The Washington herald., 1922-02-05
Predicts Ultimate Cut in
Rates Would Follow
Such Scheme.


-Cnttrsed from Pooe One.
sn loans. and yet our railways
are unable to finance the most
moderate of constructions programs.
The-confdence Of the public in rail-
Way Investments was at so low an
ebb before the war that finance by
the issue OF common and preferred
stocks had become impossible and
ray expansion was living on
The confidence of an assurance
and continuity in earning power
70 cover this burden of bonds has
reen even lowered since the war
began. because of the uncertainties
OF both rising and falling prices,
Of rising and falling wages, Of ris-
ing and failing rates preventing
All regularity of earnings upon
which an investor could be con-
vinced. even II no Uther dif1cult
factors entered into the problem.
see no occasion to go into the
labyrinth of past railway finance.
It's propriety, its foolishness or Its
skill. That generation 10 gone by.
ThiN commission approaches the
nnancial problems of the railways
upon the actual value, not upon
their issues of securities and take
IL we are living for the future, not
the past. We want transportation.
and we want IL with the values Of
private initiative and clean public
service.
.s-- Locking to Future.
IF we look to the Immediate
future with its complete necessity
Of pairing the railway earnings
down to little more than bond in
terest, until we give relief to the
shipper (and thus the primary
foundation to business recovery 1
can sec little likelihood of con-
vincing the investor as to his mar
gins of safety. There Is an at
mosphere that our railways will
never again earn profits. and that
they are not as an industry worthy
OF Investment, and that because
private investors will not come to
their assistance nobody can do
anything.
Far from IL being impossible
for our railways again to return to
a profitable footing, / believe 1t Is
possible to demonstrate that on an
average they will become very pro-
fitable. II we assume that the re-
~duction of prices and wage levels
will settle at a plane no lower
than SO per cent over pre-war, and
IL We assume that the present rates
are to maintain, and il we assume
restored traffic, then the earnings
of our railways would exceed Is
per cent on the whole of the COM
missions tentative valuation Sure
ly there Is room here for safety to
investment, as we'll as relief to the
shipper.
But the circumstances being as
they are, confidence being at low
ebb. we do not have the equipment
necessary for our business. We are
driving headlong for a setback to
our whole commerce the very mo-
nent that we begin to get on our
feet
Sees Need for Program.
IN these circumstances it seems
TO me vital that the railways as our
greatest industry should propose
. courageous program Of broad
visioned betterments and IL neces-
sarY the government should con-
slider giving the use of its superior
credit. II would not cost the tax
payer a cent to give the govern
ment guarantee to equipment trusts
upon the primary responsibility of
the railways the proceeds devoted
entirely to improvement and equip
ment- This is no proposal to take
money from the taxpayer. 1t IL a
proposal to save him from paying
treble the amount of his guarantee
in profiteering and losses. 1t will
render a reduction of rates earlier,
for unless something is done the
improvements will have to be paid
over years out of increased rates.
Nor would we lose a cent upon the
guarantee. for il American rail-
ways cannot earn interest upon
their borrowings let US throw up
our hands and prepare for a second
Russia.
"A real program of construction
would in it's various ramifcations
give relief to five or six hundred
thousand of our unemployed. 1t
would enable even added numbers
to increase their standard of living,
and thus give increased market to
the produce of our farmers. Our
farmers who look to foreign mar
kets for their surplus should stop
to COnSlOeT InAI our nOIiiC COuSdAhP-
tfon of meat decreased nearly seven
pounds per capita in 1921, mostly
owing to unemployment and that IL
this decrease could be overcome 1t
would be worth more than a 80 per
cent increase in exports.
Urges Rail Expenditure.
We talk glibIy of giving billions
Of credits to foreign countries. to
increase our farm exports. / wish
to say with all responsibility for
the statement. that a billion dollars
spent upon American railways will
give more employment to our peo-
DIe- more advance to our industry,
r,ore assistance to our farmers.
han twice that sum expended out
sids the frontiers of the United
States-and there will be greater
security for the investor.
FINALLY, 7 want to refer to the
yeritabIe witches cauldron being
fed constantly with hates distilled
from the misdeeds of railway pro-
r,oter. in the past, from the con-
fIiets between the railways and the
farmers. Letween the railways and
thAir yorkmen. From all the con-
Fusion that arises from 1t we de-
stroy our railways and destroy our
selves With this commission on
one hand assuring honesty in
dnance. justice to the shipper and
fbe railway investor. with the rail-
yxay labor board assuring justice to
workers and. above all. with