Evening star., 1938-04-12
ROUTING RIVALRY
HELD RAIL BURDEN
Wheeler, in Forum Talk,
Also Urges Regulation
of All Carriers.

broadc over a NatlOn-Wld network
OF the National Broadcasting Co.:
Before launch into discussion OF
the railroad problem, and before I, like
hundreds of others, treat of its pos
sble solution, let me say that the fu-
ture of railroads is not as black as
some predict. They are our most vital
economic arteries and have not out
lived their usefulness. They are not
relics of the horse and buggy" days,
nor are they like the trolley cars of
the past
But the Importance of the railroads
and their rehabilitation is not limited
by the indispensability of the services
they render. Think of the army of
men they employ directly and in
directly. Think of the dependence of
the heavy industries on railroad pur-
chases. Think also of the billions of
dollars invested in their securities by
individuals in every walk of life as well
as by the great savings and insurance
institutions whose welfare affects us
all. 1t is because of these factors that
some regard solution of the railway
problem as the very key to our present
economic condition.
Vital Arm of Defense,
AS factor in the national defense
the physical efficiency of the railroads
Is lrreplaceahle, No one would seek to
destroy the railroads. No one should
wish them to be slowly destroyed by
physical deterioration and under
maintenance. No one should even de-
sire to permit them to become anti
quated or to be kept up to the last
word of modern engineering.
That the railroads are in a real crisis
no one will deny. With one-third of
all railroad mileage in receivership.
with nearly another third on the brink
OF bankruptcy, with almost all the
roads not even earning their operating
expenses during the first three months
OF this year, the absolute necessity of
constructive thought and action is
apparent to every one.
What action is required depends,
OF course, on the fundamental nature
OF the difficulties of the roads. To
my mind, there are two interviewer
problems. There is the immediate
crisis caused by the fact that the rail-
roads do not have enough business. 1t
is the same trouble that steel mills. the
cotton mills. the copper mines and all
other enterprises are experiencing
lack OF business. Lack of business is
caused by lack of purchasing power
and fear. Fear. whether justified or
not, causes contraction in spending.
I do not believe the present state of
fear on the part of business is now
justified. but one must be realistic
enough and admit it is here. The un-
healthy state of the railroads hurts all
business-because normally the rail-
roads are one of the large purchasers
OF the heavy goods industries-and the
decline IN business hurts the railroads
because they have less traffic to carry.
Many Overcapitalized.
At the same time, in the BACKGROUND
there Is different problem, one that
makes the railroad crisis more acute.
The railroad plant is too large. This
means many roads are overcapitalized.
and are burdened with fixed charges
which they cannot now meet and
which the public should not. even in
good times, be taxed in high freight
rates to pay. 1t is unlikely that there
Will ever be again an economic need for
all existent rail facilities. Changes in
the production methods of American
1ndustry-the increasing tendency to
conflne the manufacture of product,
from raw material to finished product.
within the walls of a single plant-has
eliminated or greatly reduced the criss-
cross hauling of large number of
SEMI mi-manufactures. This trend will
continue and possibly be extended. At
the same time competing forms of
transportation trucks, WATERWAYS.
pipe and transmission lines-have been
greatly extended. 1t is unlikely that
the volume of railway traffic will ever
resume the constant expansion that
1t had prior to 1925. Yet constant ex-
panslon Of traffic was the chief reason
for the financial health of the rail-
roads in the past.
SO at the moment the railroad prob
lem is double-it is to provide for the
emergency and also to provide for the
future. To my mind the two must be
dealt with concurrently. If we try an
immediate cure that works permanent
damage, our last state will be worse
than our first. We will be faced with
the same problem we now have-an-
other emergency-in an even worse
form, just as the present situation is
much worse because of the temporiz-
ing with the problem in 1920 and 1882.
Opposed to Subsidies.
I am opposed to any policy of sub
Sldizlng railroads indirectly by loans
from the Reconstruction Finance Corn.
which cannot be paid back, or bv
direct subsidies. OF the two 1 prefer
direct subsidies, as the people then
know in advance what they are doing
and what it is going to cost them.
When the indirect subsidy is resorted
TO by the R. F. c. you never hear of it,
nut you pay. There have been too
many loans already for supposed bet
terments by the Government, but
which in reality were to pay interest
to the bondholders. Why should YOU.
Mr.. Taxpayer, lend money to pay
interest to railroad bondholders? SUBJ
sides always lead to mismanagement
and graft. A shining example of this
Is the shipping industry. And above
AL, once you start subsidizing there is
no end to it. We have passed legisla-
ton to subsidize the shipping interest
and now some propose that we subsi-
die the railroads. 1 was opposed to
the legislation subsidizing the Ship
ping industry and now I am opposed
to legislation subsidizing the railroads.
1t will not be long if we continue-that
we will all be living on Government
subsidies.
The trouble with loans is that they
are either disguised subsidies or they
increase the very difficulties we are
trying to overcome. The railroads al
ready have too much debt. More debt
would not seem to be the cure, but
-1-L