Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1920-01-08
FEW BIC CORPORATIONS
SHOULD CONTROL R, RS
BELIEF DIRECTOR GENERAL

BELIEF DIRECTOR GENERAL
Nov York. Jan. 7.-CompuIsoey
Consolidation Of the railroads into q
few great corporations before they
roeWn to private control. with the
puhac, labor ana capital represented
IN their manaGsment, was advo0esd
tsnleAt By Director Csneral Hines In
- address bseore the Bar ASsoeia-
t1on q Nsv York City.
W7Qaous tA1s 'fundamentAl recon
suuseasny~ n. Hinss dse,arsA IN
raGuGf wU b progressively disAp-
poauG1ng Ind n a few pears the DIS
sas1u1aoa4pn q the pubic win men-
f1ast Senstf through N insistsnt de-
uanA 1cp . raAtoa1ly df3Reut pan
w01ch - not hkely then 70 stop short
II outright suvsrnneat ownership.
puln13ng eat H. ~aAu3oet mposA-
IL. Sfenat1on AZ the railroads prior
teHAsral eontse4 owing % the DIM
ctlty az financing ths lines. Mr.. Hines
suAad thaA ~our past experience has
Aeana1seyANod t1At III old system viii
not ascrosd." He advocated the nx'
M hu Congress Of . general stand
Aed a rates TO allow earnings clear
y IN G1cess Of Reasonable return
whish must 90 largely TO providing
adequate reserves to take care OF
years Of depression and at the same
time enough Of the excess must ne
left with the company earning II 10
provfdA adequate stimulus Tor EN-
cheney. I'VE make grave mistake
in assuming that the representatives
Of capital alone can manage the Ell
uAtion." Mr.. Hines said. THE scheme
OF the past has been on that false
theory and the result has been the
public has injected itself into the
MANAGEMENT through all sorts OF
agencies and labor has injected IT,
self into the management through its
own organization. We have all three
interests participating In the man.
agement in all sorts Of ways ana yet
there IL no common ground on whicp
these three elements can meet ana
exchange views and endeavor 10
roach conclusions l believe the only
sort Of management which can De
permanentIy effective IL one which
proyjdes for an orderly participation
at the outset Of all three OF theae
interests instead Of the past scheme.
which leaves each interest to pursue
its own methods irrespective OF the
others until an eventual contact Is
established in some form q contro-
yersy"
Describing the differences attend
ing the immediate establishment "i
any plan Of private management WIRE
ADEQUATE credit 10 provide the neces-
sary capital needed for private oe :
yelopment, Mr.. Hines said that u
WAS generally agreed that TINS was
one OF the most difficult financial pc
RODS in the history of the world.
obviously" he continued, IT viii
he more difficult to establish, satis =
factoriIy. the credit Of large num-
her Of railroad companies at the
present moment than II wonIh ne ~
do this a later day when hnanciai
conditions generally have become
better stabilized.
"Haiiroad credit Is dependent 81
course. upon tie conclusions winch
the Investing public reach AS 70 the
earning capacity Of the raiiroads. NO
one would seriously contend tnat
1918 furnished satisfactory cas's
for concluding what the railroads
could earn on the basis of Il gwen
rate level, but as "a matter OF fact
1919 fl going to be equally unre'i-
able and probably more so.
tsr.t .L.t Tn,ttI rnf no "A
more difficult time in which to read
Just 20 as TO reassure the railroad IN
weston and at the same time reason
ably protect the public.
by reason Of this condition on the
public interest is confronted with a
serious dilema. How can 1T at the
present moment make rates high
enough To constitute adequate reas-
surance to railroad credit without at
the same time making them much
higher than would likely turn out to
he necessary If enc period Of read
justmept could be postponed until a
time OF more stable conditions I'M
doubtedly il the policy be adopted OF
establishing Independent railroad
credit instantly al all hazards it
would be only logical TO make the
ratio increases large enough to do 80.
ION ono point believe there must
be agreement and that is that any
rate increase which will at all es-
tablish an adequate credit for the
various railroad companies vperat-
ing Independently on their own re-
sponsibility, must be substantially
greater than a rate increase which
would protect tho situation Temporal
rily II unified control were contin.
ued until more stable conditions ap-
pear. This means that the public
must pay a very substantial price in
an additional increase in rates for
the privilege OF the immediate re-
sumption OF privar, management"
Defending the results obtained I'M
der federal control, the director gen.
eral said tho deficit incurred was not
due to excessive costs but to the fact
that "the prices charged for rail-
road transportation have not been
included, with the increase In prices
Of commodities."
IT the ratio increases made in June,
191S. had been effective Jan. !. 1915. IS
the director general said. from
which time, OF course, the included
expenses were largely effective the
additional revenue without any in.
crease in operating expenses would
have been SA04, ZOO, 900. thus more than
o6setting tho deficit and leaving q
profit Of $4,000. O00."
ALL HIS AILMENTS