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Show Interstate Commerce j; Commission Presents jj . Special Report .Cons' .Con-s' gress Urging Unifica- tion. Either by Government Govern-ment Operation or by Suspension of Sundry Acts. . M'CHORD FAVORS ! jj THE FORMER PLAN I Immediate Response Is I K Made in Both Senate and House and a Con- ference With President I Wilson Is Arranged for Next Monday. YAS111NGT0X, Dec u. Immediate action to effect nalional unification of the railroads, cither by government opcr- Jitiou or by suspension for the war of antitrust and antipooliug laws, a federal loan and regulation of security issues to permit more effective voluntary cooperation, co-operation, was recommended today by the interstate conimerco commission in ' a special report to congress. Neither plan was specifically ia-dorscd, ia-dorscd, but an implication that the ma-jority ma-jority believed the railroads might suc-,. suc-,. ' cessfully work out their own unification, prompteil Coinmissioncr M (.-Chord to tJ ' submit a separate report emphatically 'i I urging the government control and say-. say-. ing: "Tbc slrong arm of government authority is essential if the transporta- tion situation is to be radically im- proved.1' Any vohmiary pooling plan i would fail to meet war 'exigencies, he 1 declared, because of the unavoidable in- fluence of selfishness among roads. There was no disagreement as to the proposition that eompeti tion among rail-Jroails rail-Jroails nuist be diminished if not alto-H alto-H .ther eliminated, to prevent a serious breakdown of transportation facilities under the war's strain. Question of Capital. The railroads' own proposod solution for the difficulties an increase in rates in order to attract capital was, charae-t charae-t tori zed as entirely inadequate by the commission. Ken with more funds, the report said, the shortage of equipment could not be remedied materially bc- i cause of the inability of industries to manufacture it. loubfc also was expressed ex-pressed whether sufficient capital would be attracted in view of the flotation of such enormous quantities of government govern-ment war securities. These considerations led the commission commis-sion to what it considered an inevitable, conclusion that, a high state of efficiency effi-ciency could be maintained for the vail rnadn only by thorough co-operation and elimination of duplication of routes and other elements of express and energy, 1 and elimination of the economic waste which comes from competition. This r': would mean, it was pointed out, a com- ft plete reconstruction of the policies under E. which railroads have been developed. Guaranty of Returns. 7f the alternative of government operation oper-ation under the direction of the president presi-dent be adopted, said the commission. hi i table guaranty of an adequate animal return should be given with provision by which the roads could reimburse the government for improvements after the properties aro returned to private owners. own-ers. The only hint of the commission's attitude at-titude toward the railroads' pending application ap-plication for 1.3 per cent higher rates. Has given in an assertion hat the roads ; -o entitled to demand just aud reasoo- rile. rates sufficient to yielri Tnir re-rns, re-rns, and tho comment 'that although (Continued on Page Three.) RAILWAYS UNABLE TO OPERATE Li (Continued from, Page One.) railway earnings in the pant year have broken nil record?, the purchasing power of the earnings is greatly decreased. Steps taken by the railroad war board two weeks ago to pool cars, operate roads somewhat as a unit by loaning facilities of one to another, were recognized recog-nized by Commissioner McChord in his supplementary report as valuable, but he maintained they were only halt-way measures. He said the railroads now arc taking orders from too many government govern-ment agencies the interstate commerce commission, tlie war industries board's "priority director and the war and navy departments, tlie shinning board and the fuel and food administrations. As a result of the conflict of orders and priority pri-ority he said. "Railroad operation is approaching a chaotic, condition.