The Washington times., 1921-07-26

starting up Of industry will be enor-
mously assisted and promoted.
1t il evident, II the products OF
our farms. of our forests. OF our
mines. and of our other industries
are to find a way to market. that
our railroads must be adequately
equipped to move them. Mani
testify, from the foregoing statistics.
they are not now SO equipped. II
there Is to be a return, as we de-
voutly hope there soon will be. OF
normal business activity and pros
perity, 1t must not be halted and
obstructeed by insufficient trans.
portation,, which u q fundamental
condition of all commerce.
Funding.
BY the terms of section OF the
Federal control act. the President
was authorized to incur, on behalf
of the carriers, indebtedness for ad-
ditions and betterments. To create
an indebtedness to be paid by others
without limit In amount IL. II must
be admitted, a most unusual power
and was justified only by the exigen-
cies of war.
As a result of the exercise of this
power a large amount OF Indebted
ness was created by the director gen.
eral and imposed upon these car
riers,' for additions and betterments,
some Of 1t assented to by them and
some Of 1t not concurred In. This
class Of indebtedness. although on
capital account, was made by the
Government Immediately payable,
instead Of being arranged as long
time obligations.
II the carriers had been deal
ing with their own affairs In re-
spect to additions and betterments.
1t Is reasonable to suppose that
they would not have undertaken
to provide for these large capital
requirements out Of their current
income, but would have followed
their usual course. which would
have been not to incure indebted
ness, as to q large part OF this
amount. until they had succeeded
in financing the capital required
on long-term obligations. They
could not do this under the condi-
tons of Federal control and OF
the war, for the two reasons: First,
because the matter was not legal
ly within their control. and, sec
ond, because the entire investment
market was necessarily absorbed by
the Government In securing war
loans.
The question, therefore, arises
what II is equitable and just to
do now in regard to the adjust
ment Of this indebtedness? The
carriers Insist that 1t should be
funded by the Government for
term Of at least ten years.
lot to ft0
because of the circumstances above
narrated under which the indebted
ness was created, but for an addl-
tional reason in which the public.
as we'll as the carriers themselves,
have an interest. The carriers at
the end of Federal control had
been out of the possession Of their
properties for more than two
years. They were called upon at
that time to resume the respon-
sibility of furnishing transportation
adequate to the needs of commerce.
1t must be admitted that they un.
dertook the performance Of this
duty under adverse conditions.
Their organizations had been
broken up; much of the normal
traffic Of the various lines Ind
been diverted to others; their roll
ing stock had been widely scat
tered by Government management
throughout the country. and their
labor expenses had been enormous
ly Increased during Federal control.
This situation, they claim, put upon
them the necessity of providing for
abnormal expenses Of operation at
the very outset.
1t is in the public interest that
they should DO able to perform sue
cessfully the duty of transporta-
ton. This will necessitate not only
An adequate supply of cash for
their abnormal expense, due to the
special conditions which have sur
rounded their properties, ana for
their current purposes, but also
will necessitate the borrowing of
large amounts Of new capital, 10 az
to keep their roads up to the re-
quirements of the public. and for
other capital purposes, such MS
the payment of maturing oblIgn-
tons. This they will have to do
In market disturbed by war con.
ditions, and where there Is A tre-
mendous competition, as between
themselves and with other Indus
tries. for the funds available for
investment.
1t Is even more vital to the pub
lis than to the carriers, that the
carriers should succeed in securing
the money necessary to the sue
cessful performance Of their trans
portation duties
II the Government refuses to
fund this indebtedness which It
created for the carriers, and for
which the Transportation Act ex-
pressly provided. and II, in addition
to their large capital requirements
for other purposes, II is necessary
for them to borrow also the amount
they owe the Government for ad.
ditions and betterments, their prob
lem and the public's problem in
respect to transportation, will be
enormously embarrassed
The Indebtedness OF the carriers
to the Government for additions
and betterments incurred under
the circumstances above mention
ed, ought not to be allowed to
constitute an additional compiled
ton and embarrassment In this
situation. To avoid this. the Gov
eminent ought not to hesitate to
carry this Indebtedness for ten
years. as provided in the Trans
portation Act, In view of the fact
that the reason II was made i'm
mediately due grew out of the war