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Show ! SGOREDAl HEARING Head of Engineers' Union & Criticises Present Finan- h cial System f f REGULATION IS URGED ! Witness Declares Issuance I of Futurity Securities j Is Unjust CHICAGO March "Warren S Stone grand eh ef engineer of the Brotherhood of Locomotive Engineers today subn It ted to the board of arbitration which is hearing the. western railroad wage case a. statement In rebuttal to the testimony of the ra road n anagers In wh ct he charged that the issuance of flctit ous se Hf cutlties had absorbed past present and J future revenue gs ns of the western rail r roads and that there s no hope tor to rairoad employees to .secure an eou tab e part cipation in the fruits of their - labor si long as the present flnanc al control I and administration of the ra lroada is un U rCMrattdtone pointed out that the em . Tl ployees organizations found economic lus 1 tire for their demand for increased wages Ce producuTefflciency of the r work but that the constant contention of the If ra Iroads in reply to this argument was , I that revenue ga ns ans ng SCL!!'1 PJ productive efficiency were absorbed by in creased operating costs and by the pay I mint of inte est charges on add Uonal cap tal investments which have been in ft ci.rred n the attempt to develop greater efflc ency n operat on and because of pub c demand as to safety and duality jj of service ' Claims Large Gains He added J It Is now our purpose to disclose J' that any ded ne in operating or net income has not been due to the causes set forth by tl e ra iroads Stat sties J already read Into the test mony by the 1 emplojees have shown the remajkab a f gains n rai road revenue and the U amount available for the Increased r compensation of labor i We shall show that the constant M tendency haa been for those n flnan 15 cial control of the railraods to ab ii sorb revenue gains arts ng from n , craed productive efflc ency bj the f j! issuance of fict t ous securities that 4 the product ve efficiency of the men ' 9 working today the operating offlc als JS as we 1 as the emplojees had already I 2! been hypothecated and capitalized 1 before we were born that measures jW have alreadj been taken by the issu li 8 ance of fictitious capitalization to ab BM sorb the increased work and produc TBI ti e effic ency of oux children and our YP ch drens children and that there is i! no hope for the engineer and fireman it ffl and other classes of railroad em US x oyees to secure an equ table partita 1 ST nation n the fru ts of their work so ulE long as the present financial control Is! and admin strat on of the railroads is llffie unregulated In other words that W any advances which the employees I ft have been able to obtain n wages or , I L earnings have been of no financial s g lll S nlfleance as compared with the inde 3 fens ble aosorption of operating gains ,1.1 by the finan ial management of west U3. era railroads I I Blames Management I 3E Finally we shall show that If gains ' Jj f om past product ve efficiency had I $ been properly conserved and adm nls '!$ tered enormous advances cbu d be r 3 granted to all classes of railroad em a ployees both organ zed and unorgan I H ized without prejud ce to the inter M ests of the owners of the property Ij and the financial status of western ra roads today from the in ester's standpo nt would be all that could be dTne points we shall submit In this ' connection are First That the proceeds from the munificent grants of land made by the federal and state go ernmenU to ass st In the building of western rail roads were not properly used but the r value as well as the increased business arts ng from the developmen of western territorj was capitalized by the flotation of the fictitious securl ties Second That the direct financial control of western ra Iroads and the potential control of the economic wel fare of t e r employees now rests with a small group of bankers and financ al institutions whfbh make and unmake railroad p esidents and which by their methods of admlnis trat on of the railroads have ab orbed present and future revenue gains of emp oyees bv the Issuance of flctit ous securities in other words emplojees and operating officials are the victims of financial admlnlstra Third We shall show from the pub ! cly expressed opinions of em nen financiers and financial experts that this present inequality in the dlstri bution of the output of the industry is wrong Fourth We shall conclude by show ing that desp te the financial excesses of ra I oads in the past they are still financla ly able to pay reason able and fair Increases In wages. Pujo Findings Submitted Evidence gathered by the Pujo and other congressional committees as to a leged concentration of rai road control was introduced at the hearing and expounded with the intent to show that the economic destin es of nine railroad employees of every ten in the country are controlled by less than 00 men combined into four fl nanolal groups W J Lauck. who compiled the e Idence did the talking In the period 1905 1912 Mr Lauck said J P Morgan & Co the First National bank of New York the ra Uonal City bank of New York Kul n Loeb & Co the Illinois Trust & Sa ings bank of Chicago and the First Natlona bank of Chicago made joint purchases and underwrote securities aggregating $798 0 8 437 a I in bonds except an issue of stock by the Chicago Great TV estera The total number of employees of rai roads in the United States on June SO 1913 as reported to the interstate com merce commission v. as 1 815 '39 said Mr Lauck. Of these 1 6o3 S6S were em ployed on railroads controlled through voting trusts and interlocking directorates by the inner circle of financiers There fore 91 per cent of the railroad emplo ees of the country were contro led bj th s Inner circle Operators Powerless The total number of directors of inner group banks and corporations who were also d rectors of railroads was 211 Forty one of these men were officials of the roads either practical ra road men or railroad attorneys In considering the real control of the roads they should be e !m Inated as they did not owe the r pos tlons to financial power This leaves 1 0 men who dominate the ra roads contro led by the inner circle The capital zatlon of these roads wag more than 111 000 000 000 A. study of the situation shows that the concentration, is much greater than these figures show It is a fact that railroads capitalized at more than J10 000 000 000 employing 1 512 000 men are controlled by four great financial groups Mr Lauck declared that operating of ficials of the rai roads had been power less against the f nanclers in controlling the revenues from operatton and that the real y great earnings of the properties had been absorbed and concealed by stock manipulation He Introduced a separate exhibit deal ng with the land grants made In the promotion of western roads in th early days |