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The Commoner
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OCTOBER, 1919
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9
it it would not have to consult anybody. In
u way it could more quickly moot lt needs
i rnvide for the wants of its people.
8DJhn Chairman. Outside of the trunk lines that
.. oral government would take over under
ur plan the states would take over the lines?
itfr Bryan. Yes.
The Chairman. I have just been casting up in
v mind just what that might involve in a state
nh Wisconsin. The average capitalization of the
railroads of the United States, compiled by the
interstate Commerce Commission just before the
Sir was $66,000 per mile. There are in my state
nossibly 6,000 miles of line. That would involve
S39G 000,000, and if the state took that over the
state' would lose the taxes, and one-third of our
taxes prior to the war were raised from our
nubile utilities, mostly railroads. Question:
Could a state stand such a tremendous burden,
notwithstanding your suggestion that it might
take time to buy, and what is true of my state
would, of course, be correspondingly true of
other states, although it is easy to conceive of
gome state with a large mileage and thin popu
lation? Mr. Bryan. You had several questions in one?
The Chairman. Yes.
CAPITALIZATION AND TAXES
Mr. Bryan. In tho first place, as to the capital
ization, I am not prepared to say whether the
capitalization of the railroads in your state aver
ages as high as the average in the Nation, bo
cause the total capitalization, you know, includes
the cost of the land, the right of way, and the
terminals which in the cities become very im
portant items. It is possible that, if you take
all the big citie's and tho cost. of building rail
roads through them, and spread that, cost over
the entire nation, it may make the average cost
per mile higher than it would if you consider
your own state alone.
The Chairman. That is true. In some states
the capitalization might be as low as $30,000.
wr. urya.ii. me second uiiiig is uie tax. xl
the state receives one-third of its taxes from the
railroads, your people, of course, know that the
railroads collect the tax .from. the people before
they give it to. the .state.- Theroads have.no other
fund from which to draw.
The Chairman. We tax them as we tax the
other properties In our state. .
Mr. Bryan. I know; but they collect it from
the people. '.
The Chairman. It is probably reflected in the
fare.
Mr. Bryan. Of course. It could not be other
wise. . ' . .
Tho Chairman. It is an operating charge.
Mr. Bryan. Therefore, if you take your taxes
off, you can make that .up o the people in fares.
If you collect an equal amount by some other
form of taxes, you have not lost anything. Bui
you have in it your power to collect, in addition
teethe rates necessary to cover other costs, the
( amount paid in taxes. Youneed not lose it; it
Is in your own hands.
The Chairman. I would be if our state were
isolated and not related to other states in the
matter of interstate commerce, and -the decision
of the supreme court in the Shreveport case is
jo the effect that no state can fix intrastate rates
mat will become an undue burden upon inter
state rates.
n ?fr1Bryan- 0f course, Mr.. Chairman, I would
not think of entering into a contorversy with you
on the details of tho .interstate commerce law,
oecause you haVe made it your business, while
i nave been doing other things; but it occurs to
me that, If the federal government has a trunk
une running into your state, the federal govern
ment will fix its own rates on all produce coming
lint nUr State over tliat trunlc line or Ing out
uut the federal government would not "je as
much interested as it is now in the rate you fixed
W s that distributed your purchases after
w en,tiered the state, or collected your produce
before it went out of the state.
thinCa?i?ot see that that Question would be any
wmr as lmPortant as it is now, because,
linQ federal government owning the trunk
"ne and fixing the traffic rate, it would be a
char v local importance what you -would
S fore your 8tuff gt to the .boundary of
Tite,.Sr after lt came in
J!, , Present law, of course, it is a very
serious thino- v ii - 1 i. j i
aiiol enJe ow the joint rate is distributed,' and
twit ? . controversy, as I understand it, is
t J? distrlbtiqn of this joint rate.
frnm t e r,th5t'whei1 I bought some curios
m Japan I Paid just about half as much, for
getting them from Omaha to Lincoln, as I nald
S'onrtu!! loVT Yk0hama to Omaha! a
1 50 f i longhaul co,vcred an ocean and about
lll IlGS of Ameri, with two mountain
ranges to cross, while tho short haul was on
level ground, and less than 75 miles.
1 ftSThf dl8ftr!butIon of the long and short
.aul, the interstate and tho state rate, is a very
important matter when private individuals do it,
but I do not think it would be so important whon
the government owns tho trunk lino.
May I ask you, Mr. Chairman, how much your
state contributed In bonds to tho $20,000,000,000
indebtedness?
The Chairman. That would bo difficult for mo
to state, because in tho early days quite a num
ber pf the municipalities and the counties bought
the bonds.
Mr. Bryan. Oh, no. I mean the war loans, tho
Liberty bonds.
Tho Chairman. I was going to say $3G0,000
000. I would not be sure. Wo went over the top.
Mr. Bryan. You think it was about the same
that the capitalization would bo at the average
rate?
The Chairman. It would be somewhat less, but
but it was over $300,000,000, in tho five loans.
Mr. Bryan. Your people had no difficulty in
raising in a year and a half's time enough money
to buy government bonds sufficient to capitalise
their railroads; It is likely that, If the people
wanted to do it, they could capitalize their own
railroads by furnishing the money with which to
buy them.
The Chairman. Yes. Wo were assured of 4
r-r cent when we bought the bonds. We are not
sure of that percentage in the state buying the
r . ids. -
Mr. Bryan. The first issue, I think, was ZVz
and not 4.
