The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-05-05
SAYS R. R. PROBLEM
MENACES INDUSTRY
LOree Pleads for Settlement of
Question Satisfactorily
and Speedily.
DISCUSSES q. s. CONTROL
d. & H. Net Income of 1918
Was $4,714,792 During Z.
1917 Was $4,992,779.

ana Hudson Company, in the annual re-
port which will be issued to-day, de-
ciares that the railroad problem must be
settled satisfactorily and speedily or the
whole Industrial fabric will DO affected
unfavorably. Correction of the defect.
under which railroads and other public
service enterprises have been compelled
10 wait Tor Justice until action, which
promptly taken, would have suff1ced has
become wholly insufficient, is, he says,
among the plainest necessities of the sit
uation. Discussing Federal control in
the annual report, Mr.. Loree says in
part as follows:
The act of March 81, 1918. under
which the railways are operated. per
mits Federal control for no longer than
one year and nine months after the
proclamation by the President of the
exchange of Publications OF the treaty
OF peace. Notwithstanding certain eff
forts to prolong the period, and an ap-
parent desire on the part of numer-
ically slight section of the public to
utilize the emergency action. in violation
OF solemn pledges at the time II was
taken. as a means to permanent owner
ship by the Government II is plain that
the great majority of the public desires
as prompt return as possible to normal
methods and conditions. This Is espe-
cially true of those who. as travellers
ana Shippers have most frequent occa-
sion to require railway service.
The discussion of the legislative
changes which should accompany the
return Of the properties to their owners
Is In progress. Many and varied pro-
srammes have been suggested and with
n Qhnr
measures is likely to become detailed
and definite. Intelligent discussion of
these problems ought to proceed from
| initial recognition that the solitary basis
OF necessity for the radical action OF
December. 1917. was the destructive
character OF the regulative measures
ana methods that had accumulated
rather than developed. up &c that time
1t was the financial weakness OF the
carrier corporations caused thereby that
In the face of a great national emer-
sency impeiled toward the proclamat ton
of December rs, 1917
Conflict of Authorities,
"On the side of financial resources the
regulative measures had left no margin
of safety. Independent and conflicting
authorities. none OF them with definite
or recognized responsibility for obtain
ing an equation between required ex-
penses and permitted income had regu-
lated expenses, chiefly. but not by any
means wholly. those rejecting rates OF
wages upward while rates of fare and
freight were regulated IN the opposite
direction or held nominally stationary
while the medium of payment was rap
ldiy declining in purchasing power
Prior to the war these conditions had
induced sporadic disasters.
I'm other cases they had merely
threatened With enormous imitation Of
the war period and sudden pressure
on reduced supply of labor and result
ant high wages, the situation became
unavoidable and impossible. The only
| relief lay In the direction Of a prompt
adjustment of rate schedules TO the
new conditions, and between such an
adjustment and the corporate managers
the machinery of regulation seemed TO
interpose as an insurmountable obstacle
BY means OF Federal possession, the
president conceived that an adequate ad-
tustment OF rates could be obtained
without excessive delay and that, pend
ing such adjustment, the inevitable
losses OF operation could be. in the main,
shifted to the public treasury. II the
former could have been accomplished
without Federal possession, the. latter
would have been unnecessary.
THE problem is the elimination of the
conditions of which this weakness in
face of emergency was the inevita BILE
result. The mere form of the regula-
tive system determined upon Is OF minor
consequence. The essentials are that it
should be complete and systematized.
prompt and sympathetic. II rates Of
wages are TO be controlled by public
authority. in consideration of the obli-
CATION Of employees as well as owners
not to interrupt the public services rem
dered by the facilities they operate it
Is necessary that there should be CO.
ordination between regulation of wages
and regulation of rates. Otherwise, the
carriers are not unlikely to be required
to pay wages in amounts in excess of
in effect out of capital. with the early
result OF impairment OF service and the
ultimate consequences II uncorrected
of its discontinuance.
There have in recent years been many
instances in which one public or quasi
public authority has coupled with a
direction to increase wages the declara-
ton that to meet the added expenses
there must be compensatory changes
in rates only to have the proposed COM
pensation refused by a second authority
Threatens Industrial Fabric.
Railways and all public service en-
terprises are required to operate for
moderate returns to their owners and
these returns secured by but narrow
margins of safety. Such has been the
public attitude in the more recent past
where 1t has not appeared to be even less
favorable and there is no evidence of a
change Of temper in this respect. II this
attitude is not to be fatal to private
management. the rectification of condi-
lions that would destroy the margin
between solvency and insolvency must be
immediate. The remedy must always
be applied before the margin has been
absorbed. This implies a degree of rap
idity in regulation which the past has
shown them not to possess.
Railways and other public service
enterprises have been compelled to wait
for justice until action which. IL prompt-
ly taken, would have sufficed. has be-
come wholly insufficient. The correction
Of this defect Is among the plainest ne
cessities of the situation. Regulation to
be consistent with the public interest
must be applied in the light OF sympa-
thetic realization Of the problems and
| needs OF the industry.
The scales OF justice must be held
In balance without Partially to the pur-
chasers of transportation and with ade-
quate comprehension that. in the long
run. the interests of those who desire
transportation services and those who
ara equipped to render such services are
Identical. Economic efficiency reppses In
ability and intention to create AID dis
] pose OF some commodity or service on
| terms which afford a just profit to both
parties to each transaction. II either