Fitzgerald leader enterprise and press. (Fitzgerald, Ben Hill County, Ga.) 1921-1964, 1922-04-20
Comparative Cost of Government
Operation And Private Operation
Of American Railroads

On the strength of the persistent
claim of railroad managers that gov
ernment operation of railroads was
inefficient and extravagant, the car
riers have obtained large subsidies
from Congress. Hundreds of millions
of dollars have been paid out of the
public treasury, in addition to which
the public faith and credit has been
pledged for additional millions.
The testimony before the Senate
Committee on Interstate Commerce
points unerringly to these conclusions:
| That any fair comparison will be
favorable to government operation as
against private operation.
Z That private operation of rail-
reads IS today costing the people from
S54,000.00O to 100000 month
more than they were required to pay
for the same service during federal
operation.
8 Measured by units OF service
rendered, private operation is costing
81 per service during federal operation.
Comparisons Favor Federal Control
In his testimony before the Inter
state Commerce Committee of the
Senate, February, 2, 1922, William G.
McAdoo, former director general of
railroads during the first wear of fed
eral control, explained the unique and
unprecedented conditions that con-
fronted the government.
he railroads were managed with
but one primary object in view Mr..
McAdoo declared, "That was to assist
in winning the war. No consideration
OF costs of operation was permitted
to interfere with this fundamental
purpose When it became necessary
costs were disregarded. Even under
these conditions, however a very fav-
orable comparison can be drawn with
the results of private operation"
The railroads. as public utilities, Mr..
McAdoo explained, cost the people
OF the country whatever amounts are
paid Tor the transportation of freight
and passengers, plus whether direct ap-
preparations or grants are made from
pubic funds by Congress, after deduc-
ting assets remaining in the hands of
the government"
During the 20 months of federal
control the gross revenues paid to the
railroads directly bv the public amount
ed to Sill ,036, 572,50o 1t has been
estimated that the ultimate cost aris-
ing from appropriations bv Congress
would be 81 ,L00000,000. Adding this
to the direct cost in revenues. there
Is total cost to the public amounting
to $lz,235,5 72. 500. covering the entire
70 months of federal control
Statistics are available for 20 months
OF private operation since the termina-
ton of federal control or until Novem-
Der i, 1921. These show total op-
Grating revenue paid bv the public to
the railroads of $9,982. 305,818
10 this must be added the amounts
winch must be paid by the public nm.
der the Six-month'S guarantee period
OF ne Cum1nins-Esrh act, estimated
bv the Intdrstate Commerce Com
mission at $525.242,716.
This sum added to operating reve-
nues makes total cost to the public
tor 20 months Of private operation
amounting to Sl0,0o,242,716
Reducing the cost of each period @
a comparable monthly basis gives the
following result
Cost To Public Per Month
Railroad Administration -S47O. 637. 4O4
frlvate Control ---------$525, 412.l35
Expressed i'll te1ms of dollars and
cents. therefore, the cost of operating
the railroads under private manage
ment has been $54774,731 per month
more than it was during federal con-
troll or $o57 ,396772 per annum," tes-
titled Mr.. McAdoo.
Ii the costs of operation are con-
sidered on the basis of units of trans
portation actually handled, or equated
ton miles," Mr. McAdoo added. at is
even more favorable to the railroad
administration. The cost to the pub
lie per 100 equated ton miles follows:
Railroad Administration $1,000
Private control ---- 1921
On the basis of tile work done, the
cost to the people under private con-
troll was therefore, II per cent more
than under government management.
II NAV be said in criticism of these
comparisons" declared Mr.. McAdoo
that the higher wages of labor. as
well as higher freight and passenger
rates since 1920 were an inheritance
of private management from the Rail
road Administration. To this the OBJ
viouS answer is that it does not nee
essarily follow that such advances
would have been made under a con-
tinuance of federal operation, but ev-
O., so, the Railroad Administration in
1918, as I have pointed out, inherited
the necessity of equally as large wage
increases from private management
before the war and had to make cores
ponding increases in freight and pass
enger rates"
Guarantee Benefits Private Control
In this comparison every advantage
has been given TO the period of private
operation. Mr. McAdoo declared. Dis
cusslng the calculation, he said
The annual guaranteed rental OF
S9O6,000,000 is fully included in the
period of federal control, while in the
period of private conrrol the return
or me- profit contemplated under the
transportation act is practically omit
ted. If the expectations of the trans
portation &C had been completely real
tied in the rt-urns provided for the
railroads % pei cent on $l8, 100000 ,000)
the cost to the public of private opera.
ton would have been greatly increased
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