The sun., 1919-07-14
URGES UNIFORMITY
IN RAIL CONTROL
Robert s. Lovett Says Laws
Should Be Enacted to Give
Capital a Chance.
Z. S. TO REGULATE RATES
Head of Union Pacific Sees
Need for a Department of
Transportation.
Z. S. TO REGULATE RATES

"If Congress will enact the necessary
laws giving railroad capital business
chance believe capital will take bust
ness risk and the money required TO
provide the requisite railroad facilities
for the future will be forthcoming"
Robert S. Lovett. president of the
Union Pacific Railroad. thus sums up
Congress for a solution OF the present
railroad problem in America.
Judge Lovett says that In his opinion
''the choice Of this country with respect
to It's railroad transportation ultimately
Is between:
81. Inadequate and impoverished rail-
road transportation facilities, or
~. Government ownership OF the rail-
roads, or
20. A guaranty by the Government of
reasonable return upon railroad capt.
tai. or
80. Rates that viii, be reasonable I'M
der all the circumstances determined BY
O Government agency that Will consider
the needs Of the trafic and the needs Of
tho carrier, with the right to each car
rier to keep whatever profit II can make
out Of such rates so established by
eooo Hl6habciHcut. BOOu bSiNiScr tSoho-
my, wise investment and success in COM
peting for business"
Offers Several Remedies.
Then from the plan Of the committee
Of railroad executives which was sub
mitted to the Senate Committee on In
terstate and Foreign Commerce Judge
Lovett sets forth the following remedial
SUGGESTIONS
81. The rule Of rate making to be pro-
vided by Congress itself. which should
require that the rates be. sufficient to
enable the carriers TO provide the requi-
site service and facilities, protect exist
ing investments and provide the new
capital necessary In the public interest
"2. Compulsory Federal Incorporation
OF all railroad carriers.
3. Exclusive Fedora. regulation of
railroad securities.
~ Exclusive Federal regulation Of
railroad rates.
70. Creation OF department OF
transportation with power TO act
quickly and deal with emergencies, and
the distribution OF the regulatory pow
ers between such department and the
Interstate Commerce Commission, with
the creation of such regional or other
subordinate commissions and agencies
as may be necessary.
IS. Notifications OF restrictions upon
railroad consultations and provision for
the merging of lines when in the public
interest and approved by the commits.
sion"
Our railroad transportation sys-
tenn Judge Lovett says, which is
essentially national should be rescued
from the irresponsible and conflicting
state agencies and brought under uni
form control and resula ton in the ma
tonal interest. except as to strictly local
matters"
Must Give Capital a Chance.
Calling upon Congress to give railroad
capital a business chance. he says:
H. as many propose. the return upon
railroad capital is to be limited at best
to low fixed return. even by the most
successful and best managed roads, with
no hope OF anything more for good man.
agement Inherent earning capacity and
all other considerations ordinarily in
iiuencing values, while all misfortunes
are to be borne by the investors, the
necessary capital will not be obtained.
Under rates prescribed by the Gov
eminent. or with its approval, and sp-
plying to all alike. why should profit be
denied stakeholder of the wisely
quilt. we'll managed railroad any more
than to the owners of bank stock or
steel stock or brewery stock or any
other stock?
1t is about time we were introducing
common sense into some of our theories
about railroad capital No money CA
cept that devoted purely to benevolence
10 employed more in the public interest
or is entitled to more announcement
or fairer treatment and consideration
tnan that which is invested In the deyel-
opment and upbuilding OF our railroad
facilities.
Among the most important OF the
needs OF the situation is compulsory
Federal Incorporation OF railroad car
riers. Inc very first feature of the
problem is the credit OF the railroads
the means by which this is to be estab-
lshed and maintained In order that the
requisite capital may be secured This
involves at once the most important cor
porate Questionable power TO raise
money and issue stocks and bonds.
State Regulations Conflict,
Hitherto Congress has left that power
exclusively with the States, no two OF
when nave the same laws or regulate the
SUBJECT In the same way. They have
however. in the last ten years enor.
mously multiplied their laws upon the
suoJect-all of them restrictive-untIl,
generally speaking. It is not too much
TO say that railroad systems which
traverse several States are tied hand and
foot when II comes to the issue and sale
or stocks and bonds. and too often thew
are thrown back upon short term bor
rowing. with dangerous and often un.
fortunate consequences.
THE necessity for the exclusive Fed
ersl regulation OF the issue of railroa d
securities seems now TO he generally
recognized, yet 1t is SO vital to railroad
credit and to the success of any system
OF reRulation which may be adopted thar
II must not be overlooked.
III railroad company Is compelled To
go to half a dozen State railroad COM
missions for permission TO make an issue
OF stock or bonds and to encounter de-
lays running from weeks TO months on
account of numerous hearings before diff.
ferent commissions and In meeting their
conflicting policies and Views before Il
can deliver the securities. II will be I'm
possible TO have the issue underw ritten.
o. II underwritten at all the cost will be
excessive.
But WORSE still. the chances are that
differences between the commissions will
arise or that tho ineSperience and per-
hsps the financial theories OF some OF
ba