It is inconceivable that, if the American people as a whole really understood the elements in the problem presented, there could be any doubt about their solving it. The most ordinary common sense, awakened self-interest, and knowledge of human nature and human experience should quickly repudiate the fallacies inherent in the proposed Plumb plan. The danger is that public thought will not be quickened to the situation, and, through lack of understanding and organization, legislation may be forced through Congress by means of organized political pressure, backed by abundant funds for propaganda and lobbying, which will work irreparable mischief before the public is aroused to the peril. Interests of All Classes Involved Every element in the body politic has a stake in this situation. The man with money and the man without it are equally concerned, and the great middle class, which constitutes the majority, has its all involved. Even the railroad worker, himself, while he would undoubtedly profit temporarily by control of these properties, would in the long run be injured because of the assured failure of the plan and the economic chaos which would follow the working out of this programme. Wall Street As Middleman The brotherhood leaders seem to rest under the general false impression that Wall Street owns the railroads and furnishes the money for them. This is true only to the extent that Wall Street acts as the middleman in this situation. The railroads are owned, not by Wall Street, but by the millions of stockholders, bondholders, savings bank depositors, life insurance policyholders, etc., to whom railroad securities have been distributed. Wall Street does not fix the rate for money; that is fixed by economic conditions, and security offerings are based upon the price at which the public will absorb them-and that law would operate just as surely if the Government were undertaking the financial burden. By what process could the holders of railroad securities based upon mortgages to-day be compelled to exchange these holdings or suffer their confiscation? Indeed, what right would the trustees of fiduciary institutions have to permit such sacrifices? It is absolutely certain that the Government would not have either the power or the right to work out any such financial programme. Class Rule and Class Profiteering Stripped of all its fine phrases and socialistic rhetoric, t Plumb plan is simply a scheme for class rule and class profiteer ing. It provides for government of transportation of, by, and for the railroad brotherhoods. There is no modest restraint of profit-sharing in the plan, because it turns these properties over to the employees on a practically perpetual lease under a scheme of control in which they fix the return to themselves through their power over wages, and under this lease they accept no risk of the business whatever. That is borne entirely by the Government, or stated more fairly, by the public. There is no provision for securing a fair rental for the property, no effective control of rates by public authority, and the control over wages lies in the hands of a board that the employees would directly control by a two-thirds majority, and completely control by reason of political influence. What the consequence may be of this class control over transportation is foreshadowed by the already liberal increases which labor has secured through Government control of railroads, and the large additional advances labor is now seeking. Since 1915 railroad labor has averaged a wage increase of more than 85 per cent; more than $1,000,000,000 has been added to the wage roll under Government direction, and demands now lie before the Government authorities for increases aggregating $800,000,000 more. Only a few days ago the Director General of the Railroads submitted to representatives of the four railway brotherhoods an increased wage scale amounting approximately to $3,000,000 a month. From the broad standpoint of public interest it seems so obvious as to be beyond argument that the control of this great service of transportation should remain in the hands of the public and not be delegated to any selfish class. That mistakes have been made under previous systems of control, or lack of control, constitutes no proper argument for attempting this radical departure from the assured bounds of experience. Only Way Solution Can Be Worked Out The railroad situation to-day presents many real problems, but these problems cannot be solved properly in the interests of any class or under threat and force. Only patient and fair-minded study, from the viewpoint solely of the general interest, can bring a proper solution. The securing of that solution is just as vital to the railroad brotherhoods and to labor generally as to any other interest involved, for after all they are all citizens of the United States, and only as the United States prospers as a whole can they long prosper. Continued prosperity can be based only upon sound economic and political principles, and any venture into other fields must bring disaster to all concerned. The struggle is on between democracy and socialism. In spite of its shortcomings, we have developed in this country a system under which its people have enjoyed the greatest prosperity of any people in the world's history. To-day all the world turns to us for help, and if we jeopardize not only our own powers of service but also our own national future by departing so radically from the system which has made us great we shall be recreant to both our duty and our opportunity. Individual freedom and the incentive to success, which have built this country, cannot be forsaken without pulling down over our own heads the structure we have so proudly reared. It seems unthinkable that such a possibility could even be discussed, and