The sun., 1919-08-23
IOVETT SUPPORTS
ROADS, BOARD PLAN
Head of Union Pacific Testi-
fies Against Adoption of
Warfield Scheme
CREDIT QUESTION VITAL
Howard Elliott Of New Haven
Gives View Against Govern
ment Ownership.
CREDIT QUESTION VITAL


.ra how TO get the capital necessary to
sssp M the railroad facilities which the
.,nntry must have" Judge I,ovett said.
, sAay legislation that doesi not accom-
plish that object Is futile"
NJ Iovett indorsed the plans of the
-oUvav executives for Federal trans
,ortation board. and engaged in a con-
,roversy during the hearing with Luther
NJ waiter, counsel of the Association of
owners of Railway Securities. which is
admitting the warfield plan. Mr..
Loyett attacked the feature OF the War
Neid plan which guarantees the roads n
rst,irn of per cent on their real value.
claiming that out Of the 9 per cent, must
he taken an allowance of about rs per
cent which would leave such small
rate of return that credit would be un-
obtainable.
Mr., Walter said Mr.. Lopett was mis-
rspresenting the warfield Plan, and that
me per cent. would be a net return
applicable to dividends
Capital Cannot he Driven.
New capital cannot be driven into
railroads." Judge Lovett said. 1T must
be induced to enter. The mere request
or invitation or desire of the Govern
ment that investors should como forward
ments will not suffice. II Ia a business
proposition. The Government does not
propose to guarantee the interest or the
dividends.
The investor must depend upon the
Q ret earnings under the regulations which
this Congress is going to prescribe and
decide whether he will risk his money in
railroads. or put II in some other busi-
ness II you have decided against Gov
eminent ownership, then II inevitably
follows that your system of regulation
must be such as to attract investors to
railroads or you won't get the neces-
sary railroad facilities.
This leads to the point I particularly
desire to make, which is IN connection
with the much discussed proposition to
confscate the net earnings of all rail-
road companies In excess of 9 per cent.
I. the Government Is to take for itself
or for the inefficient roads or others all
IN excess Of per cent, as proposed, ]
suppose OF course II Is intended that the
stockholders will be entitled to distribute
the amount, II any Is left after the pay
ment Of interest. as dividends.
Roads Would Face Dilemma.
what then will be the predicament
Of the railroad company. of the financial
ly strong company, II you pass law
requiring II to pay over to inefficient
railroad companies or to the Govern
ment all its net earnings in excess OF
six per cent upon the value Of Its
property? 1t is assumed that after
making such payment 1t would have
six per cent left-but not in cash
with which to pay it's interest and its
dividends. but a substantial part of II
in new rails. bridges. trestles, section
Rot
tanks, sidetracks, yards sc.
II give II as my opinion based upon
rather long observation that the aver
age railroad company in this country
must spend on an average each year
al amount equal to two or three pei
cent. upon the total value of Its property
for renewals and requirements of road
way and equipment and In wholly un'
productive work. which. under the com
missions accounting rules, is chargeablt
to capital account, in addition to ordi
nary maintenance"
Howard Elliott Testihes.
Howard Elliott, head of the New
York, New Haven and Hartford Rail
road system. also testified before tn
committee that he did not believe tina
Government ownership. management an
operation OF the American railroad
would be for the best interest Of tn
nation in the long run.
Ownership by individuals" said MI
Elliott. with wise. energetic and homes
management and operation under suit
able, thorough and protective legisla
ton, will produce the best results for tn
country Regulation should be 80 ar
ranged and directed as to preserve an
encourage the energy and initiative o
the American citizen, to be prompt an
responsive to changing conditions. but a
the same time to provide checks to pre-
vent any unfair practices by owners an
managers. to prevent unreasonable an
conflicting action by regulatory bodie
and also 10 encourage, protect and de
velop the great railroad system of tn
country"
Mr.. Elliott told the members of tn
committee that he believed that II tn
country and the people can be made I
feel that the Government has adopted
national transportation policy along tn
following lines the situation will
vastly improved:
Il. That the Governmental regulator
machinery that has for the last thirty
:our years devoted 50 much time an
energy to correcting abuses and to
certain extent Furnishing the companie
Tor past errors shall now turn it's abb
Ties In part to tho encouraging of on
system Of transportation so that 1t sha
receive income enough from the rate
charged to pay:
"(a) All costs and expenses. includin
reasonable wages in accordance with III
constantly improving living condition
mat we hope always to have In tn
United States.
'tb) Returns on the system as 1t e1
ISIS to-day substantially equal TO tn
present Just compensation until sue
ume as the fair value OF the propert
IS determined. when the return shoul
De based on that figure as finally d,
ternined.
Enterprise Should he Fostered.
'(c) Returns on new capital needle
10 expand the facilities ESQ that II
public will at all times be well served
sufncient TO obtain that capital In II
markets Of the world in other word
70 Put the policy and power Of the Co
eminent squarely behind the idea Thu
any regulatory system to be adopte
must not only correct abuses and DR.
vent them but foster and encourage Il
BUSINESS and sustain the credit OF Il
enterprise.
2 That the present method of a,
!ustlng disputes over wages and worl
ing conditions for public utilities |
abandoned and q sane method Of deci
ing these questions be adopted and II
strike abolished .n the interest OF Il
people as a whole and the forwai
movement Of the country.
That the Sherman law be modifi,
20 That consultations and mergers sha
" permitted. subject to the approval
Nafh A.