The Washington herald., 1922-02-05

| tiers were their regular prey. There
| was no one who could take charge
of the public forces and run them
earnings could be increased by
tended that such opportunities do
not exist, but no one can review
the testimony given here during
the past few weeks without con-
cluding that the rates in special
instances are sitting business.
These directions are perhaps not
important in the whole problem of
rates, but am convinced that
lower rates would recover lost
traffic. such as export coal. substi-
tutions in building materials. gains
in water competition. etc.
Second Period. During 1872.
1--WE must assume that those rail-
way wages and supplies which are
out of line will at least in part
follow down to the levels of de-
creased cost of living; we must as
sumo that the efficiency that IL
slowly emerging after the govern
ment management will still further
increase; We must assume that the
/
ward normal.
'I have the feeling that the rail-
ways, being our greatest business.
Will agree that all these savings
should be instantly devoted to re-
lief in the rates on primary COM
modities in order that we should
expedite the recovery that can only
come through decreased spread be-
tween producers and consumers
goods.
Il recognize that the uncertainty
and slow reduction OF rates In this
fashion will itself delay business
recovery because of the uncertainty
of business as to it's future costs
II our railways were in position
to stand the temporary shock, IL
| would be infinitely better TO drop
the rates on primary commodities
tomorrow-our business recovery
would come faster. But we cannot
ask the impossible.
Third Period situation.
IF we look further to normal
time. we could make a rough cal
culation that present wages anu
costs at, say. SO per cent above pre-
war would show that the railways
can earn somewhere around a bill
lion five hundred million dollars, in
excess 'of the 6 per cent minimum
upon tentative valuation. As
have stated. relief Is first more crit
ically needed in the rates on pri-
mary commodities.
| Some estimates given TO me indi
cate that approximately 35 or 40
per cent OF revenues are involved
in the groups more urgently need
ing relief. ! think it will also bear
calculation that in the income as-
sumed above that primary COM
modities can eventually be reduced
to prewar rates. and still place
earnings upon a basis that will In
spire such confidesce in investors
as will secure the free flow of IN
vestment capital into construction.
1t is not to be expected that capi-
tai for these purposes will be
available at the rate that does not
exceed the tax-free securities at
least 2 per cent to per cent.
EmcIency of Railways.
"A great deal has been said about
the inefficiency of our railway sys-
tenn. do not sympathize with
these statements. Comparison
with foreign railways of the funda-
mental criteria of per-ton mile
costs, train loading and so forth. in
the light of our cost of living. will
demonstrate that our railways are
of higher standards. better in
methods th.-n others and are grow
ing in efficiency.
The consolidation of our rail-
ways into larger systems has been
contemplated in our legislatures for
some years past as gain in eff
cheney. Its value can be overesti-
mated-it is not a panacea for all
trouble. 1t does give hope, how
ever. of economics in further eff
cheney from more complete utiliza-
tion of rolling stocks and terminals.
some small degree of saving in
overhead, saving in ourrent inven-
tories but its probably great saving
that would be decreased cost of
proper finance, increased financial
stability and fuller independence
from the supply companies.
As to Federal Ownership.
1T is probably unnecessary to re-
fer to the question of government
ownership. No one with a weeks
observation of government railways
abroad, or with government opera
tion OF industry in the. United
! States, will contend that our rail-
ways could ever be operated as in
telligent1y or as effectively by the
| government as through the initia-
tive of private individuals. More
over, the welfare of it's multitude of
workers will be far worse under
government operation.
I'VE are struggling with the
great problem of maintaining pun
lie control of monopoly. at the same
time maintaining the initiative of
private enterprise. believe that
we are steadily progressing to So
luton.
Great social and economic prob
lens find their solution slowly and
by a process of trial and error. We
have tried unreguIated monopoly.
and have tried government opera
ton, and found the error in them.
We still have much to solve II we
arc to maintain our transportation.
Much of this solution depends upon
the sucesss-- initiative of the rail-
ways themselves and much of the