-" Legislation Needed. Tf President Wilson does not elect to! take over and operate the railroads, t 'ommissioner 1 c Chord declared, the next best plan would be to enact legis- : lation to v centralize federal authority over railroads to a single agency. The commission's report, the first special report in years, came as a surprise sur-prise to congress, but it met an immediate immedi-ate response in both the senate and house. .Senator JScwlands, chairman of the special congressional railroad investigating inves-tigating eomniipsion, and of the senate interstate commerce committee, arranged a conference with Frmdent Wilson for next Monday to receive executive) recommendations. rec-ommendations. Decisive action "by the government immediately is necessary, Senator Newlands said, to insure .efficient .ef-ficient operation of the railroads and provide sufficient, capital. Chairman Adamson of tlie house interstate commerce committee, expressed ex-pressed opposition to the suggestion of repealing the anti-pooling provision of the Sherman act, and advocated loaning money only to weak roads. Representative Representa-tive Hims, who will succeed Representative Representa-tive Adamson as chairman of the committee, com-mittee, advocated government operation. Representative Gillett, acting Republican Republi-can leader, said he favored almost any plan short of government control. Big Loan Discussed. A big government loan to railroads has been discussed among high officials for some time. Authority to operate railroads was given the president in the following section of the military appropriation act last yoar: "The president in time of war, is empowered, em-powered, through the secretary of war to take possession and assume control of any system or systems of transportation, transpor-tation, or any part thereof, and to utilize util-ize the name, to the exclusion as far as mav be necessary, of all other traffic thereon, for the transfer or transportation transporta-tion of troops, war material and equipment, equip-ment, or for such other purposes connected con-nected with tlie emergency as may be needful or desirable." Text of Report. The report of the commission to congress con-gress follows: To the Senate and House of Representatives: Repre-sentatives: Tiie act to regulate commerce requires re-quires the commission to transmit to the congress such recommendations as t additional legislation relating to regula t ion of commerce as the commission com-mission may deem necessary. Under this mandate the commission submits sub-mits the following special report; supplementing sup-plementing its annual report, with reference to transportation conditions as affecting and affected by the war in which the United States is now engaged. en-gaged. The railroads of the country came into being under the stimulus of competition. com-petition. From the outset their op-i op-i era t ion and development have been -i responsive to a competition which has grown with the growth of population popu-lation and industry. This competitive influence has been jealously guarded and fostered by stale laws and constitutions, con-stitutions, as well as by tlie federal ' law. The keenest of rivalry naturally drew to the front those who were I quick to seize and resolute to retain j every available point of vantage for their respective roads. Terminals. If confined lo exclusive use, were not only of strategic importance. but ' profit-yielding assets. Out of com-i com-i petition grow rale wars, pooling, mergers and consolidation into sys- terns, as well as the rebating and i other preferential treatment of ship-1 ship-1 pers which the act to regulate corn- . ! merce was primarily framed to pre-j pre-j vent. ; Prohibition Unchanged. j In that act the congress, accepting I I he competitive principle as ealu-j ealu-j tory, hay thrown about ft prohibitions a pa inst compact s for the pooling of j freight s or division of earnings of I different and competing road, and, j while the original act is but the nu- cleu of the net we now administer, admin-ister, that prohibition has remained i ' unchanged. I Kut Ihe original net and successive S amendments were alike framed in ! times of peace and for times of peace. Thev looked 10 protection of the shipper ship-per and the public against unjust or ; unfair t ream en t by the carrier, and not to protection of tlie nation and its commerce in time of war by ntiliza-; ntiliza-; lion of all the forces and resources j oT its transportation systems to their fullest cn tent. Since the out break of the war in Kuropo, and especially sine this country was drawn into the war. it has become increasing iy clear that unification in the operation of our railroads during the period of conflict con-flict is indispensable m their fullest ! utilization for tlie national defense and j welfare. They must be drawn, like I t lie individual, from the pursuits of peace and mobilized lo win the war. This unification can be effected in one of two ways, and we see but one. Operation as a Unit. Tlie first is operation as a unit by the carriers themseives. In ihe effort, along this line initialed early in this year they are restricted by state and j federal laws, and the idea is the an-; an-; ti thesis of that which heretofore ha .'outroll.Ni their activities. Their past operation- hnve been competitive, although al-though since the Hepburn act. and esne. ialiy sin. e the M.i u n -',' i ns act. the prei notion be this commission of rcaoiia b'c n-.a immn r.i t'-s and chit i ires for ra ; I ca vriers sith je.