Evening star., 1919-04-27
BY CHARLES f. MITCHELL.
President the National City Company.

~ HERE is no subject today that
is demanding. or. for that ma t
ter. receiving the attention OF
The American business man
and banker to any greater extent
than is the railroad topic, and natur-
a!Iy so indeed. for railroads with us
are 4 most important factor in the
economic and business life.
our railroad systems aggregate
nearly go, 600 miles a mileage whlch
is over third OF the combined rail-
road mileage of the world. Our rail-
road securities in the, hands of the
public aggregate over seventeen Dill
lion dollars. sam approaching the
rational debt Of our country, anu
equivalent 10 about 20 per cent OF to-
tai corporate securities. Rallroao
euiployes number more than two mil
li5:,. . member equivalent to per
cent uf the total voting male popula-
on ard approximately per cent OF
the total number of workers in the
country.
American railroad history. which
hogan in 1876 with the construction
on the Baltimore and Ohio railroad.
presents three distinct stages: first,
The construction or development
= stage second. the stage of govern
ment regulation; and third, the stage
oe governne operation. In each
stage abuse of power has preceded
and enforced the following stage.
Railroads Eagerly Sought.
=, ,ba Are. St,o> tho onerpy of nri-
vare. venturesome capital extended
rail lines into every corner of our
great country. gradually enabling
each state to attach itself to and be-
come.a part of the political and eco
romic life. Railroads were eagerly
sought for by every community and
subsidies represented by land grants.
partial payment of cost and relief
from taxation, as enticements to pri-
vate venture were so extreme as Oft
en- TO lead to overbuilding. resulting
in transference of liquid capital to
permanent investment at such rapid
rates as to form the bases for the
panics of 1873 and 1893. During this
stage the opening of the way to sub
sides and the extreme desire for ia
~orab1e treatment after construction
prompted railroad owners and man
ayers to control, as far as they might.
the politics in the territories in which
they were interested.
Thus, the so-called railroad inter
ests became to such an extent pow
ers in political life that in many
states it became impossible to elect
candidate to public Office who had not
their approval. This political control
hv railroad interests led to many
s'"'ses and developed an anti-railroad
80 --Ida among the people. which was
Is cred BY political leaders gener-
- who sought preferment on that
pi@t$orin. This fact. combined with
the high finance that was madiy prac-
tfced IN the f1otation of new and often
s1ecplative railroad enterprises.
brought to an end the great construc
ton or development stage of railroad
history. and ushered in the period of
state and government regulation.
- Period Of Regulation.
In the second stage. the Interstate
Commerce Commission. authorized by
Congress in 1887. rapidly developed in
power and was augmented by reg
ulatory bodies and commissions estab-
1ished in practically every state of the
1nion. Leading political parties came
TO the point where they seemed
to vie ,., with sh,,a one . another the ., as
1y tie hand and foot the transpor-
tst'on companies During this period
~. Srerman antitrust law. preclud-
ing railroad combinations where COM
patition was involved and preventing
the possibility of stronger roads TAX
fng the weaker under their protection.
and the full-crew bills and others of
Ike character. began to stifie efficient
operation. Railroads were subjected
10 conflicting Jurisdictions. In some
of our states they were ordered to do
things which in other states 1t became
illegal to do. One statute would order
them to compete; another would pre-
re~t them from competing. And so
ou- -si'roads. bound and stifled and
t'-n.t.ed passed through the period
81 9 cessive regulation. few living in
p .st2tr of prosperity. many actually
y IN 81 their own fat. and others
r7~a'" to survive. forced into receiv-
sip. with eventual reorganization.
from the beginning of the great
w. tn the time of the entrance of
tis United States therein. which
I'ar'Srd the last months of this sec
ond s.a-c. 18th railroad credit seri-
ou-Iy ~~ected by the absence of mar
RI. L~tweep operating revenue and
evre-~cS. tt. rniIroads struggled
Wv u'lv - bear tEeir burden. Their
pm cation for l. per cent increase
~ c-.igh' rates vas refused, practi-
r"flr !, itS entirety by the Interstate
cor,-'n-re Commission. and the situa =
- came so strained that railroad
s-"'rity values fell at an alarming
vace.
Prirste onerstion did not break
down. but the system under which
private operation was forced to exist
the system of governmental super
rlatson-conpletely collapsed. Re-
siizin2 the necessity for stable credit
conditions upon our entrance into the
war. when government finance in un-
yrecederted amounts must absorb the
attention Of the investing public. our
government saved the situation by
taking possession OF all the railroads
T. 'te Trited States. acting under the
authority Of the Army appropriation
&C. ot August. 1916.
Thus began the third stage-the
eoiernment operation stage.
Served War Mission.
In the fifteen months which have
passed since the beginning of this
third stage. tho railroads have well
served their war mission. The Presi-
dents plan OF organization was sim
PIE and effective.
While it is fair to say that the rail.
roads were obviously not operated
=" make the most favorable finan.
ciai statement. IT is true tha
her there was was onsrs.. nsvs, time time wher
@r cooperation fyom those to whom
service was rendered. The countr,
was divided into seven great traffit
regions. and for these regions wer.
appointed regional directors, wht
were. for the most part, the president,
of leading trunk lines. On paper, tn,
echeme was sound. The face tina
these operators. however, working t,
a man TO the height of their efiicienc!
and power. were unable to produc,
satisfactory results. and service de
'eriorated and morale became con
stantly lower. 10 striking commentar,