New-York tribune., 1918-02-08


troll bill, as reported yesterday by
the Senate Committee on Interstate
Commerce, appears to be quite as
satisfactory to all concerned as could
have been expected. In view of the
rapid shrinkage in the dollars COM
mand of goods more liberal compen-
sation would be defensible, but the
earnings proposed to be guaranteed
are not far below the best ever en-
joyed by the carriers, and probably
much more than they would have re-
ceived had private operation been
continued through the war period.
There is every prospect that COM
modify prices will continue to mount
rapidly, and a sustained rise in the
railroads cost of living might easily
have imperilled the solvency of many
of them. Now they will be immune
from the effects of higher prices if
the bill is passed as it stands. For
the time being the railroad share
holder will be in a position strikingly
similar to that of the bondholder-a
position in which f1uctuating fort
unes of the carriers will be of no
concern. The return on stocks will
not be fixed, as in the case with bonds,
but it will be just as certain.
That is the favorable side of the
matter, but there is an diverse side.
We are not at all inclined to agree
with the majority report of the Sen
ate committee in it's statement that
the guarantee will be of great value
in future war financing by stabiliz-
ing values. The return on railroad
stocks will be limited. Our policy of
war finance calls for unlimited infa-
ton, and imitation will be the chief
influence controlling the value of Sc
curities of fixed or limited return.
The creation of vast amounts of new
buying power, by imitation Of bank
credits, must inevitably result in a
great rise in prices; and as the pur-
chasing power of money declines Sc
curities of this character must un-
dergo process of readjustment. 1t
was readjustment Of that character
which was mainly responsible for the
great decline in values that culmi,
mated, temporarily at least, late last
fall.
The time fixed for returning the
roads to their owners - eighteen
months after the ending Of the war
is not too long. 1t is certain that
many important problems will have
to be worked out in the light of ex-
perience meanwhile. Discussing this
phase of the matter, prominent
banker remarked that regional sys-
tenn, similar to the Federal Reserve
banking system, would be the logical
outcome. "The trouble ISL he said,
chat neither the railway executives
nor Congress are sufficiently intelli-
gent to meet the situation as it should
be met. There are few, if any, great
railway men these days, while the
standard of ability in Congress is
pitifully low-lower than it has been
in many generations.
The minority report favors equal
division of surplus" earnings, but
this proposal is properly rejected by
the majority. There is no fair basis
for determining Surplus" earnings.
Locomotives and other equipment are
taken from Western lines and sent to
the Eastern lines to meet the short
age here; profitable traffic is divert
ed from one line to another, and so
on. AS result of such changes the
earnings of the Southern Pacific
might fall below the guarantee, and
the government would have to make
up the difference, while the earnings
of, say, the Central, receiving the
benefit of the diversion of traffic and
equipment, might substantially ex-
ceed the guarantee, in which case,
under the proposal to divide "sur-
plus" it would get earnings to which