South Bend news-times. (South Bend, Ind.) 1913-1938, 1919-05-14
ROOT ENDORSES
FAIR RATE PLAN
Former War Secretary 0p-
poses Federal IlC0TpOra-
ton of Railroads.

ST. LOUIS. May 14.-Compulsory
federal incorporation OF railroads.
government guarantees OF income
and the removal OF the roads from
the Jurisdiction Of the present state
commissions. as steps proposed prior
10 the return Of the railroads 10 pri-
vate ownership. were condemned By
EIhu Root in a letter read Tuesday
before the Missouri bankers conven-
tion in session her.. Mr. Roots let
ter was read by = Davies Wardeid
president OF the National AssOcia-
ton Of Owners Of Railroads. who
had requehed an opinion from Mr..
Root as advisory counsel to the as
ISOLATION.
As an alternative. Mr. Root un-
qualihedIy endorsed the plan put
forward by the security owners as
ISOLATION under which congress
would fix a fair rate iof return for the.
railroads for each Alternating dis
trict as a whole and require the
rate-making authorities 70 fix rates
which would presumptively WELD
that return. In the event OF any
road making more than the pre-
scribed return. the excess would be
taken by the government and used
TO promote public interest in trans
portatiOn.
Points out Defect.
A general fixed rate by the gov
eminent Of all railroads. Mr.. Root
contends has this defect. If the rate
is fixed so as TO give "a fair return
TO weak roads il will give an excess
Rive return TO the strong roads.
while If the rate is fixed on the
basis of an equitable return TO the
strong roads, il would drive out OF
business their weaker competitors
Mr.. Root precedes MS conclusion
with the statement that lit is appar-
ent that the people of the country
DO not wish to enter upon a perma-
nent system Of government opera
tiOE. The railroads are To be re-
turned TO private ownership" he
SAYS. 'and they cannot be permitted
TO go back TO uncontrolled operation
OF the earlier period" He maintains
also that some provision must be
made to prevent the continuance Of
the steady progress toward bank
ruptcy which characterized the dec
ade before the government took pos
session i'm 1917"
He points out that half of the
people of the United States are in
terested directly or indirectly In the
S17, 900, 0e0 OF securities repre-
senting the railroad investment Of
the country and that one-quarter of
the savings Of 30.O0O.O0G people
l.
surance companies is invested
through these companies in railroad
securities. THAT, however" he con
tinues, lis only a small part Of the
reason Cor some arrangement which
viii maintain the value OF these Sc
curities. Railroad securities are
chief basis OF credit on which de-
ponds all the business of the coun-
try. and If that credit is DESTROYED.
the consequences to all American
prosperity will be intellectually dis
astrous."
FaNors Commission.
In regard 10 federal incOrpOra-
ton. Mr. Root says:
There is only one purpose which
could be accomplished by this plan
and that is to withdraw the railroads
entirely from the jurisdiction of the
state commissions. This is unneces-
sary because congress has power to
authorize the federal rate-making
authorities 10 Overrule the state com
missions in respect to rates which
interfere with the interstate COM
merce rates The state commissions
ought not TO be destroyed. The po-