Pine Bluff daily graphic. (Pine Bluff, Ark.) 1893-1942, 1919-05-14
Root OPPOSES
Incorporation
OF RAILROADS
condemns Federal Guaran-
tees of Income.
IAVORS A FIXED
RATE OF RETURN
letter Read Before Missouri Bankers
Outlines Views on Railway
Problems.


St. Louis, May 13.-Compulsory fed
bal incorporation of railroads, GOV
Eminent guarantees Of income and
he removal of the roads from the
Jurisdiction of the present state COM
hssions as steps proposed prior to
he return of the railroads to private
ownership, were condemned by l1lihu
Root, in letter read today before
be Missouri Bankers convention. in
ession here. Mr.. Roots letter was
lead by S. Davies Warfield, president
i the National Association of Owners
i Railroad Securities, who had re-
uested an opinion from Mr.. Root as
dvisory counsel to the association.
As an alternative, Mr.. Root unqual-
iedly endorsed the plan put before
ne Security Owners association, I'M
er which congress would fix fair
'ate OF return of the railroads of each
alternating district as whole and
}equire the rate-making authorities
4 fix rates which would presumptive-
v yield that return. In the event of
fny road making more than the pre-
Rcrlbed return, the excess would be
Rken by the government and used to
promote public interest in trans
Portatlon. A general rate fixed by the
government for all railroads, Mr.. Root
contends, has this defect: If the rate
fixed so as to give fair return
4 weak roads it will give an excess
YVe return to the strong roads, while
1 the rate is fixed OH the basis of
n equitable return to the strong
pads, 1t would drive out of business,
|nelr weaker competitors.
FavOrs Return Of Roads.
Mr. Root precedes his conclusion
Fltn the statement that at is appar-
Pit that the people of the country do
pol wish to enter upon permanent
|yslem OF government operation. The
|aliroads are to be returned to private
he says, "and cannot be
permitted to 60 back to uncontrolled
pperatlon of the earlier period" He
maintained also that some provision
nust be made Ito prevent the con-
pnuance of the steady progress to-
sdfa bankruptcy which characterized
ile decade before the government took
, I in 1917" He points out
~, nat half of the people of the United
''a'es are interested directly or in
'reetly in the $4,000 100000 of Sc
urllles representing the railroad in
estlaeht OF the country and that one
Iuarter OF the savings of thirty mil
aoh people holding policies in the
.eat life Insurance companies is in
es'ed through these companies in
a'loaa securities. "That, however"
! continues, lis only a small part of
~ reason for some arrangement
.nicn vii! maintain the value of these
ss. :; Railroad securities are a
mel basis of credit on which de-
nus all the business of the country,
nv II mat credit be destroyed, the
to all American pros
erily VIII be intellectually disastrous"
incorporation Unnecessary.
- ~ regard to federal Incorporation
n Root says:
!, mere is only one avowed purpose
,nicn could be accomplished by this
aaa ana that is to withdraw the rail-
: ~ entirely fro mthe jurisdiction
.ne state commissions. This is I'M
e'essafy because congress has power
:, autnorlze the federal rate making
;a.norltles to overrule state commits
,ons IN respect to rates which inter-
20. az, VIII interstate commerce rates.
lne commissions ought not to be
sss.Ioyed. The people along the lines
~. .ae railroads of the several states
aen, TO have near their homes bodies
:, winch they can go for redress of
.,vvahces against the railroads. They
w. usn. not to be compelled to go to
rTS,nihgton for that purpose"
IN me proposal for government
= aarahty is objected to by Mr.. Root
: ene ground that as the government
, ,aS, make the guaranty good, there
on.i oe neither opportunity nor in
oaa Tor private enterprise in the
oan ordeyelopment of rail-