The Washington herald., 1918-12-17
SUGGESTS US.
BUY R. R. BONDS
Financier's Views May
Have Influenced Congress,
Says Holland.


road conditions offered. tentatively, a
suggestion or a plan which might. he
thought solve the difficult railroad
proposition. so that the government,
the railroads and the people would be
content His suggestion was that tho
government should buy the shares OF
fhe American railroads. II may be
fhat Mr. McAdoo had something Of
that wind in mind when he contem-
plated. as some of his friends asserted
he did, the utilization OF the bonds
which the foreign governments viii
deliver to the Treasury Department TO
take up the demand notes which rep
resent credits or cash loans to these
nations by purchasing for the govern
ment ali the American railroad shares.
But this financial authority went
further. He suggested that while the
ownership Of the railroads should be
IN the possession of the government
and therefore the people. on the other
, hand. the public who own the bonds
that represent the fixed obligations OF
the railroads. should continue in that
ownership. Then. again. he suggested
that the government permit individual
or personal direction or operation OF
the railroads. so that In that way in
dividuaI initiative would remain un-
impaired.
George w. Perkins recommended
that the railroad corporations of the
United States should be FederaliZed
in other words. act under a Federal
charter. Mr.. Perkins argument in ia
vOr of this proposition was that were
the railroads to secure authority for
operating by means OF Federal char
ters then necessary publicity. wise
and adequate control or regulation
would be secured and the various
veXing problems due to the fact that
so many railroads operate under State
charters would at last be eliminated
II may be that suggestions of this
kind have been heard and needed by
some Of those who are of influence
In Congress. Certainly one of the
fundamental principles behind Mr.
Perkins suggestion and that of the
high authority just quoted. appears
to be contained in the bill which q
day or two ago was introduced in the
House of Representatives by Mr.. Gray
who represents one Of the New Jer-
sey districts The objects upon which
IL based this Gray bill are similar in
some respects to those which are be-
hind Mr.. Perkins suggestion. and
that Of the man who recommended
the government ownership of the rail-
roads. Today almost all the railroads
OF the United States arc operated as
though behind them stood Federal
charters. Mr.. Gray goes much fur
ther. however than some of those
who have given deep thought TO the
railroad problems. for under his bill
II Il becomes a law. the board of di'
rectors OF each railroad system would
consist. first, of representatives Of the
government. next Of representa- tives
OF the bondholders apd the stockhold-
ers. and last OF all of the employees
The government. Mr. Gray feels as
sured. will find benefit In a provision
OF this kind because II would share
Sin the profits. although no money
would be paid. interest charges had
established a cumulative sinking fund
and also a small cumulative dividend
to the stockholders.
step In Right Direction.
While the so-caIIed Gray bill has
Occasioned a great deal of comment
in railroad and financial circles II
is looked upon nevertheless as q
crude measure. and yet as one
which suggests that we are gradu-
ally and probably wisely approach
ing a satisfactory solution of the
diffcuIt railroad problem. Never
theless certain experiences of the
past are regarded as not justifyinE
the hope that government repre-
Sentation upon the board of direc-
tors would he OF any special value
The appearance of government d.
TectOrs upon railroad boards pUr-
porting to represent the interests
Of the government through land
grants or the issue Of bonds to the
railroads. was regarded in the past
by railroad managers as something
Of a Joke and even by some of those
government directors as furnishing
an opportunity for enjoying without
cost prolonged excursions, some OF
them across the continent. The
late Isaac II. Bromley who was al
one time a government director
Rpon the Union Pacific board used
always to speak as though his as
sOciation with that board was in
the nature OF a recreation. an op-
portunity to have a good time So
also the late Prentice II. Bailey.
who was an intimate friend of
Grover Cleveland and who was ap-
pointed director representing the
government upon one of the rail-
road boards, was accustomed to
speak with a sly and yet pleasant
smile Of his official relations as gov
ernment director. However. under
Mr.. Gray's plan OF any other which
may be adopted whereby the gov
ernmsnt would have representation
on the board of directors there will
be likely to be a realization of the
responsibilities and Importance OF
such an association.
What Banks Can Do.
II IL were necessary and if the pro.
ceedings were legal then the resources
OF all the banks of the United States
as these were found to be at the END
OF the latest fiscal year, could be EN-.
pIoyed to meet all the obligations in
cured by the United States from the
, day when We entered as one of the
belligeTents in the war. Washington
authorities report that on June 30 OF
bis year the resources of all these
ranks amounted to SO. .21O, ,OO0. 900. Who
ever compares these resources to those
which were reported on June %, 1914
will get some idea OF the rapid growth
Of the country. Curiously enough the
resources of the State e-chartered insti.
tutions exceeded those of the national
banks by about $500, 600. go. and
in this difference is to be discov.
cred one of the reasons why the gov,
ernors Of the Federal reserve system
are anxious that more and more this
State-chsrtered institutions ally them
selves with the Federal reserve sys-
tenn. The national banks of tn.