The Fort Peck press., 1934-10-18
Heavy Additional Burden
Should Government Take
Over Railroads.

served as assets of private bushes!
In this country or whether they shall
be swallowed up in the rapidly ex
panding structure of government. In
deed, according to the best Informed
sources here, 1t is not unlikely that
the railroads and private business in.
terests soon may demand that the
President state his position either for
or against government ownership.
The President has not said anything
Indicating his attitude. On the record
of the past, however, some observers
believe he would not be averse to TAX
ing yer the railroads. These point
to the many experiments which he has
authorized in the field of government
ownership and operation of various
types of business. But certainly it can
be said that private ownership advo-
Gates are alarmed concerning the trend
of affairs.
1t Is not surprising then that vari-
u groups and organizations opposed
to government ownership are becom-
ing active. Their expressed fear nat
urally Is that the government will de-
stroy their businesses by the simple
process of taking them over. Nor is
1t surprising to observers that taxpay-
erS are becoming exercised because
taxpayers naturally are averse to any
additional burdens.
Foresee New Taxes.
In thn oun Of thn o,n,:
sition of the railroads would mean
new taxation to pay the interest on
the government railroad bonds, not to
mention the necessity of raising funds
for retirement of those bonds when
they mature. Some authorities recent
ly have stressed also the additional
expense of government incident to the
operation of the rail lines. This ex-
pense, it Is said, would be measured
by the number of political Jobs Gre
ated by the legislation authorizing our
chase of the roads.
When the federal government took
over the railroads during the World
war, there were several hundred high
ly paid officials Immediately attached
to the government payrolls under the
director general of railroads. 1t was
said then that these officials were neces-
.sary for protection Of the governments
interests. 1t is to be remembered in
this connection that in those days the
GRAFTON; under the current agitation,
the condition would be one Of govern
ment ownership as we'll as operation.
This question Of taxation is admit
teddy the me giving government own
ership advocates the most trouble.
They recognize that, for the govern
ment to buy the railroads, it means
a staggering I'LL to the national
debt, already more than S27,2OO,000,-
900. They are aware that 1t means
must cough up enough ex-
ira funds to pay the interest on the
debt as well as taxes for retirement
of the bonds.
Cities to Lose Taxes.
But there is another factor In the
way OF taxes. 1t has not been men
toned to any extent In argument ell
for or against government own
This factor involves the taxes
low being collected from the railroads
the states, cities, and counties and
other taxing Jurisdictions. These are
funds which will be lost to those tax
ng jurisdictions If and when the rail-
.oads are taken over by the federal
government for the reason that federal
property Is not subject to taxation.
Thus, If there is government own
,rship Of the railroads 1t Is calculated
~ Interstate Commerce Commission
that the federal government.
tates, cities and counties will lose
total Of approximately $3.50, 100000,
annually. Certainly the loss Of 80
nuch income by the treasures Of those
jurisdictions will make 1t difficult for
hem to pay their own operating ex-
In other words, they will have
o raise az rates on their citizens who
lready will have been subjected to
Increased federal taxation to meet the
and sinking fund for the gov
rnment railroad bonds.
The significance Of this threat to the
reasuries Of taxing districts, whether
hey be states or lesser subdivisions,
ecomes the more apparent in the
Dinion of authorities when 1t is re-
allied that during this depression Pc
Iod more than four hundred issues
{ bonds sold by municipalities, oun
es, road districts, levy districts and
,hool districts and other such units
zone into default. The condition
as so bad that congress enacted what
as come to be known as the munich
bankruptcy bill. This law gives
king districts the authority to com
their debts with the bond
,lders, who are scattered far and
ide throughout the country, but In
,mpromising the debts in every In
ance Of record thus far the bond
,lders have taken losses ranging
$50 to more than 20%.
In the case of holders of municipal
,nds and other securities Of that kind
is not fiction that thousands of wild
vs. and orphans w securities issued
such units of government. If the
come Of those units of government
cut off or measurably reduced the