The Washington herald., 1917-11-23
TURNS
BACK STOCKS
Railroad Securities Valued
at $1,7OO,0OO,0 900 Re-
turned, Says Holland.

dred million dollars par value Al
though Mr.. Warburg is no longer
associated with the international
banking house OF Kuhn. Loeb and
Company, he IL in excellent position
through his friendly relations with
partners in that house and also as
vice governor OF the Federal Reserve
Board to make a fairly accurate es-
innate of the amount Of American
securities which before the war were
held in Europe and have since the
war began been returned to the
United States.
II the statement made by Presi-
dent Loree a year ago of the amount
Of American railway securities held
in Europe was correct, then We have
taken back considerably more than
one-half of the total. Mr.. Warburg
told the Interstate Commerce Com
mission a few days ago that pre-
sumably we shall take back more
American railways securities, clearly
intimating that this will be contin-
ued until they are all absorbed by
the United States, at least II the
war lasts two years longer.
Some persons have thought that the
absorption Of these American railway
securities partially explains the con-
stantly depreciating quotations for
them in the securities market. Wheth-
er that be so or not, to have received
within three and a half years a bill
lion, seven hundred million of rail-
way securities which had been pur-
chased from time to time before 1914
by Great Britain and Europe, with
out appreciable effect upon the money
. market, and also at a time when
the government was raising billions
in loans, Is regarded as one of the
best proofs Of the soundness of Amer
lean financial conditions.
II It were only a question Of our
ability to absorb all OF the American
railway securities heretofore held
abroad, then the railway situation as
4 a whole would be of little Importance.
How important It is is to be inferred
from the somewhat disconcerting
statement which was made by Frank
A vanderlip to the Interstate Com
merce Commission on the day when
Mr., warburg also testified. Mr..
VanderIip said that the railway
situation had so seriously concerned
him that neither as an individual nor
as president of the National City
Bank had he bought any railroad Sc
curities for several years.
Broadly considered there Is really
very little difference between the
views which Mr.. Vanderlip ventured
to express-as well as those Mr.. War
burg gave to the commission-and
the attitude taken by the Council
OF Railway Executives OF which
Trumbun Is president This council
was organized four or five years ago
chiefly for the purpose Of beginning
work along educational lines There
was no war when the council was or
ganzied, but the, railroad situation
was growing more and more serious.
The council formulated certain ten
tative propositions which, II adopted,
might tend greatly to relieve the situ-
alton. The council supported govern
ment regulation and supervision, but
it believed that these influences could
be best secured and made very valu-
able it there were considerable
changes in the constitution of the
Interstate Commerce Commission. It
recommended two boards-one OF
which would have authority over rates
and general matters and the other
would be clothed with the power to
investigate conditions and to make
reports thereon. Mr. Vanderlip is per-
suaded that unless something radi-
calIy different from the policy now
identified by the management OF the
Interstate Commerce Commission be
adopted then 1t is Inevitable that the
government take over the railroads.
Mr.. vanderlip suggests the posi-
bIlity Of a sort Of governmental uni
fcation of railway management
through the adoption Of plan SINH
lar to that upon which the Federal
Reserve banking system is based. Rail-
way executives wonder whether this
can be done, or at least completely
done, unless there be an amendment
to the Constitution Of the United
States. For there are many railroads
operating under State charters exclu-
siyely within the boundaries Of the
state which granted the charter
Would It be lawful for the government
to take over these railrods?
On the other hand, the great bulk OF
the railway business of the United
States Is now interstate. Anyone who
visits the great freight yards or ter
minals near the larger cities can have
visible demonstration of that fact by
taking heed of the interesting lettering
upon the freight cabs. Sometimes
there will be contained within these
freight terminals cars of which the
ownership is IN railroad companies
which, as a whole, represent every
State in the Union.
Mr.. Vanderlip. speaking. perhaps, as
man of finance and not as an au-
thority upon railroads (although he is
an excellent authority upon important
railroad questions), estimates that the
railroads should have a billion a year
at least for the next five years il they
are to put themselves in condition to
meet the transportation demands. In
saying this Mr.. Vanderlip does no
more than repeat something which
James ]. Hill said several years ago.
Mr.. warburg believes that the rail-
roads cannot secure A,oooooo,0O0 a
year, or anything like 1t, unless their
credit be greatly improved; and neith-
ar he nor Mr.. Vanderlip is Of the
opinion that this credit can be per-
manently and substantially improved.
although It may be benefited. by per-
mission granted by the Interstate
Commerce Commission to increase the
rates Is per cent or even more. There
Is something beyond the mere ques-
ton Of increase Of rates. Perhaps the
railroads ought to be permitted to
pool, or to enter into combination as
they are now doing with the tacit
consent Of the government, although
clearly in violation Of the Sherman
antitrust law.
antitrust law.
The railway executive council has
always maintained that II there be
wise supervision, adequate regulation,
and a deaf ear to political or DEM
agogic appeals, then there is abb
solutely no danger to be apprehended
II pooling be permitted and combina-
tion or considerable coordination be
aIln1aA