The Brookings register. [volume] (Brookings, Brookings County, S.D.) 1903-1971, 1920-01-01

the roads was eventful in COMPRESSION
al proceedings, since the discussions
were rich in unfolding every feature
OF the industrial situation, and the con,
troversal points were thoroughly
threshed out When it looked as
though the legislation might go over
until 1920, Senator Cummins caustic
ally reminded the senate that it was
"the known habit Of congress to de
lay everything until the necessity be
comes obvious to even the most in
different mind" He warned his col
leagues that If the railroads were
turned back without prospective leg
islation, that chaos would follow, and
said that ''if the roads should be re-
turned without effective legislation
they could exist about a month, and
then they would fall into hopeless
confusion, and two-thirds Of then
would be in the hands OF receivers. >
Senator Kellogg of Minnesota, fur
nished some illuminating figures or
the railroad situation, and he told the
senate that he had learned from Inter
state Commerce Commission sources
that out of 165 Glass One railroads
1O9 failed during the first three-quar
ters OF 1919 to earn their fixed charges
for that period. In other words, in,
stead of earning a surplus for the pay
ment Of dividends to stockholders
they have not even earned their in.
terest charges and the stockholders
would be thus be left with a deficit
instead OF a surplus. Tie balance
over fixed charges earned by the re-
naming 81 roads is not sufficient by
$56,000,000 to overcome the deficits
of the other 10S.
These tables show that practic-
ally two-thirds of the railroads of the
United States must inevitably go
into the hands of a receiver unless
their conditions are improved, and
these are not the poor railroads" said
Senator Kellogg. they are such lines
as the Pennsylvania, the Baltimore
& Ohio, the Great Northern, the South.
ern Pacific, and many others. The
government took over these railroads
in solvent condition, and while, Of
course, it has paid, during it's opera.
tion, a fair rental for the properties,
it has increased the operating ex.
penses so greatly that when they are
turned back they will be bankrupt
and cannot from their earnings pay
ther operating expenses and fixed
charges, without one dollar for divi,
dends. A railroad is worth what ii
will earn.
1--WE have no right to take over
public-service corporation and use it
for government purposes. increase its
operating expenses so as to render the
property valueless. and turn it back
without any remedy. Furthermore
should this be done. financial col
lapse in this country is bound to fol,
low. and as the bonds of these rail.
roads are held in saving banks, insur.
ance companies. and by millions of
individuals. and are large basis of
credit. the greatest care should be
taken to preserve their integrity
g! wish to save the railroad systems
OF this country from utter bankruptcy,
because railroad efficiency Is needed
on every farm and in every village
and in every single industry that ex-
lists in the country; and doubt II sen.
ators realize the serious condition con-
fronting the country. I do not care
what basis of value you take: l will
take the valuation fixed by any board
In the world that is fair. The rail-
roads today are not earning anywhere
near 4 per cent upon their value.
Everyone knows. of course, that the
bonded Indebtedness OF the roads is
far below. six or seven billions be-
low, any valuation which win be
placed upon Them"