New-York tribune., 1919-12-18
The Poor Railway Owners


Esch, railroad bill by the organiza-
tion Of the owners of railway securi-
ties exposes what may we'll be re-
garded as fatal defects. It's COM
mendation Of the Senate, or Cum
Minis, railway bill confirms the COM
mon impression that while not pro-
viding an ideal settlement, this meas
urc carries perhaps the best settle
ment attainablc.
The Cummins bill recognizes two
vital principles which the Esch bill
ignores. First, the Cummins bill
recognizes the corollary Of such COM
plete public regulation as both bills
assume to be necessary. This corol-
larry is that rates must give railroad
owners fair return on the value Of
the property used in the public SER
vice. The basis of rate-making is to
be an appraisal Of the property as
made by public authorities. 1t has
nothing to do with stocks, bonds or
securities. An assessment, comply
ing with the lettcr-and, let us hope,
the spirit-of the Fifth and Four
teenth amendments is to be made.
On this assessment a return of s Il
per cent (plus one-half Of l per cent
optional to provide fund for non
productive improvements is to be
allowed. AS it will be generally con-
ceded that s u per cent is enough if
railroad owners get it, there is no
"conflscation," except a rather barren
hope Of excessive returns Most
railroad owners will be disposed to
agree that an assured 51a per cent is
a fair exchange for speculative pos
s;bilities of making money-or per-
haps less.
Second, the Cumnlins bill contains
a provision that it shall not be in the
legal power of any one or any group,
owners or employees, to stop the
railways through conspiracy. The
right Of employees TO quit is not de-
stroyed, but they may not quit in a
body and take the public by the
throat to enforce selfish DESIRES
When railroad employment is sought
it is assumed that the seeker agrees
to stick until he can quit without
fundamental injury to others. If
this issue were fairly and squarely
presented little doubt is to be enter
tanned that it would be overwhelm-
ingly indorsed by the public No
other rule seems possible if there is
to be reasonable protection Of the
common welfare.
The Cummins bill is criticized by
many persons connected with the
railroad business, but examination
shows that the critics are usually
railroad managers, rather than own
ers--are interested in a liberty of
initiative that it seems impossible to
get; or that they belong to financial
groups which are interested in specu-
lation, and which prefer fluctuations
in the market for railway securities,
rather than its stabilization.
Fearful has been the bleeding Of
investors who have honestly put
their savings into railroad owner
ship. They have seen their invest
ments lose billions in price They
have not only seen their principal
shrink, but also their income; and in
practical effect this income has been
recently again cut in two by the
change III the purchasing power OF
the dollar. They have been unor-
ganlzed and largely voiceless. If
there is one clement more than an
other entitled to be needed by Con-
gress it is the railway owners.
Money for improvements is more
likely to be secured by the safety
Of the loans than by chance Of
gain. AS to securing the competi-
ton that makes for efficiency and
economy, division Of the railroads
into competitive groups, together
with the provision that railroad
which earns more than its guarantee
IS to share in the excess, manifestly
gives some room for enterprise to
function in.