New-York tribune., 1921-11-06
Aid From Consultations

Railway consultations, which have
been proposed as the ultimate solution
Of the problem Of the weak roads, can
not afford relief for some time to come,
IN any event. The Interstate Com
merce Commissions plan, recently
not be made final until protracted hear
ings have been held. If the plan is
adopted, no consultations are possible
until the final physical valuations have
been completed, in view of the stipula-
tion of the law that the aggregate
Capitalization of merged properties
shall not exceed their physical values.
$50 we are good many months,
perhaps years, from the beginning %
the operation of this section Of the
act. Granted that material reduc-
tion in the number Of railway systems
IS in the public interest, We regard with
decided apprehension an amendment TO
the transportation act which would
make consultations compulsory even
If legally possible. The effect Of such
forced consultations would be far
more likely to destroy the credit of the
strong road than build up the credit
of the weak. On the other hand, con-
solidations which flow from the motive
of self-interest will not icopardize
credit and will, in our judgment, pro-
The Interstate Commerce Commits
sion now has full authority over the
issuance and sale CT securities Dur
ing the last year sometimes six weeks
and longer have elapsed between the
time the railroad company made its
application to sell bonds and the date
the authority was officially given.
Such delays are dangerous If the
securities are sold by the bankers sub
iect TO the approval of the Commits
sion, the investor is annoyed at not
receiving delivery of his securities,
and If the quoted price goes down he
may attempt to cancel his purchase.
If the sale by the bankers is deferred
until the Commission has granted at
thority, the market may have disap-
peared. In a year of rising prices
there might be no injury by delay, but
III falling market the railroads. the
bankers and their customers may De
seriously embarrassed. Doubtless,
part of the delay has been due to the
immense amount OF work the Inter
state Commerce Commission has beer
doing. The question deserves the
prompt attention of the Commission
to devise g means of relief.
"A summary OF the conclusions o.
your committee follows:
lie persistence Inc railway PAUS
lem is que to the acute business de-
preston and the ensuing maladJust-
ment of prices and labor, and is no re-
Election on the value and importance Of
the transportation act, which we re-
gard as most constructive Legislative
achieyem ent.
"The labor costs on the railways are
beyond the ability Of the industry to
meet, and we believe the Labor Board
erred in not abrcgating unconditionally
the so-called national agreements.
CAS- wages are the important factor
in the determination Of the rate struc.
ture, the functions of the Labor Board
| should be co-ordinated with those OF
the Interstate Commerce Commission
and we suggest an amendment 70 the
transportation act looking to this end.
Railway rates are still on war
basis and should be reduced Just as
soon as operating costs have been re"
I duced. But too drastic premature
reduction, in view of the weakened
condition of railway treasures. would
| be likely TO invite disaster.
when railway earnings fell close To
4 per cent in 1914 and 1915, receiver
ships multiplied. When earnings I'd
vanced to the neighborhood of 6 per
cent in 1915 and 1917, reorganizatioGs
panding. The lesson of railway history
is clear that the Interstate Commercs
Commission should continue to adjust
rates with the view of permitting o
net return of 6 per cent, when the de-
termination OF such return rests IN
their uncontrolled discretion. that is,
after March /, 1922.
Consultations are desirable so lorS
as they result from the voluntary
action OF the interested parties. Com
pulsory consultations might in many
cases injure instead of restoring the
credit Of the railroads concerned. :,
Tine overwhelming part of the rail-
ways activities is now Interstate
fact recognised BY the Transportation
Act: Any restoration Of regulating
auth orlty to the state commissions
would he a retrograde step.
Railroads, having already suffered
from the competition of motor trucks
using highways provided at the eA-
pense of the public, should not in Eddi-
ton be subjected to competition
- Continued ON Pare Eight