The sun., 1919-11-05
ROAD SECURITY
OWNERS FAVOR
! CUMMINS PLAN
Section 6 of Iowa Senator's
q Bill Comedies With
Their Proposals.
WARFIELD'S STATEMENT
Government Ownership Only
Alternative, Association
Leader Warns.

s. Davies warfield. president Of the
National Association Of Owners OF
Railroad Securities, made yesterday
the following statement:
A crisis has been reached and the
issues involved prompts me to write
on misconception as to the effect
ana purpose Of certain fundamental
requisites to railroad legislation, which
are considered vital II the rail trans
portstion system is to be saved and
continued under private ownership.
This country has been developed and
its wealth created largely through the
encouragement given railroad con-
struction. This development required
that railroads be built through sparsely
settled territories OF light traffic 2e
well as through populous commune
ties of dense traffic Both classes Of
territory are now and will continue TO
be entitled to adequate railroad facili-
ties. The yield or return to those
railroads operating in sparsely settled
territory, which constitute the major
tty Of the mileage Of the country, Is
pecessarily less than to roads travers-
bng territories Of dense traffic. The
latter have been termed the more ia
~orably situated or, strong" roads;
those traversing sparse territory have
been designated the less favorably
situated or weak" roads.
Neither the term strong" nor "weak"
accurately describes the situation, since
the revenue of each railroad Is dependent
upon the traffic conditions obtaining in
che territory tributary TO its lines, and
from the divisions OF freight rates 1t
gives or receives from traffic from its
connections.
Rates will always have to be based
on the character OF the territory in
which the railroads operate. The terms
s'weak" and strong" should character
ize the condition Of railroad territory.
not Of the railroads. This is~an ither-
ent condition and cannot be relieved by
creating fewer new Companies into which
al the railroads would be consolidated.
The difiiculty might be lessened per-
haps because you will have fewer to deal
with. But II the consultations should
be accomplished. the traffic conditions Of
the respective territories would not
stand still and would from time to time
change as the density of traff1c in one
tafritory would increase over that in an
ether.
Tho rail- transportation system Is COM
poSed Of approximately 162 railroads or
systems designated Glass I. or those
~hOse gross operating revenue equals or
oxceeds one million dollars per annum.
The figures used herewith apply to the
years 1s15-16-17. June 30th. known as
the test period" the average thereof
being the amount now paid as rental
under Government control. These roads
have q total mileage of 1891, or SO
per cent of the total mileage of the
country. There are in addition approx
hnhtely 1000 railroads operating perhaps
$4,000 miles OF road, the majority of
which are characterized as short lines"
Majority of Roads Cannot BE
Maintained Unless Excess Earn
inss Are Regulated.
OF the 162 roads or systems 109 op-
crate under conditions coming under the
head OF LESS favorably situated" or
srroneously termed weak" roads. These
aosfoads have a total mileage of 120,-
v5b. and serve double the area of ter
ritory served by the 6S remaining loads
Whatever adversely affects this lgreat
majority Of railroads and territory
fClass ~ necessarily affects adversely
the business and agricultural develop
ment thereof.
You cannot make a railroad rate for
each railroad. You cannot adjust rates
only to the fair requirements of the 53
railroads ("more favorably stuated")
without running substantially all of the
s09. And II you adjust rates to the fair
requirements of the 100. earnings are
produced TO the, So roads in excess of
what the public the shippers and tho
Interstate Commerce Commission, which
makes the rates, will or can stand for.
Consequently during the many years of
regulation the Interstate Commerce
Commission has not had authority to
adjust or equalize these conditions, SO
The majority of railroads in latter years
have been without adequate rates and
the public without adequate railroad IA
cilities. This has led to severe criticism
Of the commission. when as a fact it
was unable. owing to lacR>af legislative
power. to correct these conditions. This
was characterized by Senator Cummins,
eths insoluble preblem."
Cummins Bill. in Section 9, Con-
tsins Essentials of Security
Owners Proposals.
So a way out was TO be found. The
100 railroads, taking the investment in
the aggregate. received thereon only
e.s5 per cent. during the test period. -
And while the amount now paid them
es rental totals only this percentage,
many of the roads receive a percentage
bn their individual investment very much
Jess. The problem was to secure to those
zoe railroads revenue sufficient to enable
them to perform service and produce a
teasonable return upon their investment.
Fairly computed, without at the same
time producing more earnings to the
hfty-three roads than they should prop
brly, retain. This association suggested
10 the Senate and House committees of
Congress. dealing with railroad legisla-
tion, what has been considered a simple
Ind effective method to relieve the con-
Hitions mentioned and stabilize rail-
road credit and securities. These suR-
kestions have been substa ntially adopted
IN Section 6 of the Cummins bill now
before the Senate.
The proposal was to group the rail-
roads into three or more rate territories
that the commission shall adjust rates
20 yield an initial percentage return
Of not less than per cent. on the ag-
gregate investment in or aggregate value
? o. the railroad property of each Kroup
devoted to the public use. and that any
Individual railroad in each group that
receives earnings In excess of the initial
return Of per cent on the investment
IN or value OF Its property, such earnings
shall be divided one-half to the railroa
earning them and the other half to a
national or shippers fund under
governmental supervision and expendi.
ture. This fund Is to be invested IN
oars. other railroad equipment, ter.
einal. or Joint facilities to be used In
~ a. A.aNA