The interest of the people-the Government-are always paramount. When liquor men abused the rights conferred upon them by the government, licenses and privileges were revoked. The railroads violated their charter rights, inflated their capital and otherwise heaped fraudulent burdens upon the people and forced the Government to take them over. The Government is not taking this property without compensation, but these manipulators of railroad properties insist on having the valuation fixed at the amount of these inflated values or higher. Capitalization Comparisons We know that the Erie has a capitalization of $182,240 a mile and the Lackawanna a capitalization of about $42,000 a mile and the Great Northern about $42,000 a mile. There is no establishment on earth able to handle such a widely diverging transportation problem but the Government. The Government must handle this situation-readjust charges. on an honest basis and wipe out useless and ruinous railroad competition. Where five railroads extend from Chicago to St. Louis two might do the work, with increased equipment, dividing that now in use by the additional three roads and the waste in superfluous management and other such charges eliminated. Under such conditions rates could be reduced and wages increased, allowing a fair return to every honest investor or making the Government returns with Federal ownership in effect entirely secure. The Lehigh Valley parallels the Central Railroad of New Jersey from Wilkes-Barre to Bethlehem and then both roads use the Reading tracks to Philadelphia. We should eliminate two of these roads, divide the equipment and cut down unnecessary overhead charges. Agencies interested in this needless competition, bankers, money lenders, money gamblers, some lawyers and others, are the elements responsible for this condition. They made the railroads a means to improper ends to the prejudice of the people of the country. This manipulation and juggling of great transportation properties, with the business disturbance and cost to the people, was and is the great crime of this Nation and is responsible for much of the present industrial unrest and commercial instability. Under the so-called Government control of railroad properties nothing has been more palpable than the efforts of those in charge of the roads to so befuddle the situation as to discredit Govern ment participation in this work. There is a persistent effort under way all of the time thus to force these roads back into private hands. The present is no sample of the kind of service which would follow Federal ownership. Competent men would be put in charge. We are a business people and can handle our railroads. In fact the same practical men who handled these roads for the private owners could do similar work for the people, but along more efficient lines, under Government ownership. Government ownership of all public utilities is coming. Sinister agencies may through fraud, trickery and artifice delay it, but it is the logical way to handle our transportation problem and it will come. Consolidation Accomplished, Competition Ends, and With it Private Ownership M CALVIN TOMKINS Ex-Member Inland Waterways Committee, National UCH has been written about the desirability of private versus public ownership and operation of the railroads, but there has been little discussion of what may be termed the natural history of railway development and its necessary consequence; viz., the nationalization and unification of the entire transportation system of the country. For more than a year there has been a continuous search for an acceptable way to return the roads to their former owners, but no way of doing so has thus far been found. It is time to ask whether force of circumstances may not compel us to nationalize as other nations have done in spite of a popular wish not to do so, and in spite of temporary makeshifts like government guarantees of profits and like the pending Senate and House bills, which, while pretending to return the roads to private ownership, in reality only make the gesture of doing so. The railroads of the country were developed by its most experienced minds through a process of intense competition which consciously had one end in view; viz., the consolidation of many roads into a few systems. For fifty years progress was made in this direction-and unconscious progress toward one system. We have reached the conclusion of this process of natural selection under government auspices, because the war precipitated that result, which was inevitable in any event. Prior to the war, the Sherman Law, which was intended to prevent the consolidation of systems, operated to promote their bankruptcy, because of a policy of starvation which increased expenses without permitting a corresponding increase of revenue. This accelerated absorption of the weaker by the stronger roads. The war demonstrated the defects of the Sherman Law which was scrapped in 1917, and the railroads placed under one federal control for war purposes. From the beginning, the railroad history of the country has been a record of exploitations, absorptions, expansion and bankruptcies, and then the same processes repeated over and over again, the units being larger each time. It was the lack of guarantees and the risks incurred which made railroad service in the United States so cheap at the expense of the investor. The systems were in truth gradually consolidating themselves under a regime of most intensive competition. The law of natural selection, operating freely, brought to the front the kind of men who developed our railroads and attained such remarkable results in so short a time, culminating in the greatest railroad system of the world. The competitive conditions which produced men like Vanderbilt, Huntington, Hill and Harriman, admittedly no longer exist. How then is it possible to reinstate competitive railroad organization? Are not the proposed "regional systems," to be equipped with "regional directors," in supposed "competition" with each other, merely camouflaged semblances of the older order of real things which has passed away? Are not the proposed "zones" comparable to the several floors of a single department store, each with its respective floor manager in charge? Is not all this machinery a mere pretense which may obstruct rather than facilitate the operation of a national system already unified? The government, by general consent, determines freight rates, wages, hours, schedules, routing, joint operation of terminals equipment and ticket offices, safety devices, issue of securities, uniform accounting, and, most important of all, credit-and there is general agreement that these governmental powers should be perpetuated. It is also cooperatively developing water transportation. Aside from the purchase of supplies (a most dangerous function under a government guarantee of profit), what is there which can be delegated to private initiative? The genius of the old time leaders was not exercised under such conditions. The objective for which they consciously and unconsciously competed has been achieved, and it follows that railroad competition is now as much a thing of the past as they are. Private competition, having achieved consolidation and administrative unity, the old order naturally ends in monopoly either public or private, which is without initiative except as it shall be motivated by the government. Is it not then reasonable to anticipate the nationalization of the railways of the country as a single administrative unit without prospective profit for anyone, and for the sole purpose of providing public transportation? In truth, the present issue really is: How can we substitute for the existing system of mixed government and private control without responsibility, a genuine policy of responsible government ownership and operation? In short, how shall the old owners be bought out and the new machinery set up? All of the suggestions which have been made for a return of the properties to their owners contemplate a government guarantee of freight rates sufficiently high to provide for interest, dividends and the attraction of new capital. In other words, the demand is for a prospective private-service profit with a government guarantee behind it; and this in spite of the fact that real competition which should be the quid pro quo for such a bargain no longer exists and cannot be resuscitated. Since, as already noted, the government is to permanently assume the essential attributes of ownership, it follows that if the properties shall be returned to their former owners for operation, a guarantee of profits must be assured before resumption of functions can safely be undertaken by them. This will be necessary since they are to take orders from the government as to how they shall operate, what they shall get and what they shall give-except as such instructions may be modified by their power to influence the government and by the power of organized labor and public opinion to influence both them and the government. In all essentials they will be "dummy" operators without responsibility but assured of profits. This outcome, if effectuated, will be as absurd as it will be unpopular and fugitive; for there is no reason to think that Congress will be any more considerate of the rights and privileges of private railroad ownership after the war than it was during the ten years preceding it. Public patience indeed tolerated poor service at comparatively high rates as a public necessity during the war and reconstruction periods. But the railroads were then, and are now being operated as a Government function, and whenever they cease to be so operated the former antagonism against private privileges and even private rights will reassert itself, both in and out of Congress. Except as a figure of speech, the railroads have already been irrevocably nationalized-but not paid for-and what the owners are demanding under verbal cover of a return to pri |