-i to the act, and the exercise of its power lo require abatement of unjust discrimination dis-crimination or undue prejudice, have in great degree restricted that competition compe-tition to the field of service. But. whether or not perpetuation nf the competitive influence is desirable, under un-der a svstem of govr-rnine.nl regulation, regula-tion, it is apparent that operation of our railroads as a unit Involves the surrender hv each of exclusive use of terminal facilities, surrender at times of profitable traffic to other earners, and acceptance of less profitable traffic traf-fic with resultant loss of revenue, wherever economy of movement or greater freedom from congestion would dictate lhat course if the various vari-ous carriers were in fact but one. The alternative is operation as a unit by the president during the pe-! pe-! rind of the war as a war measure, under the war powers vested In him hv the constitution and those which have been or may be conferred by the congress. ,. . As bearing upon the all ernn t iyei thus stated, it will be recalled -t ha K since: the beginning nf th war in 191 the traffic offered to and moved by the railroads has increased enormouF-ly enormouF-ly Prior thereto thr hgd been occasional oc-casional periods of car shortage, u-viallv restricted in territory, but it mav h said tint from 10. down o 1 n 1 rt the number of cars in the countrv exceeded the demand. This subject is treated in our annual report. re-port. The sudden, unforeseen and -unprecedented demand for transportation occasioned hv the war placed a strain upon the facilities and equipment of the. railroads which they were not, and are not 'now, prepared to meet. Tli ere was creaied a need for immediate imme-diate and extensive additions to existing ex-isting facilities and equipment. This need is coincident with demands upon capital, as well as upon labor, manufactures manu-factures and natural resources, such as we have never known, important additions and betterments will require new capital. t Rate Increase Asked. The railroads propose essentially that we allow increase? in freight ra.tes of such maenbude tha.t their increased earnings will attract investors, inves-tors, hv dividends declared or by the prospect of dividends in competition with' securities issued by federal, state and municipal governments, public utilities corporations and industries in-dustries organized and operating primarily pri-marily for gain aa distinguished from public service. Sonic of the latter have yielded large profits siiKe ' the outbreak of the war. An attempt to secure new capital would come at. a time when the rising: ris-ing: cost of living has made it difficult diffi-cult for those dependent for support upon their earnings to meet their current cur-rent expenses: after the absorption hv American capital of two-thirds of the American securities owned abroad prior to August , 1911, the railroad securities returned to' this country alone amounting to from $l.Tfl0.wn,nnO to $2.0fiO.'100,OOri; after financing In this country of loan.s to our present allies, and after snscription for almost six billion dollars of Liberty loan bonds. Kvcn if the railroads have more money, the immediate construction of necessary facilities and equipment could not readily be effected. Tabor is scarce and the (cOst is mounting. So with materials a nd supplies. ( 'a r and locomotive builders are largely engaged in producing equipment needed need-ed a.hroad, both by our allies and by our own forces. In the conduct of tlie war. The steel and other materials needed for such construction, as well as the labor, are also needed In olher phases of the conflict . Undrr such conditions, and pending the acquisition acquisi-tion of such additional facilit ies a nd equipment, it is indispensable that those now in existence should be used lo their fullest capacity, primarily for the uses which are most vital to the country's defense and welfare, but without unnecessary hindrance to the industry and commerce of our people upon which their ability to contribute toward the. success ot the war so largely depends. Reviews Demands. After reviewing the cxt inordinary demand de-mand on the railroads d tiring the past year and the increases in labor and material ma-terial costs, the commission's special report re-port says: The act to regulate commerce was not enacted to meet such a situation. The carriers have the right to demand de-mand