, 1922-11-27
Development Awaits Rail Solution

OGNNtOHfftCih [I04t1o null OOtutIUH
SECRETARY Hoover contributes a searching dis
~ cussion of transportation problems in his
forthcoming annual report He declares trans
p%ortation facilities have Jagged far behind the ne
oessiues OF the country. Their rolling stock, their
traekage and in a large measure their terminal IA
%eilities are unequal to III nations needs. None Of
these Shortcomings are transitory. None of them is
due to the recent strike.
There has been a continuous car shortage for
the last six years.
Furthermore, car shortage reaches its most
acute stage during the four or five months of peak
load in the fall and early winter. Rilway cars are
from commercial anemia every year because they
are starved. The losses from inadequate transpor-
taiion are a tax upon the community greater than
the cost OF our government. Such inadequaces not
only stifle the progress. of production and intro
duce speculation into distribution, but they also
seriously affect price levels
Secretary Hoover then gave many Illustrations
to prove this. The price OF coal to the consumer
was increased over 800 per cent in 1920 because of
car shortage Fundamentally the instability in the
coal industry and recurrent strikes are due TO car
shortage. Car shortage directly affects all agricul-
tural sections adversely and very seriously.
What is the solution Of our transportation trou-
blcs! Secretary Hoover points out that ave nave
tried uncontrolled operation. We have tried neg.
alive regulation in the prevention of discrimina
ton We have tried naturalization. We are now
trying positive regulation Continuing, he says:
Standardization would be n social ana economic
disaster Free operation would reconstruct the vic
ious practices of thirty years ago. Regulation in
~ 'NAHA 80 necessarily u htftlDp-
inent of this regulation-to preserve the initiative
and responsibility of our railway executives. to Sc.
cure the fine values of private operation, and at
the same time TO secure public protection and as.
sure adequate service-is absolutely vital. The
present transportation act possesses many con.
%structive features and some weaknesses. 1t was the
result of compromises and these very compromises
are some of its weakest points"
The secretary then discusses the socalled guar.
antee clause of the transportation act and shows
that the repeated charges that under the act the
government guarantees railroads n fixed minimum
income is absolutely untrue. Conclusive proof of
this is furnished in the fact that for two years the
railroads have not earned the socalled guaranteed
5l2 per cent income. Neither has the government
made up the deficit TO them.
Secretary Hoover shows that under present con.
dttions and regulation, railroads which are strong
and good money-makers because of their geograph.
zeal location and the traffic contributing territory
which they serve. will remain stong and money
makers, but the curse of the transportation world
Is the chemically weak railroad which although It
is always in financial straits is nevertheless very
essential to the section of the country which it
serves. HOW 10 make ihe chronic weaklings in the
transportation world strong and capable is the
real problem. Secretary Hoover makes the very
.pertineut observation;
"Rcpcnliue the misrallcd guaranty clauses of the
transportation act will not assist the weaker roads.
for 50 long rs rates nrr controlled nv 90 different
commissions it is unlikely that they would or could
be made discriminatory in favor Of the weaker
roads, and thus the basis for financing Of better.
ments by these roads would net he materially i'm.
proved. The suggestion that all rate control should
be repealed, except control against discrimina
tion or preference, would not meet the situation of
the weaker roads because the restoration of com.
petitive rates would enable the stronger roads
agnin to driyc the weaker roads to the wall"
Secretary Hoover is inclined to believe the most
promising possibility in the way of solving the
problem Of The weaker roads is the consolidation
Of the railroads Of the country into regional sys
TENS. The present transportation act contem
plates the formation of regional groups according
to geograp hical location. Secretary Hoover states
"rhe nation has resolved to control rates and
thus depend no longer on competition as a means
of rate regulation. 1t is entitled TO the manifest
advantages of larger systems. The economies in
operation through standardization and better EN-
ployment Of rolling stock would be constructive
but of vastly more Importance would be the
strengthening of the foundations for the financing
of railroad improvements and for more intelligent
handling of rate regulation"
In conclusion Secretary Hooyer pleads for q
fairminded attitude toward the railroads Hc
says: Whatever may have been the sins of rail
way finance in the last generation, we are not only
suffering from them, but we have maintained an
attitude of bitterness in our public relationship tC
our railwayal for which we pay thrice over in pre-
~vention of their development. However. we must
have increased and better transportation if we are
to maintain our productivity if industry and com
merce are not TO he further strangled by a short
age in transportation"
4 Study in Mdjorities