The labor world., 1919-09-13
''SHARING THE RISK.'

The principal argument against the
Plumb plan is The simplest to refutc.
That is the argument that the rail
road employees are asking to share
the profits OF the industry without
Willingness to share the risk. The ar
gument rises from the habit of think
ing Of the railroads as being like any
private enterprise, in which there are
risks and gains. 1t rises also from the
faulty understanding Of the nature Of
'profits' which labor would receive
by the Plumb plan. 1t is an argu-
ment curiously enough, that has been
raised by both the Wall street press
and by leading Socialists in Europe;
the former holding to their ideas of
the laws of private business, the lat
ter objecting to ''profits' and to labor
working for "profits.
In both instances the argument is
no argument, merely because the facts
do not justify it. We are not here in
the dilemma of choosing between phil
osophies, Or Of trying to change econ.
onlc laws.
For the operation of railroads is a
state function. The Supreme Court in
stating this remarked that it never
needed a court decree to establish the
truth. The state has merely delegated
to private interests it's own powers. The
railroad corporation is not comparable
with any private corporation. 1t has,
on the one hand, greater rights-the
rights Of the state to condemn property
and to levy taxes, or transportation
charges. 1t has, on the other hand, a
limited use Of the property it owns,
which can only be used for public
service and can only be valued in 50
far as it represents honest and prudent
investment made in serving the public.
There is no private risk in a state
industry. The city water works, the
municipal power plant, do not lose
money if there is deficit; the public
which owns them foots the bills. Just
SO with the railroads. Yes, the rail
roads even when privately operated.
The Supreme Court has also decreed
this, though it is as self-evident as the
truth chat operat ting railroads is state
function. The state-that is the people
bear the risk Of the railroad industry.
If they hire private capital to do their
work, they are required by the laws of
the land to pay this hired capital fair
return. The owners Of the private in
terests, according to the courts, must
be paid 'fair return on all the
money they have prudently invested
in the service of the public.
The demands Of Wall Street for
guarantee of the property investment
account Of the railroads are not vic
ious because guarantee is vicious,
but because Wall street demands a
guarantee on watcred stock-because
Wall street demands guarantee on
money it never invested in the service
Of the public.
BY the old system of finance, the
public offered the inducement of safe
investment in order to interest corpora
tions in building and operating the rail
roads. 1t was willing to pay slightly
more than the cost Of transportation
in other words, profjts-to secure
service.
The Plumb plan is not, as is frequent
~ charged, device to offer the in
ducement Of profits to labor rather
than to capital. The "'profits'' under
the plan are not in the same category
as the profits paid to investors. BY
the present system the public assumes
all the risks, pays the actual cost of
service and fair return in addition
to the cost. BY the Plumb" plan
the public assumes the risk, pays the
actual cost and no profit.
What, then are the ''profits' in the
Plumb plan?
The Interstate Commerce commission
by the terms of the proposed law, fixes
the rates to meet the actual estimated
cost Then, if by savings, by gen
uity, and by more intense effort, the
employees succeed in operating the rail
roads at less than the estimated cos,
they share their savings with the pub
lie. And if their share of the saw