Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1917-12-17
LIBERAL u. S. POLICY
NEED OF RAILROADS
Public Supervision and Efficient
Private Operation Urged
by National City Bank

TINHE demands of tho trainmon for more
L pay are !ust IN time 10 be passed up 10
the Government authorities with other fea-
lures of the railway situation. The railway
oHcials have advised the President that they
VIII be guided by his judgment H.. tho matto",
and the officers of the brothorhoods are
Understood to have taken virtually the same
attitude. This question would seem, there
fore, To be reduced to n determination of how
much more wages the men shall receive and
what compensatory rate increases tho rail-
WAYS shall receive.
Tho railway problem, however. Is much
larger than a question OF wages or even Of
revenues. Above all else 1t Is n question Of
economical and efficient transportation sery-
Ice. ana the necessities of the country are
requiring that treatment of the subject shall
be undertaken in a large way The railroads
have been developed by private enterprise
aud private capital, and on the whole, It has
been a wonderful DEVELOPMENT but IN recent
years 1t has not Kept up to the growth of the
country. For the last ten years operating
costs have tended to increase faster than
earnings and railway investments have been
less in favor.
Such capital us tho railways have raised
in the last ten years has been procured
mainly by borrowing but this makes the
position Of tho shareholders more precariuu5
and cannot be continued indefinitely without
affecting the position of the boudhoder5 uu-
faNorablE In every other business it is con
shall be a proper relationship between Lor-
rowed capital aud proprietors capital, and
II this Is not maintained the ability {" bor-
row 10 curtailcd. Loans upon real estate
are commonly restricted TO about "nc-halt
the value of the property, and the railroads
TO be in sound credit and able to borrow at
favorable rates should be able from time
TO time to sell their stock 70 tho public in
such amount. as tc keep proprctor's capital
approximately equal to borrowed capital In
order 10 DO this. however. there must bc u
sufficient margin Of net earnings above diNi-
dend requirements 20 give assurance that
dividends will be maintained. Such surplus
earnings when returned to the properties
are not lost to the public for they take the
place OF increased capitalization upon which
dividends or interest would have to be paid
The situation in the last ten years has not
been such as to attract capital to the rail-
ways in the amounts required to onablo the
companies to plan for tho future in an adc-
quatc manner Moreover, with the Govern
mint taking all the capital IN sight ard V i'm
construction and operating costs mounting
higher and higher, the outlook for AN AIDE
quale program OF cy.lopmcut in uln future
g. not Encouraging.
Coordination VI. Competition
No matter what mistakes have been made
IN tuC past Or who is most to blamo for
them, il is timo now for everybody to look
at the Countrys transportation problem with
sure of an emergency by common consent
often shows the way to permanent reforms.
The Federal reserve banking organization
has followed and developed the general IAul
Of clearing house cooperation, which the
bankers lUrriedly conceived and adopted in
the face of panic, That idea has been de-
vclopcd until tho connecting interests of the
individual companies in current trailic have
been virtually lost sight of.
This Is revolutionary, not only from the
INF
standpoint OF the public. II has been the
theory OF alI our legislation that The rail
ways must be madc to compete: ma when
wc face the necessity for tho highest Clii-
cheney it is found that they must work to-
gCthcr. Opinions change rapidly when there
are no alternatives Congress will doubtless
be asked this winter to legalize the co-upera-
tive methods which have been put into effect
at least for tho period ut The war; but the
gains which are demonstrated by a closer
indignation of the transportation service
should never be abandoned.
Constructive Program Wanted
Tho country needs broad, constructive
program for the transportation service. and
all parties mt interest should cooperate in its
development. The amount of new worl;
which can be done in wartime VI limited
but nothing could give assurance of general
prosperity after the war like II plan FOR rail-
way deN elopnlent.
which is the point Of weakness now, and
make ample provision for the expansion Of
traffic and the accommodation of all roads.
1t should include docks and harbor improve
luCnts and the equipment and connections
necessary to utilize and correlatc inland
waterways with the railway system The
old hostility Of the railways to the water
ways should cease and their facilities should
be linked. The rivalries of rail systems
should be suborduated to the general pur-
pose Of affording the best facilities to the
public III the most economical manner. The
difficulties of such policy would be very
much less now than in the past because of
the low market values which have ruled
for railway shares III recent years. Owners
of railway shares are more interested in
having values stabilized and moderate earn
ings assured than in contending for any
MONOPOLY values which favorable loca don on
superior terminals have given them
The effect upon the business situation of an
extensive program OF construction work to
follow the war is consideration not to be
valued lightly. y state Of hesitation and
depression III tho transition period would
cost the country enough to pay for a vast
amount of useful work.
In order 10 give the element OF certainty
required for such a comprehensive plan in
the present state Of railway credit and 10
obtain the desired psychological effect it
would be necessary to have the cooperation
Of the Government possibly TO the extent
of a grant of credit The Government.
having control Of the charges. would be safe
in giving such assistance, and the economies
effected would provide the income for interest
and "A sinking fund to retire securities issued
1t would he essential. however. to the sue
cess of the policy that the owners of railway
shares should be assured new obligations
ahead Of the stock would not be TO the detri-
mcnt of the latter.
Government Ownership
The objection TO a proposal for Govern
rnent assistance to the roads is that in some
arters IL will stimulate the agitation for