Evening journal., 1919-02-10

be brought about without condemna-
ton proceedings which again must b.
based upon a valuation"
In order TO cut the Gordlan knot-"as
inevitably we must"-or fal Mr. War.
burg suggests an expert and impartia
body with functions In many ways mo-
unlike that of the Federal Reserve
Board charged with the duty lot to at.
tempt TO i've the hardest possible bar.
gain but Ike a court OF Justice to de-
termine a fair value for the properties
without Journalism c. long delays. HI
imaglnes for example a board OF 1--WE
made up say OF one member each from
! the law, finance business and labor anc
/ one railroad man.
The board should lay down broad
! principle OF valuation having cons.d-
Grafton alike for actual investment
losses. present difficulties and present
/ earn'ngs-in br'ef a board OF equity
rather than OF technical experts aim
Ing to consider alike the rights OF the
/ owners the shippers and the whole
country. On the basis OF this valua-
ton WHICH need not take a great while
he proposes that the government shall
OF i-2 per cent. even to the weaker
and less favorably situated roads.
Such rates would naturally mean a
much higher return to the stronger and
more efficiently managed roads. Over
6 per cent. Mr. Warburg would divide
the surplus among the stockholders
The government and the employees OF
the road with a fixed minimum over
which the earnings Of the stockholders
should mol go. But he would also make
provision granting the directors ami
officers OF the road certain share In
the net returns exceed ng i-2 per
cent He here adds: II do not believe
In fixed excessive salaries or directors
fees without a definite relation TO the
success OF their work" But he would
provide some INCENTIVE OF the strong
est possible sort so that we should no
longer have dummy" directors or the
highe~ officials interested only In their
salaries.
II is obvious that under this plan
fhere would have 10 be some radica'
resdjustments Of capitalization OF GER
tain companies; but In the agg-egate
these would be unimportant. Foresee-
ing that the proper development Of
our transportation system inevitably 4n-
wolves absorption Of the weaker lines,
and growth into larger units. he would
provide fo- a Federal franchise. freeing
them from the restrictions of the Sher-
man act, pooling. ETC.. and leaving them
subject only TO a Federal regulating
body. having exclusive control Of in
terstate rates and the issue OF securi-
ties by such roads
These ideas, FIRST presented before
the United states Chamber OF Com
merce In Washington 10 early Decem-
Der. have been incorporated in part In
the proposals Of the Walleld commit
tee, snd, on the other hand. would
arise over the prices TO be pad. The
plan looks forward 10 freeing the roals
from the blighting and benumb!ng In
fluences to which they have been sub
iecied for ten years or more and which
have finally brought them TO their
present plight. and give rein TO "an ag-
gressive spirit OF enterprise" This. as
Mr.. warburg remarks, "for the con-
tnued intensive and free development
OF a country whose resources we have
only begun 10 unfold, we need-not the
lazy and arbitrary bureaucracy ana po-
lflical atmosphere that, with US. would
be certain TO follow II one great re-
gional corporal on would cover the en-
tire United States. A business spirit
of rivalry must be kept alive by the
preservation OF number Of large units
Of railroads, competing on broad lines
not in rales but in service-and by the
opporiun'ty given them TO. earn more
than the guaranteed minimum"
Clearly, this Is the spirit In which
the problem must be solved.