Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-02-17
Observation-Disclosures DIR.
Dean of Wharton School Tells Why Government Operation
Proved a Failure
Proved a Failure
SO GOVERNMENT operation of railroads

HCOvERNMENT operation of railroads
~ has been failure because the govern
ment gives. way to pressure for wage in
creases, but does not have the moral courage
to increase railroad revenues by raise in
rates. said DR.. Emory II. johnson, dean
Of the Wharton School of the University of
Pennsylvania, today.
THAT is exactly where government oper-
alton breaks down in Il democratic country,
he continued. "Thc last twenty six months
have developed the inevitable shortcomings
of government administration of the rail-
roads.
1t was made plain by Doctor Johnson that
he was not criticizing the wage increases.
lie was merely pointing out the lack OF
moral courage on the part of the government
when the question comes up of raising rates
in face of country wide protests, to meet ID
creasing operating expenses. This was not
the case in Prussia, for instance. he said.
There the railroad board quietly sat down,
figured what the rates should be, and they
were put into effect whether the people liked
it or not.
Notwithstanding an increase in trathc
from SO 500 900 900 to S5,OOO.OOO, 900
during the last twenty six months, there Is
u deficit of 5000 900 900
concerning Iue CTIllCul lulll ohu Sltut'ipL'
he said: "Can the railroads be successfully
financed and operated when they are re-
turned to their owners? For two years the
government has drawn upon the public treas
ury to maintain the credit of the carriers;
after March l the companies must be self
supporting or become bankrupt.
'If the carriers avoid failure their i'll
comes must cover operating expenses. main
tenance and capital charges; if the com
panies succeed to the extent that is de-
manded in the public interest they must not
only be able to meet unavoidable expenses,
they must have surplus revenue. If there
is no income to be used in part for better
ments and in part for building up Il surplus,
or reserve fund, the public will not invest
in railroads, their credit cannot be re estab-
lshed and maintained and corporate owner
ship and operation of the railways will fail"
The country, according to Doctor John
son, must decide between adequate revenues
for the railroads or government ownership.
1.-THE county has had two years expert
ence with government operation he con-
tinued. "With the exception of the rail
road employees very few people want the ex-
pertinent continued. Free as the people of
the United States are with government
funds, they will not be disposed to make an
initial investment of S1S, 900, 900 900 to 500
600 900 900 in railroads and to raise
minimum of even ) per cent of that sum
81 .O0O, 900, ,000-additional capital each year
to provide for betterments and extensions.
"If shippers and travellers had been better
served during government operation than
they were during corporation management /;
if the government had made ends meet in
stead of incurring a large deficit, the public
might possibly desire the continuance Of gov
ernment operation and might favor public
ownership of the railroads but the showing
made by the government is not encouraging"
Failure Of the government to run the rail
roads with positive success, according to
Doctor Johnson, was not due to lack of
ability upon the part Of either Directors
General McAdoo and Hines. Both are men of
great executive capacity and ability, he said
However" he said, 'the limitations of
government management of transportation
have been clearly revealed by the experience
of the railroad administration during the last
two years. The service has become less
efficient, 'the number of employees has been
increased wages and other expenses have
risen rapidly-paftly because of the war and
partly because of political reasons-revenues
have not been increased to meet the enlarged
expenses and large drain has been made
upon the taxpayers to make up annual
deficits.
''rbe government is entitled to credit for