New-York tribune., 1920-01-08
Wants Few Strong Groups
With Capital, Labor and
Public Sharing Control
on Fair Earning Basis
Defends us. S.Management
Straight Federal Ownership
Is Only Alternative to
His Plan, Director Says

OOHSOI1OdClOu OIL Cne railroads INTO
a few great systems, with capital,
labor and the public represented in
their management, was urged by
Walker D. Hines, Federal Director Of
Railroads, last night as basically es-
sential to a solution Of the nations
railroad problems. Rates must be
established by definite standard and
earnings must be sufficient to provide
for years of depression,, he said.
Unless these fundamentals were pro-
vided for in a return of the railroads
to private control, declared Mr.. Hines,
the result would be progressively dis
appointing" and in few years the
public would be satisfied with nothing
less than outright government owner
ship.
Mr.. Hines spoke before the New York
Bar Association at AZ West Forty
fourth Street.
Protected Rail Credit
Answering criticisms of railway
service given the public, Mr.. Hines de-
clared that Federal control had rem
dered some important services, (which
far outweigh any defects with which
it may be chargeable." For one thing,
he asserted, Federal control had pro-
tected railroad credit through a period
Of critical financial difficulty.
Outlining his plan for the future of
the railroads, Mr.. Hines said that at
the outset controversy among capital,
labor and the public must be avoided.
Railroad enterprise is a great COM
mon enterprise" he said. eve make
grave mistake in assuming that the
representatives of capital can alone
manage the situation. The scheme of
the past has been on that false theory
and the result has been that the public
has injected itself into the manage
ment through all sorts of agencies, and
labor has injected itself into the man.
agement through its own organiza-
tions, not only through direct demands
! upon railroad companies, but through
demands on Congress and on state
Legislatures and public commissions
for legislation and regulations affect
ing management.
1--WE have all three interests partici-
pating In the management in all sorts
OF ways, and yet there is no common
ground on which these three elements
can meet and exchange views and en-
deavor to reach conclusions. I believe
the only sort Of management which
can be permanently effective is one
which provides for an orderly parti-
cipation at the outset of all three of
these interests instead of the past
scheme, which leaves each interest to
pursue it's own methods irrespective of
the others, until an eventual contact is
established in some form Of con-
troversy.
Consolidation Needed
TO recapitulate my views on a per-
manent solution of the railroad prob
lem, believe that there must be
Fundamental changes which will con-
solidate the railroads into few great
systems. 1 believe that the public and
labor, as we'll as capital, must be rep
resented upon the managements of
theso systems. | believe that
definite standard for rates must be
estab blished and that earnings clearly
IN excess of a reasonable return must
be divided and must go largely to pro-
viding adequate reserves to take care
Of years Of depression and at the same
time enough of the excess must be
left with the company earning it to
provide adequate stimulus for ef-
ficiency. In my opinion, IL any effort
be. made to return the railroads to
private control without the funda-
mental reconstruction which + advise,
the result will be progressively dis
appointing and in few years the dis
satisfaction Of the public will manifest
itself through an insistent demand for
q. radically different plan which is not
likely then to stop short of outright
government ownership.
"The argument has been urged in
response to such fundamental changes
that VIC ought not to adopt an untried
system, but ought to retain the sys-
tenn OF the past with which we are
familiar. but it is the very fact of our
familiarity with the system of the past
which compels me to believe that there
must be complete departure from that
system. believe our past experience
hat! demonstrated that the old system
will not succeed. 1t certainly is
poor argument to insist that we should
adhere to failure as a permanent
with it.
g! wish to point out the unusual diff
ficulties which attend the immediate
establishment Of any plan Of private
management with aocouate credit to
provide the necessary capital needed
for railroad developr nt. These OBJ
stacles are not only emb> RAISING to
railroad credit, but they so involve
serious elements of injury to the pub
lie transportation service.
II believe there will be ger eral agree
ment that this is one of the most diff
cult financial periods in the history
the country or the world Lbviously
it will be more difficult to establish
satisfactorily the credit of a large
number Of railroad companies at the
present moment than it would be to do
this at later date, when financial con
ditions generally have become better
stabilized"
! Coming to the defense of Federal
control, Mr.. Hines said: II wish to cor
rect the radically erroneous impression
as to the treatment Of labor. The in
crease in the rates Of pay to railroad
labor has by no means been out of
line with the increases to labor in pri-
vatc. enterprises, and in both instances
the increases have been due to the con-
ditions created by the war. 1t is
curious illustration of the alteration
OF the times that the increase in wages
made by the railroad administration Is
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