New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-12-28
Is Ii Control or Operation?

The abrupt rise IN the value OF rallIodd
securities on the New York Stock EX-
change yesterday was owing not to any
ccstatic view Of The future, but to sense
of profound relief The carriers had been
Immediately delivered from an intolerable
situation, containing elements Of disaster.
On one side was labor, sympathetically
supported by the government, demanding
a very large increase in wages. On the
other side was the government demanding
impossible services and so interfering with
its priorties orders that chaos of opera
tions was imminent. There was then the
problem, not to say the impossibility, OF
raising new capital wherewith to enlarge
railroad facilities. in competition with I'M
limited war loans. The railroads were
poweress to solve these difficulties. They
were at the end of their resources, and the
value of railroad securities had fallen to a
point at which serious financial disorder
had begun to be feared.
Enter now the government. 1t takes
over the entire American railway system.
1t assumes the burden Of wage adjust
ments. 1t will find the capital needed to
extend the facilities and put it into the
properties, to be accounted for later. Net
earnings out of which to pay interest and
dividends on existing private railroad
capital are guaranteed at the average OF
the three years preceding June so, 1917,
which means that interest and dividend
payments may be continued as before,
whatever else happens, provided Mr.. Nc
Adoo, the railroad dictator, does not act
upon the strange and undiscussed power
reserved to him in the phrase, dividends
and interest may continue to be paid
until and unless the said director shall
from time to time otherwise by general or
special orders determine" When the first
feeling of relief has worn off, Wall Street
will become very curious as to that reser-
walton.
So much for the financial aspect of the
case. We come now to the public ques-
ton, will the railroad machines effec
tiveness for war be enhanced? That will
depend upon whether the government con
fines itself to the policies, as it should, or
undertakes, as it shouldn't, both to deter
mine policies and to operate the railroads.
Government control of the railroads is
necessary. Government operation Of the
railroads might be fatal. The reasons
why control is essential may be stated in
a very simple manner.
If you will look at a railroad map you
will see between New York and Chicago
great many parallel lines, each owned
by separate company, each company try
ing to hold its share of the tonnage, each
trying to move freight both east and west
at the same time. 1t is like traffic moving
in both directions in the same street. To
meet the traffic problem in a city you make
"one-way" streets and enormously relieve
the congestion, because the capacity Of a
given street for traffic in one direction is
very much greater than the capacity of
the same street for traffic moving in two.
Obviously, with the railroads, if you could
treat them all as one system, routing
freight eastward on these lines and west
ward on those, without thinking who
should get the earnings, you could greatly
increase the carrying capacity of existing
facilities. But if you pool the lines and
the equipment and all the facilities you
have to pool the earnings also, and this
the railroads could not do on their own
account because some roads would fare
very much better than others, and the
managers had to think of their security
holders.
Now the government says; 1--WE guar
antee returns to your security holders
equal to the average Of the last three
years Having done that, we take control
of the railroads and treat them as one sys-
tenn for the duration Of the war
If the government will stop there and
leave the operation Of the railroads in the
hands of operating men the effectiveness
of the transportation machine lCW be in
creased. If, having taken control of the
railroads out of the hands Of the owners,
it will hand them back TO the operating
people and say, There they are; take
them and run them as one system, without
thought Of dividends and interest pay
ments, using every mile Of track and every
car and locomotive in common, only to get
the freight moved" If it will say that,
the thing is done. The railroads will have
been unified" That is essential.
But if the government undertakes to
operate the railroads there will be an
other story TO tell. Its interference with
operations already has caused 10000 cars
to be tied up under priority orders. The
railroads are moving 10 per cent more
freight than last year in spite of this in
reference; they could be moving perhaps
80 per cent more than last year without
It, If the operating men who know every
mile of road and the whims Of every loco