at our hands, and it is our duty to approve, just and reasonable rates sufficient to yield fair returns upon tlie value of the property devoted to public use after necessary expenditures. expendi-tures. Measured in dollars, the gross revenues of the carriers during dur-ing the prist and current fiscal years exceeded any In their history. But what the dollar will buy in labor, material ma-terial and supplies is substantial Ivies. Iv-ies. We are sensible of the vil a! and imperative need of the hour that our railroads shall not be permitted to become be-come less efficient or less sufficient. We realize tlie gravity of a serious breakdown of our t ra asportation facilities. fa-cilities. It is unthinkable . that t his breakdown would be permitted if it could lie prevented. Increased charges for carriage, if found necessary lo take care of unavoidable increases in operating expenses, would not at this time bring new capital on reasonable terms in important sums. Tn our opinion the sit ua tion does not permit of temporizing. All energies en-ergies must be devoted to bringing the war to a successful conclusion, a nd to thai end it is necessary that our transportation svstems he pia. cd and kept on the plane of highest efficiency. effi-ciency. This can only be secured through unification of their operation riming the period of the war. Should Suspend Laws. If the unification la to be effected by Ihe carriers, hey should be enabled en-abled to effect li in a lawful way. To that end. in our judgment, tlie operation opera-tion of the anti-trust, laws, except in respect of consolidations of mergers of parallel and competing lines, as applied to rail and water carriers subject to the act to regulate commerce com-merce and of the anti-pooling provision provi-sion of secrion of that act, should be suspended riurinc the period of the war and unt il further action by the eoncress. In addition, they should be provided from the jjovei nment treai y wit h financial assistance in the form of loans or advances for capita; p nT'o.-es. in such amounts, on su ii considerations considera-tions and under such supervision of exoendiiure a? may "oe determined by a ppropi i,no : u i h"rlt y. A s a ipi"'-.csa i y l on com i t a n t, t he rec ida t ion of sci n i : y issues of common com-mon i Mi-riers et i paired in inter---tale commerce sNm'.l he invested in .vmif apnroi-.rla co.iv as 1ms been le oni-l- mr-:i d-'ri 'n n-jr an n ua i l po: s of shippers, for reasonable rate? and tion -discriminatory service under the present jurisdic; ron of tlie commission commis-sion need not be seriously interfered with by such unified control. Some elastic provisions for establishment of new routes probably v.ould be needed. If the other alternative be adopted and the president opera I cs the railroads rail-roads as a unit during the period of the war, there should be, in our opinion, opin-ion, suitable guaranty to each carrier of an adequate annual return for use of the property, as well as of its upkeep up-keep and maintenance d miner operation, opera-tion, with prevision tor fair terms on which Improvements and betterments marie by the president during the period pe-riod of his operation could be paid for by the ca 1 1 ier upon ret urn to it of the properly after expiration of that period. lli:XKV C. HAM",. Chfiirman. McChord's Views. I Com miss ion-' r Mr-chord, in his supple-. supple-. mentary report, said: The sperhil report of the majority of the commission leave? ;;nsaid some tilings which should be phiinlv stated, if prompt and surf re'ief is to be brousrht to tiie p'sent transportation situation. That the lah of adequate railroad servi.e. pnrt icnla: i- in at-ern at-ern territorv. is serious at ihe present pres-ent time and is a n.-e of crave concern for tb coming vinte- month? ne-ds no demonstration. That the industries of tiie country encraced in n:a kin? wa r matej iaK as well as thoce not so occupied, rennire the., very bet service which can be Th-nri hv tiie railroads i? also -lear. T f-iil.-enncnr in 'lie majority renori t;-at "it Is ners - ;V-it our transforation transfora-tion systems b-- ni'-ed and Uent on the plane of highest, efficiency." and a'so that "this can onlv be e cured t ! iro - ic b un i M " a t ion of i ii c-i r orra t ton durins: the period of ;he ;u-." Hot the ma iori! v report taks thp p"--'it:"n. at :e:lst by Iniulica' ion. that tills unification unifi-cation may "be "fTe -ted h- tlie carriers car-riers themselves."' With Ihn judsr-nieiU judsr-nieiU T wbo'ly disagree. I r.itn m!sp!or.v f Choral h-re siim--ni;iii"e? the .-'T.,t- of ibp ir i T ds to ; n .eel p h: - rd n s of t a r y;. i " t ions tiiroTiRli the appointment nf s'.ir-i-r-ssi vo ! central rommitteep. t' e Hflh and la-l of j w'ni' "il is - wat ,tuv it o.