GOVERNMENT OWNERSHIP WILL COME AFTER
BY MAX THELEN,
President National Ass'n of Railway
The first constructive remedy, in
my opinion, toward improving rail
road conditions in the United States
is to provide adequate and effective
regulation by federal government of
capital stock issues, bonds and
other securities of all roads engaged
in interstate and foreign commerce,
and for mergers, sales, mortgages
This regulation could be either
concurrent with the states or exclu
Such power should, however, not
be conferred upon the federal gov
ernment unless-at the same time ad
equate machinery is provided to
propmptlyhear and dispose of railroad
application for the issue of securities.
No phase of public utility regula
tion requires more prompt attention
than financial matters, such as pro
posed security issues.
The railroads are trying to sup
port a claim for increased rates to
pay interest and dividends on all
their present outstanding securities,
whether issued for value or .not, and
to establish new borrowing power for
In other words, the mistakes,
faults and crimes of railroad finan
ciers and executives in the past are
to be saddled upon the public in the
form of higher rates.
The people of the United States
will never consent to pay increased
rates for any such purpose.
The remedy in such cases is not
higher rates, but reorganization of
the railroads reorganization on an
honest basis under public authority
with a view to substituting for the
existing unsound financial condition
a sound, healthy structure that has
a chance to succeed.
Furthermore, railroad credit would
be much improved if the railroads,
instead of crying calamity in the
days of their greatest prosperity,
should adopt an attitude of optimism.
Never .before have I heard of a
business man, needing funds for the
enlargement of a prosperous busi
ness, apparently trying to scare off
every itivestor who is wjlhng to as
sist in such development.
Finally, all public authorities must
deal with railroads in a spirit of sym
pathy and broad constructiveness.
Public officials represent the rail
roads just as much as they represent
the traveling and shipping public.
The railroads are a very vital part
of our industrial life and may soon
become of supreme importance in
the national defense. The interests
of the nation require that our rail
road systems be at all times adequate
The railroads, however, must do
their part. They must cease bearing
false witness against public authori
ties, state and federal. They must
play the game openly and honestly,
with all the cards on the table, face
up. They must cease crying calam
ity when there is no calamity.
If the railroads fail to do their part,
or if, notwithstanding good faith on
their part hereafter, it appears that
because of their financial manage
ment of the past they are unable to
do their full duty without unjustly
high rates, there is only one alterna
tive government ownership.
The situation must be most care
fully watched. In view of the possi
bility of breakdown of private own
ership, the wisdom and patriotism of
our statesmen will prompt Chem to
take steps at once to study govern
ment ownership in every aspect, and
to make the provision so that if gov
ernment ownership of. railroads
comes it will find the American gov
ernment and its people ready to han
dle the new problem effectively, wise
ly and patriotically.
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