Evening star., 1925-09-05

At the time that speech was made,
1886, there was no Interstate Com
merce Commission to control the
management of the pblic be
damned railroads, and no Depart
ment Of Labor or Department Of
Commerce to protect the interests of
the people in industry and transpor-
tauon. Conditions today are not the
same helpless conditions which made
it necessary to prevent monopoly in
railroad mergers
X
Today President Coolidge and
those statesmen who are supporting
his policy of compulsory consolida-
ton of all railroads into some 10
systems have no thought of danger
of monopolistic nature. because
that is safeguarded by the laws and
governmental institutions for their
enforcement. What is now sought Is
to perfect control and to create
economies of administra tfon of rail
roads, under 19 heads in places of
some hundreds of independent COM
panieS.
The fundamental idea is to so ar
range the mergers that strong roads
Will be combined with weak ones, and
by uniting their administrations
ruptcy and annihiIation. for it is to
the interest Of the general public
mat all communities be served eff
clently with transportation facilities
whether the merger will accom-
plish the economies that are expect
ed by its supporters is a mooted
question. There are good authorities
on both sides. and ii is freely pre-
dicted that there will be strong oppo-
sition in Congress.
There is a question raised by law
yers as to the power of Congress
TO decree that a strong railroad must
take up the burden of a weak and
losing road. in the interest of the
pubic and at a possible loss TO stock
holders.
In an editorial in Railway Age, OBJ
posing the compulsory merger. the
argument is advanced that there is
no basis for assuming that if a strong
and weak road are combined the
strong will remain strong and the
weak remain weak. 1t points 10 the
history of railroad stocks: In 1910
ST. Paul common stood at Sl5g. in
1915 at S101 and today it is quoted
at 50 and the road is bankrupt. In
1907 Carl Snyder, an authority on
railroads, said in a book that "a pur-
chaser of st. Paul common at Sl2O
might lay it away with confidence
that it would readily show a large
profit to its holder"
The editor continues. citing that i'm
1905 southern Railway common sold
0o7 Carl SNYDER said it was
''pure water" In 1910 the stock sold
t. ..., IA 1915 for S26 and now it
is Sl00. "a large additional invest
ment in the property. efficient opera
ton and increased traffic have caused
the change" In 1910 Great North
ern preferred sold for Sl44. in 1915
for SIPS, now SIS. In 1915 St. Louis
San Francisco, bankrupt. sold for SIS:
now it is worth S100."
The point of the argument is that
there is no permanent strong" or
weak railroad, which may not
change radically overnight. and the
question of compulsory Government
interference with the investments of
stockholders will be resisted as con
fiscatory and unconstitutional. unless
the Government guarantees against
loss.
There is no intention by the ad-
ministration TO guarantee against
loss. nor is there the slightest en-
couragement toward Government own
ership of railroads, especially after
the costly experiment during the
World War, defended as a war
necessity, but not as economic wis
dom. That Government control of
IL months cost a net loss, according
to James c. Davis, director gen
eral of railroads succeeding Secre-
tary William Gibbs McAdoo). was
81 las, 900 600, TO which must be add
ed, says Mr.. Davis, the amount COW
ering the six months guaranty
against stockholders loss after the
roads were turned back to private
management; that guaranty cost the
Government S536, 900, 900. Then there
was another item, says Mr.. Davis,
for deficit roads''-what are now
designated as weak poads''-and
that is estimated by the Interstate
Commerce Commission to amount to
SIS, 900, 900. So in an experiment
of less than IS months Government
management the total loss was
81 500 000, 900.
President Coolidge's fundamental
policy is saving against waste. He
is not recommending Government
ownership nor management of rail-
roads, but only their merger for
hoped-for economy
tCopyright. 1925. by Panf W 0srfA@& u