The sun., 1919-08-13
RAIL MANAGEMENT
FLAYED BY PLUMB
Charges Plot to Make Invest
ment Accounts Basis for
Rate Making.
EXPENSE TOTALS PADDED
$3.50, 900, 900 Stock Bonuses
Given Away, He Tells the
House Committee.
Special DespafcA 70 Tnn suN.


WASHINGTON. Aug. 12,-Glenn E.
Plumb. author Of the Plumb plan for
turning the railroads over to the en-
ployees to run under the guise Of Gov
eminent ownership, continued his testi-
mony before the House Interstate Com
merce Committee to-day by making
wholesale charges against the private
try and against the fnanciers concerned
with the railroads.
Mr.. Plumb. charging that the railroads
are ~overvalued tremendously. their stock
watered and values inflated, demanded
that Congress make a thorough investi-
cation. After reviewing parts of what
he said before the committee on Thurs
day last Mr.. Plumb read this statement
to the committee:
Il have shown by excerpts from re-
ports by the Interstate Commerce Com
mission that the property investment &C
counts of the railway lines in all of the
transportation districts of the United
States are wholly unreliable and cannot
be used as the basis for determining
what the public shall pay for service.
IL have shown that in the five railway
valuations first completed and published
by the Interstate Commerce Commits.
sion the actual cost OF reconstruction
now. including the increased value OF
lands n real estate, is about so per
cent. OF the aggregate property invest
ment accounts Of the Ave railways SO
valued.
II charge that me nearly completed
survey of the entire transportation area
of the United States contained IN the
reports of the valuation division of the
Interstate Commerce Commission, so far
as that work has now progressed. con-
firms results disclosed by the valuation
of these Eve roads. I charge that the
aggregate investment account. as stated
by the carriers so examined, exceeds the
estimated cost of reproduction new by
the same or approximately the same per-
centage shown in the valuation of the
Ave railroads as o In my testi-
mony.
Earnings Expanded.
81 charge that in such investigations
so made by the valuation division of
the Interstate Commerce Commission,
where the cost OF reproduction now APP
proximates in amount the investment
account as stated by the carrier, II will
be found in most instances that this ap-
piOAllldllOn Is Ouc u lnc IdCL ludl vast
expenditures have been made out OF sur
plus and excessive earnings after the
| payment Of ample dividends on the
actual investment; that these surplus
earnings have been expended On or
~ploughed into the property in such way
that the actual cash investment, includ-'
ing these surplus earnings, has brought
the level of cost OF reproduction new
up to the property investment account
OT AAn.--o al.N D.--sA-s Tv-A~-NA
of the Erie Railroad in an interview
recently given to the New York World,
stated that the expense OF operation
under Government. control had been
greatly increased by the employment for
political purposes OF unnecessary en-
tployees. and that this increase in pay
roll expense had been nae for the pur-
pose OF building a political machine. I
charge that investigation of President
U~nderwood's indictment will disclose
that X there has been w~astefulness Of
money in swelling the payrolls. It has
been at the instance Of railroad manage
ment to max the expense account under
Government control appear e~xtravagant
and wasteful.
Roads Were Depleted.
81 charge that at the time the Govern
ment tool control of the operation Of
the railroads they were in such depleted
condition as to maintenance and repairs
of both roadbed and rolling stock that It
has required hundreds of millions OF
dollars advanced by the Government to
place them in effective operating condi-
ton.
Il charge that in the making of such
expenditures the railroads operated and
controlled by men under the influence o.
Wall Street directorates have spent vast
sums in unusual expenditures for main
~tenance and supplies, anticipating the
return OF the railroads to the private
owners. that such unusual expenditures
have been made for the purpose of plac-
ing these properties in perfect operating
condition n furnishing them with sup
piles for a long period of operation
ahead, such supplies having been paid
for out OF Government none at exorbi-
tant prices.
81 charge that the Interstate Com
merce Commission was six years ago d.
rected by Congress In the provisions of
the valuation act to ascertain and report
the value Of all aids, gifts and rants
made to railway corporations, the value
of those grants at the time made, and
the value of the portions OF the grants
still in the possession OF the carriers at
the time OF valuation. This work has
not been done
Lands Given to Roads.
ct charge that the records disclose
that an area OF land exceeding 100, 000,-
900 acres. or 296,S75 square miles, has
been given by the United States Govern
ment and by the various State Govern
ments to our railroads to aid In the con-
struction OF our national highways that
this area exceeds in extent the areas OF
all the New England states. New York
Delaware. New Jersey, Pennsylvania,
Maryland. Ohio. Indiana and Illinois, and
exceeds the area of either England
France, Germany or Austria-Hungary
before the war hat OF the grants made
113, 000, 900 acres had been patented and
80, 900. 900 acres had been forfeited prior
to Tune 80, 1910. and hat OF the re-
mainder the greater part is still avail
able. / charge that the values OF the
grants SO made have either been appro.
priated to the private property OF tn,
railway promoters or they W beef
capitalized as a part of the value Of
these properties upon which the grantees
now demand of this Congress the righI
to exact returns from the public.
IT charge that during the period from
1900 to 1910 the Chicago. Burlington anC
Quincy. the Chicago, Milwaukee and st
Paul. the Chicago Northwestern. tn
Great Northern, the Illinois Central anS
' ,ka co,&harn Danfdo - iIrna da mn VA awa,