ways have practically no boats on them. I can not think but that men would operate boats on these waterways if it were not for the fact that railroads always have at hand the means for destroying water lines.

Mr. SIMS. In other words, the railroads are carrying a great deal of freight from what are called water-competing points without any profit to them at all.

Mr. LYON. I do not know about that.

Mr. SIMS. And if that is not done for the purpose of keeping the water carriers from handling the business, I can not understand why it is.

Mr. LYON. Certainly.

Mr. SIMS. That is a fact, and I was simply speaking about a case where the long and short haul would not apply. They would ship by another railroad. The long and short haul applies only over the same railroad going in the same direction.

Mr. LYON. As I said in my opening statement, no matter what your legislation may be, as long as there is Government operation of railroads your fourth section proviso will be null, because whoever operates the railroads as a unit is undoubtedly going to route the freight over any rails he sees fit to route it; that is, if he is working in the public interest.

Mr. SIMS. It seems to me the right way would be to make the rate 25 cents by rail from Louisville to Memphis, or from Louisville to Jackson, and not let the railroads carry it for any more or any less, and let the boats carry it at whatever rate they have a mind to.

Mr. LYON. Of course, if the Government is going to regulate the steamboat rates and fix the minimum, I think this whole thing will be settled by the Interstate Commerce Commission. Pardon me, gentlemen, for occupying so much of your time, which I did not intend to do, although I am more than glad to be here, but I know your time is valuable.

Mr. DOREMUS. I would like to ask you a question. I gather from what you said, Mr. Lyon, that you believe fundamentally in the doctrine of free and unrestricted competition in railroad transportation.

Mr. LYON. I can not answer it quite as broadly as that. Under private ownership I would believe in the survival of the fittest, but you have undertaken to regulate railroads

Mr. DOREMUS (interposing). If we can not have Government ownership, you believe that the best policy would be to have no regulation of either rail or water carriers but leave them free to compete in their own way?

Mr. LYON. No; I am not prepared to go that far.

Mr. DOREMUS. I thought you were.

Mr. LYON. No; I think that regulation is a failure, but I think that it is very doubtful whether private ownership of railroads, unregulated, would not be a worse condition.

Mr. DOREMUS. You are opposed to Government regulation of rail rates. You think that has been a failure.

Mr. LYON. But it is probably better than private ownership of railroads without any regulation. A thing can be a failure and yet there might be something worse.

Mr. DOREMUS. I understood your position to be that Government regulation as exercised through the Interstate Commerce Commission has been a dead failure. I think you so stated.

Mr. LYON. I said it was a failure.

Mr. DOREMUS. If it is a failure, you do not believe in it, do you? Mr. LYON. I would rather see that than see the railroads go back to private ownership without any regulation; but I think that the next step is we have tried private ownership, we have tried regulation, and I think the next step is Government ownership-not that I want Government ownership. I think it is a very unfortunate thing, but I see no light under regulation; that is all.

The CHAIRMAN. The committee is obliged to you for your views, Mr. Lyon.

STATEMENT OF MR. CHARLES F. HUNT, 1752 CHURCH STREET, WASHINGTON, D. C.

The CHAIRMAN. Mr. Hunt, state your name, address, and whom you represent.

Mr. HUNT. Charles F. Hunt, a private citizen, residing at 1752 Church Street, Washington, D. C.

I am here for the purpose of submitting an outline, which has been somewhat revised, but practically in principle the same as was submitted to the Senate committee of the old Congress. I represent nobody except the interests of 100,000,000 common people.

Mr. HAMILTON. One hundred and ten million.

Mr. HUNT. One hundred and ten million. I am self-appointed and self-paid.

The plan I have is called "Hunt's 14-point plan." I have those 14 points briefly outlined here and am ready to stop on any one of them to explain it if desired.

Mr. WINSLOW. You do not mean to disregard the 14 points altogether, do you?

Mr. HUNT. No, sir.

First. Return these roads, for operation under Government control, at the earliest practical date to the various railroad companies now holding stock and certain vested rights in same.

Second. Increase the membership of the present Interstate Commerce Commission to 15. Enlarge the authority of such commission and more clearly define its duties and powers.

