The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-05-14
ROOT SUPPORTS
WAKEFIELD PLAN
Saws Public Ideas on Profits
Block Roads Return and
Remedial Legislation.
FAvORS STATE BOARDS
Attacks Theory Of Compelling
Federal Incorporation in
Letter to Convention.
Spa. ial Despdtch TO THE SuS.


letter read here yesterday before the
Missouri Bankers convention by s.
Davies Warfeld, president of the Ma
,ional Association of owners of Ran-
road Securities, declared that the real
difficulty In the matter of remedial rail-
road legislation and return of railroads
to private ownership is not a question of
banking, railroad operation or division
Aetween Federal and State control, but
a very simple and stubbornly held opin-
ion about railroad profits which pre-
N,ils among the people of the United
yates
Nj Root attacked the idea of compel
ling Federal lncorporati as we'll as the
raea Of Government guaranty. The
letter. which supports Mr.. warfeld's
plan for constructive railroad develop
ments, follows in part
1.-THE whole system of rate regulation
and the whole business of transportation
rest upon the necessity that rates for
competing roads shall be the same. Yet
rates so low as to prevent the most IA
vorably situated railroads from receiv-
mg excessive returns for their service
will ruin the bulk OF the railroads of the
country. while rates so high as to per-
nit the bulk Of the railroads of the
country to live will give to the most
favorably situated roads returns that
the American people will not stand for.
II that difficulty is solved all other ques-
tons are comparatively easy of solution.
Our present law leaves that difficulty as
an insuperable obstacle to fair rate
making.
Reads Should Have Fair Return.
IF Congress fixes a fair rate OF re-
turn for the railroads OF each rate maxi
ing district as whole Snd requires the
, rate making authorities to fix rates
which will presumptively yield that rate
Of return and that. in case any particu-
lar road makes more than the prescribed
return, the excess shall be taken by the
Government and disposed OF equitably.
10 promote tho public interest in trans
portation. there is no reason why rail-
road credit should no. be reestablished
and railroad development proceed
promptly and with It development of the
business of the country.
This being done, all the rest of these
elaborate plans becomes mere machin-
cry, much of It unnecessary machinery,
including doubtless many useful pro-
visions and some necessary provisions
adequately provided for IN your plan.
about the idea of compelling Federal
Incorporation, whether applied to exist
ing railroad companies or new CONSOLE
dated regional companies, 1 think that
comes under the head of machinery,
which is not only unnecessary but mis-
chevous. The process OF getting all the
sl7,C00, 900, 900 OF railroad securities of
: the 2,300 railroads OF the country away
from the millions OF present holders with
all the litigation and Injustice and dis
satisfaction and obstruction of credit in
volved. would require so many years of
controversy that It would not meet the
present exigency. The patient would be
dead before the remedy was applied and
nothing useful would be gained after it
was over. The power Of Government to
regulate the present corporation is prac-
t!cally as complete as.it would be to reg
ulatc the proposed Federal corporations
State Commissions Necessary.
~There Is really only one avowed pur-
pose which could be accomplished by
that plan and that is to withdraw the
railroads entirely from the Jurisdiction
Of the State commissions. This Is un-
necessary because Congress has power
10 authorize the Federal rate making
authorities to override the State COM
missions in respect of rates which in
terfere with the Interstate Commerce
rates The State commissions ought not
TO be destroyed. The people along the
lines OF the railroads in the several
states ought to have near their home
SS'i!es to which they can go for a re-
Dress of grievances against the railroads.
They ought not to be compelled 10 go to
Washington for that purpose. The State
COMMISSIONS have been OF great value
hitherto and they ought to continue their
useful service under the limitations i'm
posed by the paramount necessities OF
interstate commerce,
III the Federal Incorporation plans
mean anything more than I have stated
they mean Government ownership.
The same observation applies to the
'dea Of Government guaranty. That
means an attempt to assure a given in
come Independently OF rates instead of
assuring rates subject to a limit of in
come. The inevitable result would be
mat no rates would be permitted be-
Eond those necessary TO make the guar
anty good, and as the Government must
make the guaranty good there would be
neither opportunity nor incentive for pri-
Pate enterprise in the management or de-
Veopment OF railroads. The only real
hnancial interest and active control
simulated by interest would be on the
part OF the Government, and this would
'ead inevitably to Government owner
snip. Your plan makes the railroads
"orK for their living and assures them
oi chance to earn II. The guaranty
nan gives them their living. whether
Ihey work for 1t or not. That is fatal t.
enterprise and TO efficiency"
"