The sun., 1919-08-15
WALTER EXPOUNDS
WAKEFIELD REMEDY
Labor, Capital and Public to
Share Excess Railway Prof
its, Congress Is Told.
Is AVAILABLE INSTANTLY
Would Limit Dividends to 6
Per Cent. by Adjustment
of Tariffs.
sr.ctn, ps,patcn to TIE sur.

Special Despatch to The Sun.
wAsHINoroN, Aug. 14.-Return OF the
railroads to their owners with direc-
ton from Congress to the Interstate
Commerce Commission that rates be adj
justed so that a return Of per cent. on
the fair aggregate property value Of the
lines may be assured was urged before
the House Interstate Commerce Commit
tee to-day as the solution Of the rail
problem by Luther NJ. Walter, general
counsel of the National Association OF
owners of Railroad Securities.
MIR. Walter supported the warfield
plan. which in addition provides for
equal division of surplus above the fixed
return among labor, the roads earning
the surplus and the public. Participation
OF labor and the public in the surplus is
one Of the fundamentals OF the plan, he
said. The plan proposes the creation of
six regional branches Of the Interstate
Commerce Commission.
Compulsory arbitration of all disputes
between capital and labor also was sug-
gested by Mr.. Walter. with an impartial
Government commission sitting as the
arbitration agency.
Labor should not be allowed to strike
until its demands and alleged injustices
we've first submitted to the commission,
which In effect would be a bar OF public
opinion, and capital should be compelled
TO take the same procedure In case
lockout was planned" he said.
Fair Return on Property.
Questions by committeeman disclosed
that the per cent return the commits
sion must guarantee under the Warfield
plan would be on a fair property valua-
ton. and he pointed out that roads with
large quantities of watered stock would
have to pay much smaller dividends than
the lines FREQ from such an incumbrance.
He opposed the position of the railroad
executives for Federal Incorporation, for
transportation board and for a secre-
tary of transportation in the Cabinet
and brought out that under the minimum
return plan the net result of railroad OPP
erations In the pre-war test period, which
is the basis of Government rental, would
have been the turning in of a surplus
by some of the carriers for division with
labor and the public. This would have
been accomplished. he said, on the level
of rates then prevailing.
Mr.. Walter said in part: THE Ma
tionai Association of Owners of Rail-
road Securities is voluntary organiza-
ton made up of holders of railroad Sc
curities, the bonds predominating
Through Its memberships directly and
indirectly by institutional and Individual
membership the association now repre-
sents nearly 100000 actual paid up
membership Of the outstanding S19. 000,-
100000 of non-duplicated railroad Sc
curltes.
1--WE use the property investment ac-
count OF the carriers as the basis upon
which to apply the per cent. because
the l. C. c. in the per cent. case found
that the only basis available for prompt
determination of the sufficiency OF the
return upon investment
Would Give Labor Its share.
THE second fundamental of the War
field plan is that labor shall participate
in earnings of carriers We believe capt.
tai Is entitled to Its return of 6 per
cent that labor is entitled to a fair
wage, and that the excess earned by the
carriers after paying fair wages and 6
per cent. on capital should be divided
with labor and the public. Labor's
share should be used for the establish
Igent of the insurance system or for
profit sharing. BY reason of the largely
increased duties which will fall upon the
committee the security holders ask Con-
gress to create six regional interstate
commerce commissions subordinate to
the commission but with all the powers
Of the Interstate Commerce Commission
in their respective territories.
There should be accorded to a car
rier however, part of the earnings
in excess of the maximum reasonable
return so that the incentive to economy
and efficiency in operation should not
be lost. We believe that one third OF
the excess over per cent. is sufficient
10 encourage incentive and initiative in
operation: that the carrier will be anx-
ious to make the additional dollar in
order that~it may have the 33 Ia cents
for its own treasury. The other two
thirds of the excess I believe should
be divided equally between labor and
the public. which has paid the money.
"Thus we have what we regard as
the ideal relation between capital which
has made the investment, labor which
has performed the service and the pub
lie which has paid labor and capital
for Its services. The application OF this
principle will not reduce the usual and
customary dividends of the carriers Had
the system been in effect during the
test period OF three years endingt June
so, 1917, there would have been excess
earnings OF s12e.OOO,Oo0.
How Plan Might Have Worked.
1.-THE corporations earning in excess
of per cent would have received one
third, or $4,000. 900. There would have
been left to divide betVsen labor and the
public some $S4 100000. During that
three year period had the Warfield plan
been in effect every customary dividend
could have been paid. The only erect
would have been to reduce the corporate
surplus of carriers to whose earnings
the plan applied.
1.-THE Warf1eld plan contemplates 8
continuation Of the present rate commits.
sions composed Of representatives OF
both railroads and shippers primarily tC
consider and pass on all changes In
rates requested by either railroads oil
shippers and before being died with the
regional commission or the l. C. C. "a
provided in the plan.
And lastly the Warfield plan would
create corporation operating without
profit to the railroads and under Fedora
control, directed by trustees, the min,
interstate commerce commissioners anC
eight railroad men to finance in tho
present emergency such equipment al
may be purchased by It from the Rail
road Administration and allocated to IN,
railroads and furnish Immediate mean,