The commercial. (Union City, Tenn.) 190?-193?, 1921-08-19
Government Fails in Business.

Mass, meeting of statesmen, the fail
ure of state and municipal owner
ship, reproduced in this paper. II
the issue of July 80 of the Saturday
Evening Post Will Payne goes hin
one better and makes out very
plain case of the failure of govern.
ment control.
To us this article of Mr.. Payne is
a very interesting document, for in
a detached way we have been look
ing on from distance at what seems
a most deplorable condition of af-
fairs.
The controlling idea in Mr.
Paynes calculations is that the sue
cessful industry is the one in which
the greater production is brought
about by the lower service rates and
vice versa.
His subject is the American rail-
ways.
First he recalls the names of great
railway presidents who made histor-
ical achievement of American rail-
roads, and then the growth of the
greatest system of railroads in the
world.
America and Europe started build
ing railroads about the same time.
Out of the progress of this industry
America emerged with one-fifth more
with less than fifth of Europe's
population, and the most remarkable
feature of this industry was that be-
fore the war transportation charges
were no higher in America than in
Europe. Remember that all this was
accomplished with the wages of
American railway employees 80 to
$50 per cent higher than they were
in England, France, Italy, Germany
and Austria-Hungary
In the northeastern territory we
had twice as many miles of rail-
many, Italy or Belgium and the
freight rates per ton per mile were
much lower, while the passenger
rates were little higher with COM
mensurately better service.
The summing up of the achieve
ment is not yet told until it is re-
called that American roads sold their
products as cheap as Europe, while
most other American industries were
charging higher prices to offset
their wages.
So it is, with private ownership,
private capital, private initiative and
privately planned and managed rail
roads we beat Europe hands down.
But the weight of Mr.. Payne's
brief falls upon state control.
Before the Government had as
sumed power to fix freight and pas
senger rates they were steadily fall
ing From 1870 to 1900, the great
est period of railway expansion, there
was a steady decline of transporta-
ton rates. The secret of railway
success was the economic advantage
of greater production-lower rates
and surer profits.
Mr.. Payne cited notable example
of this in the automobile industry.
The man who made the biggest prof
it paid the best wages and sold the
cheapest car. He might have also
spoken of the success of this mans
late railway enterprise. transformed
in few months from a financial
wreck to paying industry.
In 1887 Congress passed the
Interstate Commerce Act In 1898
wages and prices began to rise, but
the average freight rate per ton per
mile in 1905 was .766 of cent.
When the Government took con-
troll of rate making 1t was "the
sitting of individual initiative, set
ting up the rule of the thumb, infu-
sion of politics and stuffed pay ROLL
in general the sort of thing you see
exemplified in those big depart
ments at Washington whose low eff
ficiency and high extravaganza are
deplored."
The intervention of government |
aid at that time seemed to be an ex-
cellent idea, but all the advantage
that might have accrued from better
counsel was lost in the common prac-
tees of government operation. Now
80 cents out of every dollar dis
bursed for the railroads is done by
the Government.
Before the war the Interstate Com
merce Commission haggled over the
granting of a five per cent increase
in freight rates. During the war Mr.. |
McAdoo lifted the freight rate by q |
single stroke % per cent. and after
the war the next leap was 40 per
cent. The labor bill increased from
one and half billion dollars in 1916
TO over three and half billion dol
lars in 1920.
Nou tho froipht ratio ic twica what