yet here it faces us, not only a possibility, but a probability, unless the intelligence of the country is aroused to meet it. On this question of Government ownership of railroads we stand to-day in the first line trenches for the protection of the private ownership of all property. If this position is lost the whole line will be seriously threatened. Men who believe in American institutions, in property rights, in orderly government, must line up in opposition to this attack, or live to regret the day of their unpreparedness. The railroad problem is the immediate and intimate problem of all of us as citizens, and taxpayers, consumers and producers. If we are not able to solve this fundamental economic question fairly and sanely in the public interest through our duly accredited representatives, we shall have loosened the very cornerstone of our whole economic structure and must be prepared to see it tumble about us carrying disaster to special interest and general interest alike. Democracy faces the test. Can it function efficiently in such a crisis or must it learn the lesson through years of experiment and disaster? That is the question of the hour. THE OBJECTIONS TO AN IMMEDIATE RESUMPTION W OF PRIVATE OPERATION GEORGE FOSTER PEABODY E are all indebted to the Chairman for putting so clearly before us the foundation of the discussion this afternoon, which is really the foundation of the whole study we have before us, the interest of the public as being paramount, as being fundamental to the whole question. I wish it were possible that his very succinct expression of that might be put before the minds of the whole public because, as Mr. Sisson has pointed out, the public is indicating very slight interest in this, the most important domestic issue that has ever come before the country. My excuse for speaking on this subject, apart from my interest in public affairs for many years, is that for more than a third of a century I have been actively engaged as a banker and railroad official, in the construction of railroads and the operation of railroads and the observance of the conditions in the relation of railroads to the public practically, and with reference to the influence in politics, of railroad corporations which, as regulation began to develop more and more, were compelled to be in politics and compelled to be in politics in the most harmful and disastrous way possible, because they necessarily worked more or less underground. They worked to influence the election or defeat of this man or that man. We cannot imagine any more harmful way of having the railroads participate in politics than the way of participation through regulation of the private corporations by the government. The railroads have long been operated for profit with public service as a secondary consideration. We all recall, as was suggested to us last evening at the dinner, the well-known phrase of a very prominent man with reference to the public's relations to the railroads just after he had sold thirty million dollars worth of railroad stocks to some people in Great Britain. I have observed in my very considerable relations with railroads in every section of this country, Mexico and Canada, that while they do not say so publicly, it is almost of necessity the fact that the operating managers and officials of railroads feel that sentiment in their hearts; when they dare do it they act it in their practice "the public be damned." I am rather surprised, as I talk with some of my associates in railroad and banking circles, and as I recall the very interesting, carefully prepared and evidently studied paper of Mr. Sisson, to observe that they are anxious and desirous to have the railroads. now given back to the corporate management without all the necessary facts made public with reference to the financial conditions of the various railroads. We were told last night that something like 150,000 miles of our railroads had not earned the mortgage interest. What sort of condition is the country going to face? What conditions are the bankers going to face? What condition are the reserve funds of our banks going to be in if we have railroad bankruptcy developed? I never knew anything so full of temerity as the position of the banking interests with reference to this railroad question. The former Director General of Railroads, not an advocate of government ownership, Mr. McAdoo, recommended five years' extension of the government control that the public might study the question, that the government might go forward to develop the good or the bad features of unification of terminals, of the diversion of traffic formerly sent over heavy grades and around curves and long routes, rather than over low grades and direct routes. There was then, on the part of the prominent and leading interests, almost unanimous opposition without any effort to develop public sentiment on the question. I am sure that they do not realize the possible panic that might result from having these railroads turned back under the Esch Bill or the Cummins Bill or any possible bill that may be worked out in a few weeks. It is something quite too fearful to contemplate, and that at a time when our financial resources are being strained, when we are told-and it is the truth-that European nations need this one solvent country to help them in the recuperation of the world. So when we discover that the public generally is not so very much interested, that the banking and railroad interests which ought to know this situation, are simply saying "Give them back to us," giving us no notion as to whether this railroad corporation in Illinois, this railroad corporation in Colorado, this railroad corporation in Maryland, is coming out solvent or not, it is a most amazing instance of a strange faith in the resiliency |