Perth Amboy evening news., 1922-05-09
REMEDY FOR RAILROADS
OF THE UNITED STATES
Daily Letter by Frederic j. Haskin

WASHINGTON, May 6.-Differ-
ence of opinion regarding the advis-
ability OF consolidating the railway
systems of the United States in ac-
cordance with provisions of the
transportation act is making itself
felt. This plan was devised by Con
gress, with the aid of experts, as
one of the most feasible solutions to
the American railway tangle. Sena-
tor Cummins of Iowa is one of the
chief champions of the plan and ex-
presses the opinion that unless the
railroad systems are consolidated.
the nation cannot escape govern
ment ownership and operation.
The general plan is to consolidate
into twenty or thirty main systems
the hundreds Of railroad companies
now operating in the United States
The American railroad system de-
veloped as the result of Independent
projects of individuals or small COM
panies. In fact the railroad sys-
TENS that now exist. such as the
Pennsylvania, the Baltimore and
Ohio and the Southern are nothing
more than consultations of a num-
Der of smaller lines. These console
dations have been the result of ac-
QUESTION of additional mileage by
lines which desired to extend their
scope. II vas = natural development
with no statutory dictation behind it.
The transportation act plan would
merge about 500 lines into twenty or
thirty general systems and the con-
so1idation would not be as the COM
panies want it particularly, but as
the Interstate Commerce Commits
sion, charged with enforcing the
laws governing railroad transporta-
ton. wants it.
The consolidation theory and plan
have had careful study by many ex-
perts. The latest study to be made is
tf at of DIR. Jean Paul Muller, an at
torney and economist of Washington,
who ~specializes in railroad and in
dustrial investigation. DR.. Muller's
study has caused him to oppose the
consolidation plan because of the
method adopted for putting it into
effect.
He declares that the plan will not
reduce rates but is more likely to in
crease them to even more burden
some levels. He does not oppose
the general principle of ~consolida-
ton but contends that it should be
a natural development on the mi
tiative of the owners
Muller Combats Cummins
One of the chief arguments ad-
vanced by Senator Cummins and his
adherentS in favor of the govern
ment consolidation plan is that IT
will unity railroad rates and place
| the whole country on the same OPP
| Grating basis. DR.. Muller denies this.
| He declares that there will be just
as much difference of quality in
MANAGEMENT. proportionately, among
twenty or thirty systems as between
500 railroad companies. The result
will be that some OF the big systems
will grow strong and others VIII
grow weak, just Is among the sep
| arate 500 railroads.; this development
would bring about in the course OF
a few years the same situation that
now obtains and there would have
to, be another consolidation so that
the weak roads could be absorbed.
This process would go on. DIR. Null
err thinks, until ultimately there
would be but one great railroad sys-
tenn. Obviously the result of this
would be the total destruction of
| competition, the element in business
| of all kinds which experience shows
is the in. tigator of progress and SER
vice.
DIR. Muller's analysis persuades
him that the principal weakness in
the American railroad system today
is the restriction in the t~ransporta-
ton act which limits the earnings of
a railroad to 6 per cent He points
out that railroads, like all other en-
terprises, must pass through periods
| of prosperity and depression. He
says that i'm the natural course of
business the individual or the COM
pany is able in good times to earn
enough money to permit of laying
aside a surplus. This surplus is
drawn upon when hard times come
and earnings dwindle. This is the
policy which kept alive many great
corporations and many small firms
during the last year or two of bust
ness depression.
Now, DIR. Muller points out. If the
law limits to a low figure the amount
Of MOLE which a railroad may earn.
how can 1t lay a surplus aside for
a period of diminished income?
The natural course for a railroad
1 to take in hard times would be to
reduce rates. All merchants do this.
In prosperous times, they can get
high prices. In hard times, they
must cut. BY such a course, BUSH
ness is stimulated. Bargains are Of
fered and it is found that trade is
e~nlivened to such an extent that
profits begin 70 reappear aud pros