The Wilmington morning star., 1945-01-10
EDITORIAL COMMENT
TRUTH ABOUT THE RAILROADS
Savannah Morning News

It is noticeable in the course of human
events that half-truth sometimes is worse
than direct falsehood because it is more
subtle in deceiving
Consider, for example, editorial COM
ment the Hon. Josephus Daniels made in his
Raleigh News and Observer the other dav
on the subject of the railroads of the South.
According to the North Carolinian, they ''a-e
making SO much money that there is no JUS
LITIGATION for maintaining the high rates and
fight ng the proposal to end the differential
excessive freight rates in the South" and
he continues:
They cutting melons. Last week the
Louisville and Nashville Ga majority of the
stock owned by the Atlantic Coast Line)
split the $10o par value chip stock two
shares for one. And the shipper and trav-
eler will be taxed to pay the dividends
There is need to follow the same course
as to railroads as has been followed in the
case of light and power comprehensive
the water out of the stock
Mr.. Daniels made first-rate Secretary of
the Navy in Woodrow Wilson's cabinet and
he handled the job of ambassador to Mexico
for President Roosevelt with efficiency; but
it is patent that he is far from well versed
in the grim business of operating a modern
railroad system.
He inspires the notion that he views the
problem of the railroads purely from the
standpoint of the type of politician who for
the past twelve years has looked upon all
business and industrial enterprises with the
same distrust that an ignorant small boy looks
on the mythical giants of fairy lore. His dis
trust is based on fancy rather than fact.
Mr. Daniels doesn't seem to know that the
of 10 ma rd,
est-hit business concerns in the depression of
1882 to 1910 and that the railroads for years
have been and still are the heaviest taxpay-
ers in the nation, in the states, in the counties
and in the cities and small towns.
No business has suffered greater COM
petition-in the field of passenger and freight
traffic, for example-than the railroads, so
that when the carriers were jolted by the
depression some of their bonds which once sold
above par went down as low as S. to $40 on
the 500 prior to this country's entry in the
Second World War.
Nevertheless the railroads have always had
big payrolls, and they have been among Amer
icas greatest buyers of commodities.
The sad truth is that a world war had
the semblance of prosperity that they pos
sess; but that prosperity" is by no means
what it seems to men like the honorable Mr..
Daniels.
Many of the roads have suffered such re-
verses in the past two decades that they
have been forced into receiverships- what
now appars to be prosperity has been
nothing more than the stern business of using
their ''profits,'' above taxes, to iquidate old
debts and retire outstanding bonds in an earn
est effort to reduce fixed charges.
Mr.. Daniels glibly talks about taking 1.-The
water out Of the stock" and blthely men
tons the cutting of melons"
Not all railroads possess Watered stock, but
those which do have been unable for the past
fifteen years to earn anything on such stock.
If there is any watered stock it is safe to
say that it has been wrung out in the drier
of the present-day financial problems of the
railroads.
If Mr.. Daniels means melons in the form
Of cash dividends he can be reminded that
the individuals who receive such fruit have
to pay hugh excess profit levles, this means
actually a double tax.
On the other hand if the North Carolinian
has in mind melons in the form of split
stock he can be told that the splitting does
not necessarily enhance the value of the
stocks, and that even if the values en-
HANGED the investor must pay tax on their
yields.
Above all, in view of the terrific compe-
titon the railroads of the country will have
to face after the war, it would seem to be
simply a matter of practical wisdom for the
polite al-minded braintrusters to lay Oft the
carriers and give them small chance to Lift
themselves by their boot-straps from the
dra gging down mire of taxation, government
regulation and the recurring anti-business pro-
posals of politicians who know no more abou,
the fiscal problems of railroads than kinder
garten child knows about running Mr.. Dan
iels Raleigh News and Observer.