The Topeka state journal., 1919-07-29
TOPEKA STATE JOURNAL
INFORM ALTON
BURE AU
FREDERIC J. HAaKIN. DireeaoF.
WaShtnGtaa. D. G.
DOES THIS SOLVE THE RAILROAD
PUZZLE?

steps forth a new and idealistic plan
for the operations of the railroads OF
the United States-a plan which has
the endorsement of the executives of
the organized railroad workers of the
nation and, to a degree, of the Ameri-
can Federation of Labor.
This plan would place the owner
ship CT the railroads in the hands OF
the people thru the sale of bonds to
absorb them and would divide the
profits from their operation between
the government and the workers who
keep the wheels turning. The plan
was evolved by Glen E. Plumb. a Chi
cago lawyer and expert on railroad
valuation.
In urging this plan its friends in
sist that government ownership of the
railroads is still an untried experiment
in this country. During the emer-
gency of war, the government has
owned them. They are still owned by
the stockholders, who Invested their
money in them, and who continued
to draw per cent interest on their
capital under government regulation
Moreover, they have been operated by
the same men who operated them un-
der private control. All that govern
ment regulation has served to demon
strate, it is held, is that the railroads
could be run much more efficiently
If they were in the hands of one large
syndicate. instead of several small
ones. such a syndicate is made impes-
isble under private ownership by rea-
son of the Sherman antitrust laws.
1t is into this situation that Mr..
Plumb thrusts his new plan. He
proposes that the government should
buy the railroads from their owners
for twelve billion dollars, the money
to be raised among the people by the
| issuance of treasury bonds. The bonds
would pay per cent interest. and Mr..
Plumb claims that by this method the
government purchases of these roads
would figure as a much better busi-
ness proposition than the present ar
rangement of renting them.
If the owners of the railroads are
dissatisfied with the valuation placed
| upon their property by the govern
| ment, they will be permitted to take
| the matter into the courts, which
shall examine their books and make
final appraisals. Pending this time.
Mr.. Plumb suggests, the government
| shall pay the owners one-half the
present rental fee, which shall, how
ever, be deducted from the price at
the time the railroads are actually
| sold.
Consider that. according to this plan,
the railroads are bought. 1t is pro-
posed that they be turned over to a
board of fifteen directors. consisting
| of five, appointed by the president to
| represent the public, five to represent
the operating employees, and five to
| represent the ordinary. or what are
| termed Classified" employees. This
| board of directors is to determine the
| policies of operation and control. 1t
is to run the railroads as efficiently
and cheaply as possible, but not to a
| trary, 1t expects to make q profit, just
as the postoffice department, in recent
years. had made profits.
| The question of profits is most i'm
portant, in fact, for this is the unique
feature of the plan. The profits are
to be divided equally between the gov
ernment and the railroad employees.
! the operating employees, by reason of
| their greater skill. getting a larger
percentage than the classified en-
| ployes. For example, suppose that at
| the end Of the year it is found that
the railroads have been operated at
| a profit of IL per cent. Six per cent
OF this will be taken over by the gov
ernment and used in building extern
sions. paying for improvements or for
| retiring railroad bonds; and per cent
will be divided among the railroad en-
ployes. If the railroads are operated
| inefficiently, of course. this profit will
be greatly reduced and in the case of
a deficiency, congress has the privilege
OF cancelling the enterprise altogether.
The railroad mileage of this coun-
try amounts to $500 miles. 1t carries
an enormous amount of commerce
| The transportation of this freight has
been one of our leading Industries,
controlled by private owners. regu-
lated by the public. and employing
more than five per cent of the total
labor supply of the country. This in
dustry, Mr.. Plumb says, is based upon
three elements: The grant of author
ity lin the from of franchise) from
~
their benefit; the investment OF capi-
tai in sufficient amount to acquire the
properties and their equipment. and
the investment by wage earners OF
their services in the industry. These
three elements are of equal impor-
tance in performing the public serv-
Ice But OF the three, only one-capi-
tails represented on the board OF
directors.
This new plan recognized the prin-
ciple that it is not fair to exact re-
sponsibility where there is no author
ity. Every railroad employe is ir
small measure responsible for the safe
and efficient conduct of the railroad
industry, and yet he is not permitted
a vote in regard to its operation. II
, all the railroad employees on the Pitts.
burgh division, for example. got to-
gether and decided to work harder
improve their methods, and increase th'
efficiency of the railroad system. 4
wouldn't do them the slightest hit o.
J good. They might stand a chance Of
getting a small raise in their salary
declares Mr.. Plumb. but the owner!
would pocket the real profits.
,, The same thing would be true were
the railroads to be operated e%clus
lively by the government. The EN-
: ployes would get the same salaries
, whether they worked to increase theil
efficiency or motor practically tn,
same salaries. But, under the Plumb
system, their returns would be in di
rect proportion to their investment o