
than the flowers that bloom In the
spring. He Is for profit only and is
not even ornate. All that the rail-
roads want Is his money and that Is all
they get. | am "A railroad stockholder
myself "A substantial one. and
hence l feel privileged TO abuse my I'M
known associates. who have been as
derelict as I have been. LEX" says
that recently in one railroad the stock
holders turned the management out.
True enough. but that was after the
company was ruined. The %s,ockhold-
ers slam the stable doors after the
horses have disappeared. "Lex' says
that the president Is elected by proxies.
That was the theory. hut it broke down
almost in the very beginning. one
great fact Is clear, namely. that rail-
road stockholders do not count. and
that inside coter!es elect the directors
and run the railroads as though they
owned them.
Neither is there anything startling
in the propos. ton that the Govern
ment name the directors OF the pro-
posed Federal railroad corporations.
In the original charter granted by
Congress 10 the Union Pacific Rail-
road Company II was provided that
the Government should name a pro-
portion of the directors tl2 l.. :.
stat. 4S1). subsequently increased to
five out of fifteen 1l3 L. :. STAT. 36i).
n Congress gave that railroad its
hrst taste OF regulation in 1873 Or. :.
or l. :. lolD as the result OF the
notorious scandal of the Credit Mo-
hIlier. Those i've directors had no
power and amounted 10 nothing. but
they show that the idea Of the Gov
eminent naming directors is neither
revolutionary nor Unprecedented. and
that h stockholders have no sacred
right to Vote.
y ScCou great fact IS tina, the puh-
u" VII no. tolerate much longer this
mode II choosing railroad directors.
JOHN f.nlay was right when he said
democracy. beginning In the Missis-
Slppi Valley. IS seeking q "A perfect
iinpersonal transportation machine
An impersonal machine" That
means a great deal. II means that
h public shall control. The present
machine is intensely personal. Like
the old turnpike system 1t ras served
It's purpose. but il outgrown and has
got To- 20. In fact II has become 50
bad that II simply cannot obey the
law. only the other day the supreme
Court of the United states refused To
interfere with fines a~ggregating over
100000 imposed on the New Jersey
Central for Illegal disCrim nations in
favor of a coal company. And a few
years 4" the New York Contra was
heavily fined for rebates on sugar
shipments. MOI IS the PENNSYLVANIA
Railroad free from guilt, Ia lroad
competition has drg'ucratrd into
criminal competition competition IN
giving criminal rebates ana secret is
ordinations. The great, fundamental
trouble * that these directors repre-
sent no II but themselves. Nley
don't represent the stockholders nor
the investors nor the public. Graft
also has "rcpt IN, hut tho situation is
ugly enough without going into all %,
that. Private control is the source OF
our troubles.
| come now 20 "LcN's' charge that
my proposition is practically Govern
m.nt ownership. J. j. very FAR from
Government ownership. In fact, II is
four remove from Government own
crship. because four distinct and for
midahle lines of intrenrhments would
bar the politicians; a. the President
and Senat selecting the Federal Rail
Dad Board, 90 the board itself. l3)
the railroad directors selected 10y the
board, 90 n genera managers Sc
,ccted by the directors. stu other
Instructions are possible. For in
stance, tn" directors selected by the
board might he vetoed 10y stockholders
voting 10y letter. Even the privilege
Of protest by the stockholders would
check the board. Under Government
a new member uf the Cabinet would
distribute railroad offices like the
Postmaster-General. but the above
proposition is like the Federal Reserve
Board. far removed from politics.
Lex" refers To the New YORK Post
master as showing the "Spoils" system
To my mind that incident has u fai
deeper significance II shows that
public opinion has II reach long enough
and u grip strong enough To max.
"