Omaha daily bee., 1919-07-14
BUSINESS CHANCE
FOR j, S. RAILWAY
CAPITAL ASKED
President of Union Pacific
Gives Suggestions to Men,
bers of Congress for SoIu-
ton of Railroad Problem.

New York, July ,13.-Suggestions
to members of congress for "a sound
solution of the railroad prob em," by
Robert S. Lovett, president of the
Union Pacific Railroad system, for
merly head of the division Of capital
expenditures of the United States
Railroad administration, made public
here Sunday, included as a funda-
mental principle the necessity of leg
islation that will give railroad cap
ital "a business chance"
IF congress will enact the neces-
sary laws giving railroad capital a
business chance" declared Judge
Lovett, Il believe that capital will
take a business risk and the money
required to provide the requisite rail-
road facilities for the future will be
forthcoming"
The head of the Union Pacific de-
clared that, in his opinion, the coun-
try is confronted with four contin-
eencies: inadequate and poor serv-
ice, government ownership, a federal
guaranty of reasonable return upon
railroad capital, or reasonable rate
fixing by government agency, the
latter providing consideration of
the needs of the traffic and the car
rier, with the right of each carrier
to keep whatever profit it can make
out of rates SO established, by good
management, good service, economy,
wise investment and success in COM
peting for business"
Need Sufficient Rates.
Regarding rate-making Judge Low
EFT maintained that the regulation
provided by congress Should re-
quire that the rates be sufficient to
enable the carriers to provide the
requisite service and facilities, pro-
tect existing investments and pro-
vide the new capital necessary in the
public interest" as advocated by the
committee of railroad executives and
submitted to the senate committee
on interstate and foreign commerce.
Judge Lovett. likewise, favors
five other features of the railroad
committees report as being remedi-
al and wise as national railroad
policy" namely: compulsory federal
incorporation, exclusive federal reg
ulatior of securities and rates, the
creation of Department of Trans
por;ation in the presidents cabinet,
the head of which would have power
TO act quickly and deal with emer-
gencies," and modification of re-
strictions upon railroad consolida-
tlcns and provision for the merging
of lines when in the public interest.
Our railroad transportation sys-
tenn" observes Judge Lovett. (which
is essentially national, should be res
cued from the irresponsible and
conflicting state agencies, and
Lrough under uniform control and
regulation in the national interest,
except as to strictly local matters.
without government ownership
or operation, the only reliance for
railroad revenue to support rail-
road credit must be upon the adop-
ton by congress Of sound rail-
road policy involving absolute JUS
+ice to railroad capital and requiring
specifically and plainly that the
rates to be fixed shall be sufficient to
enable the carriers to provide safe
and adequate service, to protect ex-
isting values and to attract the new
capital necessary in the public in
tsrest."
Deserving Encouragement.
Railroad investors, according to
Judge Lovett, are deserving as much
of encouragement, liberal treatment
and appreciation as stockholders in
other enterprises with no public in
terest involved"
No money except that devoted
purely to benevolence is employed
more in the public interest or is en-
titled to more encouragement or
fairer treatment and consideration
than that which is invested in the
construction and development of
railroad facilities" declared Judge
Lovett, who added that 1T is about
time that we were introducing COM
mon sense into some of our theories
about railroad capital"
Judge Lovett said he favored
compulsory federal incorporation be-
cause then the railroads would cease
to be mere creatures of the states"
and cease to be "tied hand and foot
when it comes to the issue and sale
of stocks and bonds" a restriction
that, "too often threw back upon
short term borrowing with danger
GUS and often unfortunate conse-
quences."
Exclusive Federal Regulation.
Exclusive federal regulation of the
issue of railroad securities. said
Judge Lovett, is so vital to railroad
credit and to the success of any
system of regulation that may be
adopted that "it must not be over
looked" Federal regulation of
freight and passenger rates also, he
thought imperative because of the
notorious" discrimination by many
state railroad commissions in ia
vcr of their own citizens against
citizens of other states.
Establishment of Department of
Transportation with a secretary in
the presidents cabinet was empha-
sized as needful for the reason that
the railroad business, "the largest
single industry in the United States
next to agriculture, is unrepre-
sented in the government and with
cut any friend at court" Such an
official, Judge Lovett said, would be
able ito meet the emergencies re-
srlting from exceptional congestion
in traffic or through blockades in
transportation, by quickly mobiliz-