Mr. Sims. You spoke of a trunk line to go
t'ough a state, and then for all portions of that
state not in the trunk lino to bo served by shorter
or branch lines. It .will be a problem almost
staggering to ask the states to purchase all the
railroads, operating within their borders, except
a' trunk line or two, but why would not this solve
tho problem and practically attain all that you
want to attain, to havo tho United States govern
ment buy -all of thoso lines everywhere, in tho
state and between the states, and issue its bonds
in payment for tho same? It could get money
lower than a state could, and then let tho govern
ment lease to the states such of these lines a3
the states are willing to take charge of and
operate, paying the government just what the
government-paid for them? In other words, pay
ing the interest on the bonds to the extent of tho
purchase that the government would have to
pay, and then have absolute complete state con
trol of the roads so owned by. the state, and in
case the government did not buy them and tho
government wanted to lease them to private com
panies making arrangement with the paramount
owner of tho property and require by arrange
ment in the contract for the same identical ser
vice. What I have thought about for a good
many vears is this, that the government will have
to acquire the property of tho railroads, because
the unearned increment keeps piling up, whether
we take over the equipment or not. It seems to
me the sooner this is done the better, because
we are constantly increasing the security liabil
ities of the railroads and not amortizing any.
Could not your plan of theory be so modified as
to reach the ends and objects that you have in
mind without forcing the states or without hav
ing to wait for tho states themselves to deter
mine on doing so, and then let the states' take
such parts ,pf the roads as they wish to pay for.
Mi- Bryan. I think the plan that you suggest,
Mr Sims, would be a vey great improvement
over the nationallzrtion plan.
Mr Sims. The single federal control?
Mr' Bryan. Yes. That is, if you provide in
vour law that any state may at any time pur
chase orVoerate any part of .the general system
that is in the state, excepting this trunk-line
, S would to a certain extent protect
fZtofJSL to take possession of local
"Tut Tet alfyon further. I think i
would have Uie objection of presenting an enorm
ous problem nt tho beginning, which might ba
jo nig as to provent tho adoption of nationaliza
tion. That Is, 1 think if tho government had to
put up the money to buy $20,000,000,000 worth
of roads, It would not bo go apt to ontor upon
uiiS8 U woul(l onljr ,,ava t0 Put four or flve
billion. If you can raise tho monoy for national
ization your amendment would go a long way
toward reducing the danger that in Involved In
centralization, because it would glvo tho remedy
in tho law and tho states, as they likod, could
tako tho railroads or not.
Mr. Sims. It is my observation that whon a
railroad comes to receivership and tho mortgage
Is faroclosod and tho property Is sold out that
some other railroad buys It, nnd there is practi
cally nota dollar of monoy pasKos. Tho govern
ment would not havo to colioct all of this volume
of money, as a matter of courao a great doal of
it would be an exchange of government bonds
for railroad bonds at what they are worth. It
would almost ruin tho commorco to lock up funds
in that way. So that the hugonoss of the under
taking itsolf would not bo so appalling, because
of the fact that you aro only swapping your
securities for those that tho railroads themselves
own, and I believe that in the stato of Wisconsin,
the state that tho chairman mentlonod, the peo
ple would bo very glad Indeed to got tho govern
mon' bonds, especially If they are froo from
taxation.
Mr. Bryan. To tho extent I havo said, I think
it would bo an improvement to tho nationaliza
tion plan, and relievo It to some extent of tho
danger of centralization, which to ray mind Is
tho groatost danger.
Mr. Sims. No plan that has been presented
contemplates tho amortization of railroad socur
itios and indebtedness, -d I havo not looked
upon government ownership from tho standpoint
of theory or desire, but as an ahsoluto necessity.
That Is tho way it strikes me, that wo havo .got
to come to it, and your plan may bo best, I only
suggest these matters.
Mr. Bryan. My plan is only presented for con
sideration, that it may be kept in mind whon tho
people decide these questions.
Mr. Sims. That s all I want to ask,
Mr. Winslow. You mado a comprehensive
statement and touched a good many high spots
in regard to the railroad proposition, and many
of them new. On tho other, you havo brought
forward tho opportunity for questions In tho,
way of comparison between your views and the
other views wo have heard expressed. Thero are
a number of questions here that I would like to
ask that do not require long answers, but I
would like to have the questions comldcred.
Mr. Bryan. I shall be pleased to answer .any
questions, so far as I can.
Mr. Winslow. I would like to ask you in
what respect you feel that the management un
der federal diroctlon has heen improved, as con
trasted with the management under private di
rection. Mr. Bryan. In the first place, I said that wo
were under such restrictions and limitations that
we were not at liberty to Introduce Improve
ments and economies as wo would bo If it wero
a settled policy and the roads permanently in
the hands of the government, but I think there
is no question that some have already been in
troduced. For instance, the joint use of tho ticket of
fices. I have heard a great many people speak
of that as being a great improvement, and one
that would bo likely to remain, oven If tho roada
went 'back into private hands.
Mr. Winslow. That is, thero are small
economies of that kind.
-Mr. Bryan. Yes; and the fact that wo can
now buy a ticket that is good over every lino
in the country. I have been buying railroad
tickets for a good while and sometimes we could
buy a mileage book good in a certain section, say
on lines west of Chicago, or on lines oast of
Chicago, or on certain southern lines, but now
I think they sell a book that Is good everywhere.
Mr. Winslow. Could not most of those im
provements be carried out under private owner
ship as well as government ownership?
. Mr. Bryan. They could be, but my observa
tion Is that if you have private ownership lt la
because you have In office people who believe In
Jt, and it is very difficult for tho people who
believe in private ownership to agree to any
thing that the railroads do not want, and they
do not want everything that is good.
. Mr. Winslow. That. Is getting back to the
legislative point, is It not?
Mr. Bryan. Well, I do not think you can ,
Ignore. the- fac.t that a gigantic power like the
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