New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-15

10 invest the public funds in an un-
profitable undertaking TO assume
risks that individual investors decline
, TO take. The weak roads would be the
I ones seeking aid those earning
| sufficient profit to attract the savings
| Of investors. II these investments OF
/ the public funds were Improbable, as
they would in all likelihood be. the
government would soon be sending
good money after bad. trying to save
its first investments, and, IN the end
the public treasury (which means pub.
| lie taxation) would have TO be resorted
to 70 make up the losses. :.
The logical end of such course o,
governmental participation IN railway
financing would be that the govern
ment, holding fourth. nth and sixth
liens on those weaker properties,
would be obliged to step in and protect
| itself. assuming the prior mortgages,
| supplying more capital and operating
the companies. This would be govern
ment ownership.
| II Mr.. Amster and those who agree
with him want government ownership
Of the railways, they can quickly bring
( it On by entangling the national treas
ury in the financing of the weaker
| systems.
II is plain as pikestafF that the in
vestment of public funds by the ma
/ tional Treasury in railway mortgages
or short-time loans will not solve the
problem of financing the growth of the
! railways.
New capital is vital need; it must
| be provided. But any plan for provid-
| ing this capital without provision for
meeting the charges for this capital
must lead to disaster.
The American public-the millions OF
thrifty people who save and invest for
an income are abundantly able TO pro-
vide all the capital the railways need
for expansion. and they would eagerly
provide this capital if they were en-
couraged TO do so.
The only encouragement the Ameri-
can investor needs is the encourage
ment the government can give and the
government alone can Gives reason
able assurance that funds invested in
railroad expansion will return an in
come commensurate with that to be had
/ IL other ventures.
The production Of transportation
must be stimulated. Not only must
more be produced from the present fa-
cilities, but there must be provided
greater facilities 10 take care of future
expansion OF traffic.
Transportation must be encouraged
as agriculture is being encouraged.
How has the government stimulated
whHt raising? BY guaranteeing the
farmer minimum price Of 50 a bushel .
as compared with 81 wheat before the
war. In the twenty years preceding
the war the average price OF wheat was
81 cents. For the 1917 crop the gov
eminent has established a price of
S2.20, or 260 per cent above the twenty
year average.
But what of the price of transporta-
ton in this period of high prices? The
( twenty-year average price Of trans
| portation on all American railroads is
/ tnree-quarters of a cent a ton-mile.
I With the rate advances recently
, granted, the war level" Of freight
rates is still below the twenty-year
average. Wheat is being carried now
~ less charge than when il was SELL
ing at 10 cents, or one-third its pres
ont government-guaranteed price On
the Eastern roads the average charge
for carrying a ton of freight three
miles is 2-cent postage stamp.
Pig iron has doubled. tripled and
lAllWANC
are the largest buyers in the country
OF the products made from pig iron.
! Coal has doubled and tripled and
! quadrupled in price and the railways
buy quarter OF all the coal mined in
the country. Wages have risen 10. 20.
80, 40, 80 per cent-and two-thirds of
( the cost of railway operation is labor.
But the advances in freight rates re-
Gently granted by the government to
( enable the carriers TO meet their rising
costs will not. for the whole country.
average more than 3i2 per cent. And
what is 3l2 per cent advance com
pared with 100. 200 and 800 per cent
advance in basic commodities, like
wheat, pig iron and coal?
The marvel Of it is that the railways
have been able, up TO this time, to con
. tlnue solvent and provide for the
major part OF their capital require
: ments. Operating economies, developed
by American genius like the increase
. IN the average train load in the last
, ten years from 344 to $40 tons. have
/ enabled the carriers to shoulder higher
? unit costs for labor and material. But
1t is plain that these economies-wo
derful as they are cannot be expected
10 keep pace with such rise in prices
as the world has seen in the last two
years.
If investors had the assurance that
rates for railway service would be ade-
quate to insure a fair return on the
property. there would be no difficulty
I in providing 100000. of new
capital every year for the carriers.
/ And what is of even greater impor-
lance, this capital could be provided at
comparatively low cost; the credit of
the carriers would be nearly as high
as that Of the government itself if the
government would support railway
credit by guaranteeing fair rates.
{ In its decision in the 1916 rate case
/ the Interstate Commerce Commission
, very concisely stated the situation as
follows:
! II is generally conceded that within the
next few years. If our means of transport
] tation by rail are 20 keep pace with the
calls upon them, very large sums must be
expended in the way of new construction
and new equipment While some small
portion of this may come from current
earnings. the great bulk must be new capt.
tai and this capital must be obtained from
/ the investing public.
II. therefore. we are to rely in the fut-
ure as we have in the past. upon private
f enterprise and private capital for our rail-
way transportation. the return must be
: such n will induce the investment. II is
therefore not only matter of justice. but
in the trueSt public interest. that an ade-
: quate return should be allowed upon rail
way capital.
That was seven years ago. Commits
sioner Harlan, in his opinion in the
/ 1917 rate case. restated the PROPOSE
! ton in these unmistakable words:
! Our population and our commerce have
! largely expanded. but there has been no
/ pansion. relatively speaking. in our trans
/ portation facilities. So long a.