Deming graphic., 1920-01-13
ADVISES GOVERNMENT CONTROL

ADN INfsN uOk EhANNtbsNA
Director General Hines Of the rail-
ro,d administration has pointed out
what has not been clear before in
sne,eh before the New York City Bar
Association: The railroads can never
hc returned In the same condition 10
The same condition in which they We're
before they came into federal control
For one thing he makes IL clear the
pnsition Of the privately owned rail-
rond was getting mighty precarlous
from the standpoint of financing. lie
T., for having congress fix rates that
will give a margin clearly in excess OF
reasonable returns ON the Investment
Ia insure extension when necessary
stimulate efficiency and provide
against times Of depression.
As the railroad director sees 1t the
,illroadS must be arbitrarily consoli-
dated into a few great corporations
aud allow the participation OF the
three factors involved in its manage
mrnt in order to insure coordination
and cooperation. The three factors
are the vital public franchise, the
skilled labor and the capital which
huilt the railroads. The assumption
H. saws the capital is entitled to alb
snlute control is without foundation
Labor has injected itself into the sit
nation and the public through legislh-
tirn has injected itself into the situa-
tinn. At present all three fnctors are
working at cross purposes with con
tinual threc-cornered fight going on
instead Of cooperation without which
the service is bound to suffer.
Federal control was defended and
It's continuance advised. II was point
ed out that the railroads were tlded
over n period of great financial stress
the troops and supplies were moved
which was the primary object In gov
erpment control. rates We're not in
creased 10 keep pace with other com
modities labor was not increased IN
proportion 10 other industries. the
reason for deficit instead Of sur
plus was accounted for by the facts
that rates were not increased to meet
rising costs In materials and labor.
The director general sums up as fol
lows:
let me in conclusion again remind
You of the conditions which prevailed
iu 1917. We get no clearer or more
striking picture Of those conditions
- .'an that which was presented by the
rlilroau executives 10 the interstate
commerce commission in the late fail
,r 1917 i'm behalf of the effort that
made 10 secure an increase In rates
The conditions were then summed up
On behalf of the railroad interests aS
( llows:
"Ca) Continuous increases I'm the
st Of labor fuel. supplies, taxes and
cf obtaining new capital;
"Cbl Inability to secure and retain
efficient labor.
"(c) Curtailment Of maintenance
which curtailment Is due in part to
Inability 10 secure necessary labor and
Materials;
"(d) Decrease in net operating
il come. Notwithstanding large in
ease in operating revenues, IN
= opcrty investment. in carload ana
In trainload;
"te) Reduction in surplus with
nscaucnt effect upon the credit OF
tie carriers;
"tO Inability to secure new cap
ilil by the issue Of stock. with the con
srquent weakening effect upon the
financial structure;
"tg) Inability to provide improve
ents and facilities. not only essential
f-r the traffic Of today. but equally
g scnual for the traffic Of the future.
Let MS not forget that conditions OF
tlis character were the outgrowth OF
the imperfect system Of management
and regulation which existed at that
time and let rs take the lesson to
heart I'm considering whether there
must not be- fundamental recon-
struction Of the scheme of manage
ment and regulation II any Of the
useful features of private control are
to be- re-eStablished with any reason
able hope of their being permanently
successful"