The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1932-08-23
Railroads and Hoover Plan
(The Traffic World)

RdllrOaQS ana Hoover Plan
(The Traffic World
The railroads have passed the
buck" with respect to President Hoo
ver's plan for bringing back prosper
ity by referring it to the individual
roads. This, Of course, is where it |
would have to go under any circum-
stances, for the association OF rail-
way executives could not we'll bind all |
the roads for any road to borrow
money of the Reconstruction Finance
corporation or anywhere else. The
association, however, could have en-
oorsed the plan and thus given it the
weight of its approval with it's con-
stituent members and the public. That
it has not done so is matter for con-
graduation. Perhaps some of the
roads will borrow money under the
plan suggested, but probably most of
them will not. If the interest rate
is reduced below the figure now asked
and if it is true that the roads that
borrow would not be called on to pay
until the equipment bought or re-
paired with the borrowed money was
put into use, the plan is not quite so
bad as it first appeared but it is still,
IN our opinion, fictitious and un-
warranted scheme for endeavoring to
restore an appearance of prosperity.
If any of the roads do borrow under
this plan, We do not know how many
of them will be influenced by honest
opinion that the presidents scheme
for bringing back prosperity is sound,
and how much by other considera-
tions-such as fear to refuse to COM
ply with a request or suggestion from
the president of the United States; we
do not know how much President
Hoover, in proposing the plan, is in
fluenced by sincere belief that 1t is a
good plan and how much by politics.
since he is a candidate for reelection
and an appearance of restoration of
prosperity would do much for him
and his party: we do not know how
much those who joined him in advo-
eating the plan were influenced by
blind sincerity and how much by ul-
terror motives-Since some of them
are in the railway supply business, di-
dectly or indirectly, and some depend
on the president for consideration of
one sort or another; but we are con-
vinced that, to the extent that the
railroads borrow money from the Re-
construction Finance corporation to
recondition equipment that is not now
used or in immediate prospect of be-
ing used, or to use for any other pur-
pose for which good business man,
in similar financial predicament,
| would not think it wise to make eX-
penditures out of borrowed money, on
which he must pay interest, they will
make grave financial error. The
only way in which their action could
possibly seem to justify itself would
be by quick and unexpected revival
Of traffic so that the reconditioned
equipment would be needed and the
other expenditures warranted. If that
happened they would, of course, be
just lucky, though they might pic
ture themselves as far-seeing. We
hope, for the sake of all concerned,
that it will happen, but we do not be-
lieve it will. The return Of prosperity,
even when started on its way, is a
slow process, and it is not even GER
tain that it has started, though the
indications seem to be in that direc-
ton.
If there ever was false economic
theory 1t is that the way to bring
about prosperity is to employ men
that are not needed and spend money
for things that cannot be put to good
use. Sound prosperity can be based
only on legitimate demand for COM
modities by people who have the
money to pay for them. An appear
ance Of prosperity, to be sure, can be
created, for time, by schemes such
as the one We are discussing, but
they can result in nothing but calam-
ity in the end, unless those partici-
. pating in them are so fortunate to be
overtaken by a real return OF bust
ness before 1t Is too late.
President Hoover has always beer
an advocate Of this method Of hoist
ing business by its bootstraps. Wher
the financial depression first became
on1inous he called to Washington vari-
GUS groups-among them the rail.
roads-and advocated the plan o.
, business as usuar'-no reduction ir
the number Of employees, no reduc.
tons In pay, no diminution Of mainte'
nance work-just hide your heads II
the sand and pretend there is moth
. Ing the matter. The railroads-witl
! others-assented. They soon fount
they had made mistake. We believe,
that President Hoover had ais
learned better, but 1t seems now tina
he has not.