I believe that in addition to the present membership that 9 of the 15 members of the commission should be constituted a supreme court, or a court of appeals, to reside in the city of Washington; that that supreme court, or court of appeals should be divided into three separate courts of three members each, one to have charge of finance, one rates, and the other wages, and as a court of appeals these three separate courts may be brought together and constitute a supreme court of appeals of nine members, and I would make the verdict of two-thirds of such court final and binding. For the other six members of this commission I would divide the United States into six regions or districts, placing one commissioner in each district to cooperate with State commissions, to hear and determine a number of such cases as have clogged up the machinery here in Washington, to make personal investigations and reports, and perform such

other duties as may be required. I believe this is essential for the expedition of the business of the people. I am not a stickler as to the number. It may be more than 15, I am insisting upon the principle and the division of the work.

Third. To concentrate authority and escape confusion of National and State jurisdiction, declare all roads-operating in two States or more-national railroads, and as such require each of them to take out and operate under a new national charter with such protection, benefits, and control as Congress may provide.

I think this is essential to clear up the twilight zone between State and National authority and to bring all these roads under one jurisdiction.

Fourth. Allow each road to choose its own officers and fix salaries of same, subject to approval of the Interstate Commerce Commission.

I believe that is essential in order to cut off $100,000 salaries for men who do not do any more work, or bring any more ability, than is brought to the United States Senate, the House of Representatives, or the Supreme Court of the United States.

Fifth. Ascertain and establish the fair cash value of each of these roads at the earliest date practicable, in such manner as Congress may prescribe, and as this may require two or five years, in the meantime let the Interstate Commerce Commission or other duly authorized body ascertain and fix a conservative temporary value on each such road-such temporary value to serve until final values are established. Such temporary values to be found—

(1) By ascertaining as nearly as possible the first or original cost of such roads-making due allowance for wear and depreciation. (2) Basing such road's value on its average earnings for the past 10 years.

(3) By estimating cost of replacing such road by taking the average cost of materials, equipment, and labor as of July 1, 1914, 1916, and 1919, then finding the average of these three costs, and when so found, establish such average as the present fair cash values on which to take over and transfer such roads to new stockholders, under said new national charters; and let a 4 per cent or larger annual dividend be paid on two-thirds the face value of such stock, until definite and final values are fixed, at which time full adjustment of balance and interest should be made.

Sixth. Authorize and require each road to issue to the president of such road, as trustee for its stockholders, a single certificate of stock, based on and equal to the temporary fixed value thereof; and when so issued, make it the duty of such president as such trustee to deposit such certificate of stock with the Treasurer of the United States, who shall accept and receipt for same.

Seventh. When such stock has been so deposited and accepted, make it the duty of the Government to indorse it, to guarantee its full face value to future purchasers and also to guarantee such purchasers a net annual dividend of 4 per cent on same.

I do not know how much time this committee may feel like granting me, but either now or later, I want to show that if carried out in good faith, such plan of Government guaranty will obviate the objection-which I think is almost universal-to a Government

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guaranty. Why? I am opposed to a Government guaranty upon an indefinite amount of stock; nobody knowing its value; but whe the Government appraises a piece of property and does it properly. I think it is the duty of the Government to say, "We have arrived at an honest valuation of that property and if you want to invest your money, we will guarantee that our appraisement is worth 100 cents on the dollar." When the Government has done that, if the Government is going to use my money as it would, and if I invest $100 in this share of stock, I do not believe the Government has any right to ask me to put my money in and take a chance of loss; that it should guarantee me a fair, reasonable return. If 4 per cent is too much, cut it down. If it is not enough, raise it. I am talking about principle and not percentages. Then if this new stock under h such national charter is scattered, as I propose it shall be, among the common people, to anybody and everybody who can raise $100, they not only have a safe investment, they have a perpetual investment, and they have one that will yield them not less than a Gor ernment bond. I believe that is in the interest of the section man. I believe it is in the interest of the brakeman, I believe it is in the interest of a clerk, a dressmaker, or a widow who does not know just where to take her little $100 and invest it and know she will have it in a safe place.

