Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1919-09-20
Buying the Railroads.

Employees ownership as well employees
management Of the railroads possible sub
stitute for the Plumb plan is suggested by the
Railway Age in an editorial in its current
issue.
ut may be thought" says the Railway Age,
that employees ownership would be difficult
to bring about. But it would be very easy to
bring about. When it can be shown that the
railroad employees could easily and in a short
time become the managers of the railroads by
the simple process of becoming their owners,
the question naturally arises as to why they
should be carrying on an enormous propaganda
to get the other people of the country to buy
the railroads for them"
The employees, it is pointed out, could quick
ly become the owners of the railroads by saw
ing a comparatively small part of their annual
wages and Investing it in railroad securities.
"Of course if the employees owned even ma
jority OF the stock they could elect all
the directors, and through them manage
the railroads" plan for employees pur-
chase and ownership of the railroad is out
THE employees are now being paid approx
mately $4,000 600 ,00O a year in wages The
cost Of living in the United States, according
to the most reliable estimates has increased
only about IS per cent within the last five
years, while the average railway wage has in
creased about 80 per cent Therefore, the en-
ployes could, on the average, now save approx
imately one-ffth of their annual wages and at
the same time live about as we'll as they could
have lived about five years ago if they had
spent all of their wages. If they should save
one-ffth of their wages their total annual saw
ing would be $500 100000.
The amount of railroad stock outstanding
in the hands of the public June So 1916,
was $6,315000000 and it is not much more
now. The average dividend paid was 5A per
cent. Presumably, if the railways are returned
to private operation they will be so regulated
as to enable them to continue to pay an aver
age dividend of 81 per cent. If the employees
should save $500 900 a year from their
wages. invest it each year in railroad stocks,
and also invest in railroad stocks the dividends
they received from their stocks, they would in
five years own $3.50 ,OO0,O 900 of stock, or a ma
jority Of all the stock outstanding. This would
give them control of the ownership. and there
fore of the management, of the railroads of
the United States. If they should continue to
save in the way, at the end Of nine years
they would have saved in wages and dividends
s6,671O000O0 With this they could purchase
all the stock now outstanding and also few
hundreds of millions worth of bonds.
These calculations based upon the
assumption that, on the average, they would
have to pay par for the stock, but there are
more railroad stocks selling below par than
above. Therefore, the employees, if they bought
stock at anything like the present market
prices, could acquire complete ownership of
the railroads for much less than we have esti-
mated. We have not extended our calculations
to railroad bonds. but it would be an easy mat
ter for the present generation of railroad EN-
ployes by the practice of merely reasonable |
thrift to acquire all the railroad stocks and
bonds in existence and leave them as heritage
to their children.
While we do not believe that the plan for
employees ownership of the railroads we have
outlined has much chance of adoption, we do
believe that if the solution of the railroad prob
lem is to be furthered by giving the employees |
more voice in the management the increase of |
their influence in the management must be &C !
companied by an increase of the investment of |
their own money in the railroads. The main |
trouble with large part of the plans for fu- |
ture ownership and management Of the rail- |
roads which have been put forward is that |
they contemplate giving the employees more |
power in the management without giving them |
any responsibility for the results of the exer- !
else of their power. Good results are never |
obtained by giving anybody increased power |
by corresponding response !
bility'