New-York tribune., 1919-05-09
director Says Old System of
Hundreds of Companies
Must Go or Government
Ownership Is Inevitable
Elliott Supports Plan
fle and Senator Cummins
Declare Consolidation Is
Solution of the Problem


last night. The speakers. were How
ard Elliott, president of the Northern
Pacific Railway; Walker D. Hines, di-
rector general of railroads, and SEN
ator Albert B. Cummins of Iowa.
All three agreed that the return of
the railroads by the government to the
companies and their operation on the
basis OF private ownership is desirable.
but maintained that this could onlv
prove successful by new methods of
regulation. Mr.. Hines especially
maintained that unless a common and
general standard of regulation is es-
rapllsned the ultimate alternative Will
ne government ownership.
Consolidation Urged
Mr.. Elliott, speaking For the railway
executives, outlined a plan of regula.
ton IN which he urged the cons.olida-
tlon of the many railroads now In ev-
lstence into not more than eighteen
ana the application of federal regula-
ton under the supervision of either a
'oepartmenti OF transportation headed
by secretary Of transportation or
sncn an agency as will prove most eff
fective.
Mr.. Hines disagreed with him on one
point only. in that he urged that the
consolidation of the present many
weak and strong railroads be made
compulsory He maintained that un-
less this is made so the consolidation
Will not occur, as many strong rail-
roads may refuse to dilute their pros
perlty with weaker roads
Elliott's Address
Mr.. Elliott said:
Regulation by the government is
necessary and desirable, but it should
not attempt management and operation
or the business, but should be con-
lined to those steps necessary to pre-
vent unjust discrimination. extortion or
excessive profits; t.. provide for good
service and the sa fety of the public.
and Tor suitable living and working
conditions for the employees.
AS the railway system is national
IN It's work and scope, regulation bv
the Federal government must he en-,
preme and not be weakened or set
aside by state regulation.
continuous anna lgamation of var;-
Gus railroads into number of larger
systems must be permitted, so that
the whole country will be we'll served
and there will still be the spur of self
interest and competition all the time
so as TO produce development and good
service. anu sooo
The income of the roads should be
adjusted within a reasonable time N
meet the necessary outgo. and Tn+;,
tnat readjustment can be brought abou+
cie government should protect tha
financial situation not for the purnose
Soleiy OF making a return to indiv;dna !
holders OF securities, but to nreven+
financial collapse that will affect the
| whole country. VIC
Rate Reduction Opposed
Until the valuation work can he
completed, It might be assumed tom
tatlvely and without prejudice as to
nnal valuation, that the standard no
turn, now being paid by the government
is 1alr return on the property and
that, pending the final valuation. the
government shall not reduce rates
uAtll under normal conditions as to
volume of business the income exceed 9
the standard return.
1T is better for the country IN b.,,o
the roads sustained by means of 1he
rates charged for transporting passen-
gers, freight, mail and express. rather
than to make up the deficiency. larqe
or small, by appropriations from the
natlonal or state treasures"
Mr. Hines urged closer cooperation
petween the governments regulatory
oooles and the railroads. For this
purpose he advocated that the regu-
iatofy bodles be represented on the
poaros OF directors of the railroads,
mus creating a direct link between
the companies and the government He
crltlclsed the public's tendency to re-
gard the railroads as overcapitalized
Gaming this popular misconception ONE
OF the greatest stumbling blocks on
the road to fair regulation.
Inc evils which characterized the old
form of regulation, Mr.. Hines said
were not mere defects on the part of
the persons appointed to carry out
the regulation.
No group of men," he said, could
possibly make a success of the form
of regulation that existed prior tn Ed -
erai control. There must he chance
IN the system itself. The fact that we
nave iSo railroads whose operating rev.
enue IS Slo0,000,O00 year and several
huhored whose operating revenue is
less than that is the great stumbling
block to successful regulation"
The varied financial condition Of
ehese roads, Mr.. Hines pointed out.
makes 1t impossible to establish a def
mite standard on which rates could
be based, with the result that decisionS
OOOaSo nave always pro-
Voked protest and proved inapphcable
to all railroads as whole.
Standards Are Lacking
There was a general idea that rates
ought to be such as to give a fair re-
turn for fair value, but there were mn
standards to show what were fair rates
and what were fair returns" This,
the speaker maintained, must be avoid
ed IN the future by the compulsory
consolidation of the railroads into as
Few companies as possible, without at
the same time destroying the oppor-
tunlty TOR competition, "for the public
| wants competition"
Unless we can accomplish this Mr.
hines said, government ownership is
inevitable, for the public will be con
vlnced that regulation has failed"
senator Cummins, who is a member
OF the Senate Interstate Commerce
Committee, supported the proposition
of consolidating the railroads into fif-
teen or twenty companies. He op-
posed their consolidation into one com
pany on the ground that this would de-
stroy the advantages of competition.
Senator Cummins said:
II feel bound TO say to Won tbo+
there Is but one real remedy for the
present railway situation. it lies in
the further and compulsory consolida-
tIon and unitication OF the railways. /,
is obvious that complete consoiids-
ton into one system would attain the
object. For If the earning power of ali
the roads, under given rates, produced