Mr. HAMILTON. Is it your suggestion that all the stock of each railroad shall be deposited with the Government? I did not quite catch that.

Mr. HUNT. Each road shall deposit a certificate of this appraised value with the Government; that is, each road operating in two States or more that has been declared a national road.

Mr. HAMILTON. A certificate of the ascertained value of the road! Mr. HUNT. Of its temporary value. Suppose it is $10,000,000: this certificate shall be made to the president of that road as trustee for the stockholders of that road to the amount of $10,000,000; is p that plain?

Mr. HAMILTON. I understood that a certificate should be filed with the Government, and I did not catch just what that certificate was to be.

Mr. HUNT. It is to be based upon and equal to this temporary fixed value of the Interstate Commerce Commission found by the three plans which I have suggested here.

Mr. HAMILTON. That is, a certificate of the present value of the

railroad.

Mr. HUNT. No; the supposed present value as estimated by the Interstate Commerce Commission, as they have found it under the three plans I have suggested here.

Mr. HAMILTON. I think I understand now.

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Mr. HUNT. The Interstate Commerce Commission has inquired.& what is the original cost of this road; they have inquired, what is the average earnings of this road for the past 10 years; and they have inquired, what will it cost to replace this road to-day, basing the cost up on the cost of materials, labor, and equipment in 1914. 1916, and 1919, as an average. Now, we have arrived at three different valuations. We will take the average of the three valus tions as being a fair, temporary value, and the Government shall

-to be on the safe side-interest upon or guarantee interest n two-thirds of such value until such time as final valuation is d. I think that is plain.

Ir. MERRITT. What is going to happen to the stock and bonds of existing railroad corporations meanwhile?

Ar. HUNT. The stockholders share pro rata. Suppose the road's ue is $10,000,000 and suppose they have $15,000,000 out, each low would share two-thirds of the face value of his stock, whatr it is worth. I do not care whether he gets more or less. If he stock of value, he will not suffer by it; and if he has a lot of tered stock, he is not entitled to pay on water.

Mr. MERRITT (interposing). Suppose the Pennsylvania Railroad s out $100,000,000 of stock and the stockholders are getting 6 per t. You are going to cut them down to 4 per cent and only pay o-thirds of that; is that the idea?

Mr. HUNT. If their property is only worth one-half of $100,000,0, honestly invested, then pay one-half of $100,000,000. If that is o low, and if they have $100,000,000 worth of property at a fair lue, pay them every dollar it is worth-justice to all and injustice

none.

Mr. MERRITT. But they are getting a sure 6 per cent now, and you e going to cut them down to 4 per cent and only pay two-thirds of

at.

Mr. HUNT. I am not through. with that yet. I have something se up my sleeve.

Mr. MERRITT. I beg your pardon.

Mr. HUNT. If not permitted hereafter to file an argument in suport of these points, I want to say this: I have given it quite a good al of thought and I do not present it as a perfect plan, but I do lieve, in the interest of the people-and I have no other interest my head and no other interest to serve except the interest of the ople that one item of saving under this plan, if I am not wrong my calculation, would save the people of this country about 00,000,000 a year. Now, how do I get it? I get it on the suppotion that if the Government will go on my note and guarantee that is good and that I will pay it, I can borrow a large amount of oney at about 2 per cent per annum less than if I go out as an indidual and get that money.

If that is true, and if these roads are worth $20,000,000,000, as as been estimated, 2 per cent on $20,000,000,000 is $400,000,000, an anual saving on the investment account alone. I think I will be le to show that either in the production or purchase of rails the rofits to-day are excessive, and have been excessive, although not as cessive as they were on armor plate, and that it is reasonable to ppose that if we would either purchase or produce those rails as a ody a saving of $5 a ton might be accomplished in the production purchase of these rails; and if that is true, the 854 railroads and rminal companies, according to the statistics of 1916, showing bout 400,000 miles of track, and if the life of an 80-pound rail is ly 15 years or less, as has been claimed, $175,000,000 more may be ved annually by this plan in the interest of the people, and therere require lower rates than if we were paying the steel producers high price for such rails.