New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1919-02-02
The Warfeld Plan

The plan proposed to the Senate
Committee on Interstate Commerce by
the Association of Railway Owners
through their president, Mr.. S. Davies
Warfeld, has at least the merit
of being direct, simple and along the
line of least resistance. 1t embodies no
radical proposals, and it seems to drive
straight to the heart Of the railway
problem. The idea in nutshell i$ this:
Definite assurance of fair rate of re-
turn on the invested railway capital.
Profit sharing with the employees.
The creation of emergency fund to
take of the immediate situation and
to provide against the industrial high
tides of traffic.
Mr.. Warfeld's committee holds that
the power to fix railway rates (the very
life blood of the companies) practically
carries with it the responsibility for an
adequate return. This responsibility is
practical, not ethical nor legal 1t sim
ply means that the railroads, like any
other industrial enterprise, must have a
fair return on the invested capital, or
they cannot get the billions of further
capital needed to keep the roads up to
the standard of the nations traffic
needs
1t is recognized by every one that the
difficulty with any such guarantee is
that fair return to the more favorably
situated and better managed companies
would mean disaster to the weaker roads
and, in the same way, that enough for
the weaker is great deal for the
stronger To meet this dilemma the
Warield committee proposes that all
over per cent on the capital invest
ment shall go to a surplus fund, and
tins fund is to be divided into three
parts
20 One-third TO be set aside as fund
for the benefit of the employees
OBJ Onc-third retained by the compa-
MES for betterments.
tc) One-thlrd to 60 to an emergency
fund to buy equipment, to be rented out
to the particular roads which happen to
be most in need of it,
The heart of the railway problem. as
we see it, is how to get the roads run
with
l. A maximum of efficiency
2. A minimum of expense
g. Fair but no Undue profits.
We do not believe that the country is
yet ready to try government owner
ship, with or without any schemes of
delegating operations to individual or
regional" companies. 1t is much less
inclined than it was one year ago.
1T is recognized also that there is
great difference in the ability of man.
agements. A Hartman or a Hill can
make a road pay under conditions where
roads alongside of. it go broke. 1t
is very large question as to whether
the public is the gamer by penalizing
efficiency and protecting the weak or
the incompetent. In the end that man.
agement wins out which gives the best
public service. There are many thought
full men, not mere, apologists of "capi-
tall" who believe the country would
profit most by the least possible gov
ernmental interference or control.
But this is not the temper of the
times. There is strong tendency to
limit profits, to penalze courage and
imagination and unusual ability, to
level down to mediocre plane. We
cannot but believe that the country as
a whole will suffer from such a tenden-
cy. In the case of the railroads it
has already suffered severely. But The
seizure Of the railroads threw the whole
matter into the political arena, and
there it must be fought out.
Somewhere, perhaps midway between
the extremes of government ownership
and the let-alone policy, favorable
compromise may be found: The Warfield
committees plan ID step in that difec-
'tian. 1t gives the employees Of the roads
a direct interest in efficiency and ex-
penses. 1t gives q due incentive to ey-
ccutive and managerial talent. 1t pro-
vides for ouch emergencies AZ came, for
example, in 1906 and in the midst of the