The Washington herald., 1922-02-05
Proposes Government I'm
derwrite Equipment
Trusts.
PLAN WOULD HELP
JOBLESS, HE SAYS
Ultimate Rate Reduction
Would Also Result,
Ayers Secretary.

Declaring that the violence Of
Americas readjustment is without
parallel. Herbert Hoover, Secretary
of Commerce. urged upon the In
terstate Commerce Commission a
proposal foE a government guaran-
tee for equipment trusts to help
the railroads improve facilities for
travelling.
Speaking before the commission
Friday, Secretary Hoover declared
the guarantee plan would provide
work for thousands of unemployed
and alternately result in rate re-
ductions.
Such a scheme would not cost
the taxpayer a cent" said the Sec
retary.
Mr.. Hoover's speech follows:
The secretary's Statement.
IF We look at the national eco
nomic situation as a whole. the great
est impulse that can be given to re-
covery from any source whatever Is
a reduction of rates on primary COM
modities combined with the inn
mediate resumption Of railway con-
struction and equipment The first
depe0ds upon reduction of operating
costs, the second upon restoration Of
credit for our railways.
zone thing is absolute. Our trans
portation facilities are below the
needs Of our country. and unless we
have a quick resumption Of construc-
ton. the whole community-agri-
cultural. commercial, and Industrial
will be gasping from a strangula-
irr. ~. Nru 7AtA TO
tation the moment that our business
activities resume. For the past five
years, we have had no consequential
expansion to our railway transporta-
ton machine. With but one interval
Of nine months in 1918 and 1919 we
had a car shortage Throughout the
whole OF the years l916-17-1s-1s and
20. This shortage rose to as high as
10000 cars with corresponding
shortage OF motive power. We paid
tremendous sums in commercial
losses and unemployment in conse-
quence. We laid 1t onto the war. We.
should lay it onto our lack of fore
sight and antagonism to railroads.
Expansion Needed.
Few people seem to reafize the
amount of expansion in our transpor-
tation machine necessafy to keep
pace with the growth or the country.
And an equal few seem to have any
notion OF the prioe we pay for not
having It Our Country is more de-
pendent upon railway transport than
any other. AN others have COM
paratively greater coast lines and in
ternal waterways. The experience of
the twenty years before the war has
shown that We must build an ex-
tepsiop of lines, including terminal
facilities. additional sidings, etc,
every year equal to the construction
OF new railway from New York to
San Francisco. We must add at
least 10000 cars and $500 Iocomo-
tives annually to our eauipment.
Since we entered the war in 1917 we
have constructed at least 10000 miles
OF railways less than ar increasing
population and economic Sdevelopment
called for and We are behind in roll
ing stock by about 1000 locomotives
and 100000 cars.
Il wish to emphasize that unless
we can have an immediate resumnI
tion Of construction and eouipment
our commercial community will nav
treble the cost of the whole of them
IN their losses of a single season
The very moment that we reach any-
thing like normal business we shall
see repetition of car shortages. fol-
lowed by an increase In the cost of
coal TO the consumer from one to
three dollars a ton: we shall again
see premiums of 20 cents a busbel
for the use of cars for moving grain:
we snail IN fact see shortage of
commodities to the consumer: and
We shall see gluts upon the hands
OF the producers. We shall see
factories filled with orders again
closed for lack of cars; we. shall see
large intermittency in employment:
ana we snail see the usual profit
eertng in commodities dus to a
structure between the producer and
Loss to Public.
There would be no difficulty what
ever, by basing such losses On the
experiences we have already had, to
calculate a loss to the American
people of a billion dollars for each
one of these periodic transporta-
tion shortages.
Furthermore, there is, nothing
that is So irrecoverableS a loss to
the nation as idle shops and idle
men. Today we have both. There
is nothing that will so quickly
start the springs Of business and
employment as an immediate re-
sumption Of construction and equip
ment Of the railways. When busi-
ness does resume, we shall need
all Of our capacity for the produc-
tion of consumable goods. We shall
not only find 1t strangled for lack
of transportation. but we shall find
ourselves plunging into the manu-
facture of this very railway equip
ment and construction in competi-
tion with consumable goods for ma
terials and labor. Herein lies the
basic cause Of destructive price in
fation and booms, witR all their
waste and over expansion. In times
Of depression, we should prepare
for the future and by doing so we
can cure tDe depression itself.
IF we examine the fundamental
reasons for failure 70 resume
equipment. weSwill find them in the
loss of confidence in railways as an
Investment and the composition Of
'tax-free securities. We have passed
the period of credit strain in this
depression. Surplus capital is pour
ing by hundreds of millions month
ly into tax-free securities and for-