, 1923-05-08

SollS ColCop SdNS MI. DdU-
and that since they may have some
watered stock the government has
actually guaranteed them earnings
on capitalization which really Toes
not exist. AS a matter OF fact, this
is not at all the case. The govern
ment has not guaranteed n earn
ings and all roads arc being dealt
with upon the present valuation set
by the Interstate Commerce Commits
sion and not upon their capitalization
either real OF fictitious.
THE original ruling put in force
the day the railroads went back to
private ownership stated that the
Interstate Commerce Commission was
to set rates that would show a rea-
sonable return on the investment.
For the first year that act established
6 per cent AZ such a return. The In
t~erstate Commerce Commission raised
rates from 25 per cent to 40 per cent
to show that earning. but the roads
actually armed 2 per cent. Last
year the Interstate Commerce Com
mission established SIX per cent as a
fair return on valuation and has set
its rates to allow such earnings.
The net earnings for 1922 average
$50 Per cent which is less than saw
ings banks ordinarily pay on de-
posits. Nor is this SO per cent in
any way a guarantee. Once the
rates are set It is up to railroads. If
by efficient management and econ
omy the road is able to make more
than 5a per cent all well and good,
IL 1t shows n loss under these rates
set by the Interstate Commerce Com
mission there In no recourse.
The encouraging thing about the
whole situation is hat three or four
OF our great railroad systems have
come to their sense and are really
merchandising their service and CIV
ing their attention to their custom
ers. h success of the course they
are taking is evidenced by Increased
traffic n very satisfactory earn
ng.. During the next few months
l hope that the rest of our railroads.
will become converted to this com
mon sense policy and hat they will
realize that running n railroad is
very much like running any other
business-'he profits most that serves
bestG h is why the keenest in
v%estors arr now bullish on railroad
stocks.
In studying this problem I nnd
that we must go back Is years to
get at the cause of u present diff
hculty. In those days the financiers
were operating the railroads and on
a public be damned policy. Wages
were held at too low n level and
rates were lacked up for all that
the traffic would stand. As condi-
tons became unbearable. 1t was
necessary for the government to
step in with its Legislation and re-
strictions. The railroad management
of today is reaping the harvest that
was sown by the railroad
ment of a score of years ago. 1t is
the old law OF Action-R Reaction all
over again. The general public's
habitual complaint of its common
carriers is an attitude inherited from
these same years and bred of this
same mismanagement.
Il am firmly convinced that the
present dissatisfaction will continue
until a new conception of the rail.
road has been sold to the American
people. The present management is
too busy to bother with this little
shipper or tina little shipper, this
passenger or that small claim. 1t
busies itself in Washington playing
PohtiSS Ahu Tying ~ get llStlI lekiS-
lated into the profit column.
IF 1 had one of these railroad sys-
TENS on my hands. 1 would hire a
salesmanager for 1t. n man thorough.
ly competent to sell transportation
service to the American public. A
man who could merchandise efficient
transportation TO the shipper, a man
who could sell q pleasant. comfort
able Journey TO thu traveller. The
railroad business In no different from
any other business. " must render
n service. but IT must also sell tina
service. The department store that
took the railroad attitude and said.
that II you want anything we have,
you will nave TO come and get It. you
will have TO wait until we get ready
TO give II to you. and II IT is not
satisfactory just try IND get a settle
ment; would be in bankruptcy within
sixty days. II is just as unsound for
the railroad management to try to
pass favorable legislation that they
believe will get them into the profit
column, as It Is for the rail workers
to want government ownership be-
cause 1t can IA them a high wage
year in and year out whether they
earn It or not.