The Birmingham age-herald., 1919-06-14

)f which will be returned to the govern nent as that operation is wound up.
 The appropriation particularly needed is the s425, 900 as a working capital md s775O00,0Oo, which will all have been spent for the benefit of the railroads and on their account in improvement of heir own property, which, on account of the war conditions, the railroad com psnies were unable to provide for them selves.
 WILL BE REPAID
 These two items, this q. 2G0, 100000, and this working capital of $425 GOO will be of coui SC, when the government retires from railroad operation and the railroads are turned back to private man. agement. and it will then be necessary for the private management to reimburse he government to that extent of s425.0 .0oo.- GOO
 INLAND WATERWAYS
 There is another item of S14,000, 900 that I would like to call your atten- tion to. for expenditures for equip ment of inland water ways, which ex- oenditures have been made under con tract for and in pursuant of a policy, provided under a federal act and em- towering the President to make eX- penditures for that purpose in order to develop the transportation of our nland waterways.
 "I have announced over and over that I am not in favor of government ownership, and am not in favor of control of the railroads by the gov ,rnment I am in favor of their re-
 urn to private management, but l do think, however, that their return ti private management should be made under conditions which win provide tor 2 successful private management un- fer proper government regulation, and think there will be a better chance of the new public regulation cf the new private management being sue eessful if there is considsred on us own merits and unembarras ey any rnisconception which the pubic might nave as to present federal control ana what it has accomplished or what 1t has failed to accomplish.
 DIFFICULT TO RAISE MONEY
 For years there had been i1croas- ine, embarrassment on the part of the railroad companies generally m ra's- ing money necessary to meet pubic service and needed for improvements that seemed to be a progressive mat te and was getting more and more embarrassing to the rai'rcacs tha. were less able to induce anyho fy to put moe money into the railroads: be-
  issla new stoc0 ard sell it at par. tha , WIS because ever. body was as,:.,i Of the g., ck and t..e a ads were hay ;pe t,,uble bo". ,wrg the money to i:,io the pro ,.st" That meant VI at
 he fctt was 1T "easing "'lt oi ITO portion to the total assets and that means that the margin Of safety over and above what went into 1t was d. minishing, so that the situation was the railroads were constantly having to borrow more money in order to bulld new lines new terminals and to make the needed improvements and that the margin of safety was diminishing ana gradually being impaired, resulting that the railroads were having to pay a higher rate of interest and that fsit- uation meant that the railroad enter prize of the country was headed to- wards failure. Then fedepal contro came along and took charge of the '' D' THE OLD SYSTEM
 How are we going to prevent re currence of that, situation which ex isted when federal control began? will try to give you a few words or that subject of the old form of pub lie regulation of railroads. In the frs place there was a standard by Whlcl were tO pS COilduCtCu VI | the general notion of a fair return ol a, fair value of the railroad property 1 but the fair value was not ascertaine and the fair return was not definite. 1 eve have in this country 1S0 railroad | with a revenue of $1, ,000,000 a year an | several hundred railroads of less revenu 1 than $1, ,000000 year. All of these rail roads, big and little, were necessary i some way to the public service and any thing that might be done in the solu ton of the rate or wage problem seem ed to result in giving some of the rail roads more than they needed and there by creating popular dissatisfaction an at the same time giving some railroad so much less than they needed that was almost impossible for them to per form the public service which they wer supposed to perform, and therefore, was almost impossible to fix any rat that would reasonably meet the needs C
 the strong railroad and the weak rail
 roads and failure to combine and sat isfv that situation started new agl
 tation on both sides
 HIS REMEDY
 My idea is that there ought to be definite statutory basis for these regt Ilations and it ought to be ascertaine what the value of these properties i There ought to be a prescribed rate rt | turn to Wnlcn they dTt CilitiSu ohV SAe ought to be assured by some mandator
 or statutory provision, and the rate mus
 be so fixed as to produce that return land beyond that, I think it ought to [ provided that if an additional retur } shall be yielded from those rates that sum. to be determined for that purpos l to be put back into the property TOT III proving the property in order to kee
 pace with the increase in demands ( I bot ha thus Dt I into the property out of the earnins : shall not be capitalized so as to furtht add to the value of the property That would provide that the earning made in iaccess of what was necessai to operate this property upon a standai return would be put back into the prol ? erty without being capltalzed. Tn would lead to the question or the pu lie getting the improvements and the would not have to pay for this exploit, : ton without any limitation of the pu g lic having the benefit thereof
 s CONSOLIDATION OF RAILROAD "Another thing that l would recon 2 lmend would be a consolidation of u n railroads of this country into few lar' f competitive systems, al Of when sna g present a fair average railroad condltit
 so that regulation can De aPpiieu
 them and we will realize approximate f uniform results as to all of them. l D
 lieve from F to 20 great railroad systen could be created in this country, ea' f one of which would present fair ave Iage of all the railroad conditions al h those railroad systems could be so a ranged that every important city tn a now has competition would continue
 lhave competition between the strong
 railroads and I believe if these thini
 can be done, that will present ren
 edy