The sun., 1919-11-05

sonsl interests, recognized the serious
ness Of the situation and has met It.
It ,is proper to state that We do not
agree, as Senator Cummins knows, TO
many Of the provisions Of the Cummins
bill. particularly those relating 20 the en-
forced consolidation OF all the railroads
into not less than twenty or moro than
thirty five new systems, and when power
is given to four Governmental roeulatory
agencies, which includes the Interstate
Commerce Commission, to bring about
such consultations within seven years
II at the expiration thereof such con-
solidations have not been effected volun-
tarily. they are to be enforced. During
this period, bargaining for the proper
ties through Governmental agencies un-
der forced valuation takes place. with
all the uncertainties incident thereto.
The owners Of these properties. In the
sbsenoe Of legislative protection AFFORD
ed by the fundamental requisites to
whioh ve have referred, would be con-
fronted during these seven years with
not only uncertainty as to the return
they are presently to receive from rates
to DO made, but also with uncertainty as
to the value of the principal of their In
vestment, dependent as 1t will be upon
the basis of such consultations. Such
are the conditions. should the conf
pulsory consolidating features of the
Cummins bill obtain, which confront the
owners Of railroad securities. The re-
suits to be obtained from our proposal
for rate adjustment with excess regula-
ton with permissive cohBolidations en-
couraged along natural lines) should
make unnecessary the enforced oontrac-
ton of the present railroad operating
structures into 30 limited a number of
systems. which, after the possible i'm
pairment Of both security values and
competitive service, may not bring the
results it's advocates hope for. II was
partly because of these conditions.
which II was manifest must sooner or
later be met, that action was taken by
the association represent in respect TO
the two fundamental requisites to con-
struotive railroad legislation herein
named. We hope consultations will be
made and without limit on their num-
Der.
General Endorsement OF Associa-
tion's Proposals.
Interstate Commerce Commissioner
Clark, who is chairman of the legisla-
two committee of the Interstate Com
merce Commission and whose experience
in regulatory railroad matters Is very
extensive, has. as stated, expressed him
self favorably relative to definite legis-
lation in respect to rate adjustment car
ryipg with 1t excess earnings regulation.
Mr.. Clark, as already quoted, testified
before the House committee that this
would "avoid endless controversies and
put an end to interminable discussion
and argument"
Director General Hines, with the ex-
perience gained during governmental
control and operation and prior to that
with the Santa Fe Railroad, has stated
before the Senate committee and else
where:
ANY level of rates which will pro-
vide enough revenue to sustain the walk
roads will give the strong roads more
than the public is willing for them to
have. This condition will make
the public always fear or suspect that
IL is being exploited through the trans
portation service for the benefit OF pri-
vate capital and will lead to continual
insistence upon the railroads being op-
Grated exclusively for the public benefit
through Government ownership and op-
Grafton. II any plan OF private
management Is to be successful It ought
to provide for the participation Of the
Government, and perhaps of labor. in the
profits in excess Of some comparatively
moderate return"
Our proposal, as already stated, In
cluded a division also with-iabor. This
has been abandoned temporarily at least
because representatives Of the brother
hoods discouraged It,.
Daniel Willard. who was a men,
Der OF the steering committee of the
Association of Railway Executives, and
resigned because he did not agree with
some OF his associates on tho committee,
believing b a fixed minimum return and
Nf, f1II rt,,nr %
say before the Senate Committee on
Interstate Commerce:
while this plan (minimum fixed re-
turn and regulation of excess earnings
Securities Association plan) does not
contemplate a positive guaranty OF any
fixed amount II would afford a definite
guide or measure and would. in my opin-
ion, be a decided improvement upon the
methods of the past.
II firmly believe that no less rate Of
return than 6 per cent. upon no less an
amount than the combined book invest
ment account OF all the railroads taken
az a whole viii be sufficient to establish
and sustain the credit Of the carriers"
The executives of two Of the most
prominent trunk lines OF the country had
indorsed the position taken by Mr.. Will
lard.
Alfred P. Thom, their own general
counsel (Association of Railway Execu-
tives), asserted before the same COM
mittee that the Interstate Commerce
Commission should be required to flx
rates adequate to sustain the average
traffic conditions-"not the richest nor
poorest, but average oondition"-in the
several traffic territories. And, in re-
spect to railroads earning more than
they had the right to retain, and what
they would not receive were they alone
TO be considered, Mr.. Thorn In answer to
a question testified:
THAT raises a great problem, and we
think that will have TO be dealt with by
some means OF having governmental
supervision over what we term the ex-
cess earning power OF those roads"
Notwithstanding all this and in the
face of the memorial presented to Con-
gress signed by investors and represen-
tatlves of institutions representing over
sac, 900, ,000, 900 of the total resources OF
the financial institutions of the country
and approximately S5 per cent OF the
funds available for the purchase of rail-
road securities who have petitioned Con-
gress in respect to this subject, COM
paratively few railroad executives are
attempting to defeat the purposes OF sec
| ton of the Cummins bill and of the
owners of these properties. including
stockholders as we'll as bondholders. II
accomplished II would likely bring upon
the country Government ownership and,
ponding this calamity, the destruction OF
the interests they may represent
g. DAVIES WARFrxIID, President
National Association of Owners Of
Railroad Securities, Baltimore, Novem-
ber /, 1919.