-,i;S,e n:n-. n:n-. miuee fif tiie er.-inl committee on national na-tional ''.fense of l'..- .-neri.an ll.iilway i a -ba i - on The flrt 1 wn cf ; hc " mltlees, he says, were given no real authority, au-thority, and only as late as November 1 did the present war board beffin taking such an essential step as the pooling of cars and facilities. Self-interest Paramount. "I do not wish to lie understood as saying: that the carriers' committee has not accomplished results." the commissioner commis-sioner continued, "nor that t he shippers have not co-operated with t he carriers to get the heavier car loading which has been a very material factor of improvement. improve-ment. Unt our experience wit h railroad commit tees durins the past ear makes me believe t hat no voluntary commit ten can accomplish what the situation demands. de-mands. One of the principal reasons is t ha t tlie element of self-interest , tiie trafu influence, is a. persistent factor in postponing and resist i r. z m- s,;re:' that seek to disregard Individual ri;hts in the ! effort to secure transportation lvsulis as I a whole. Thp 'inert. iy individual and competitive activities' and the established operating practices have their effect. dcHpito directions- or recommend a I ions that have no sand ion to enforce them except a volurilarv agreement which Is very general in character. "There runs, also, in the a' ti ilics of these committees the self-evident purpose to do uhatevcr a pp'-ars -to he no'-epsa ry to prevent the ctvcj-ninental authority from act hip. For the-c and o! iier reasons rea-sons whhh ii is dot nepj-sary to state 1 cannot con; ur in a report in tiie con-press con-press wbi-b apparently acfpiiecp jn a 'nut in ua 1 ion of con! :"ol n cr the 1 ra nw-pO''t:-i tion siluation by a. conninttee appointed ap-pointed hv th' cai-riej-s tljeinsf l-.es. The su-'t:estioi.s witii re,rereTi'-e lo loe anti- iriitft iaw. an ti-pooiiuir i-rc, j ti. ,n of i section .". of the act. the. .:.-sij;i bilily of I government loans for capital purposes rant tne i eiodat hm of se.-uritv i-snes nn-(iouiitediy nn-(iouiitediy ba e merit, out, in my .iudg-inenl. .iudg-inenl. thir iiRf,i merit into h -..- wil no' make- it pos.-o:e for any ritn -i i : i , r, injin l ed ny t lie i nrr.rp tri sc i r. t. 'r.f I n i I metisiii-e of 1 ra nsi .ort a I im t - r i e w hji. ii ti:c prese:jt coi ,ri 1 1 ;r.ii demand. Federal Control. "The ifi a:n' tieedrv if our trnn-j trnn-j no; l atioii s..tTeIMy are 'O he 1;:--'h nr;d kent on "' : piae of b!;r"..ey: :'! it-jir-v' i? the un ili '-a! ion of tiie uriii t rU ersi-r.e,l ersi-r.e,l envern i in-! 1 1 a ! font rol. At 1 1 pi es -e !! i time f !: '-e air .-e"- f. a I f"i e ! a a i.e 1 1 - is fl it: or:j,-. by 1,: tv ., is-m.- nrder- -ir a op roved Mhv 29. 1017. was giveti very broad powers to Issue summary directions direc-tions with respect to the movement, distribution, dis-tribution, exchange, interchange and return re-turn of cars. Tiie priority director, designated desig-nated hv the president for that purpose under tiie ael Gpproved August 1", Ui!. Is authorized to direct that traffic- essential essen-tial to the national defense shall be given priority in transportation, and he has made certain orders of thai cha racier. The Ira nsportal ion of troops and material ma-terial of war, under the a mend men t to i the act to regula t e commerce, a pproved ! August 2H, Itfl'i. is required unon the de- mand of the president to be given prefer- j ence overall other traffic in time of war. and by direction of 1 he a rniy and navy departments and the 1'nited Slates shipping ship-ping board preference orders ha vc been given for the t ransporta tion of a very large tonnage of war materials and supplies sup-plies m nil kinds. Tiie ad nd nisi ra I ions controilhic find ami food, to which :id--ijuate 1 1 ansporta l ion c, of course, vital, have taken an wiive interest hi t be , movement of those commodities throu:;h : their appointed agents. j Business Suffering. j "'nder this oiversified control ;he ear- j riers are not a-.je ( o meet t he j-e'p"rr-- j meals of the incioasinly tieuy tonnage. which mcst be rnri-cd. In -o!c e-pjeive. j (lie indnstiies devoted to war purposes! and tho-e engaged in Hieir noMnal busi- j aess ai -offering. There is n' iftstitj-: lion In whb-h reijlDiiiy of operations is more reriLilsite t'oan in t ra n sport a t Ion. but 1 railroad ' cr. e i ,i tion i anpi'a 1 'h i ng a ebiiotic ennduion. A . OllTeM pb" n must be worked out whtr-h 11 m o id'- for I loth the nee. is. ot liie 20 e 1 nn lent in the j enei cct ic jiroduciion of ihe war and the, needs of ueneryi e.nriToej r e. "It is imperative (hut war ,j, ia l er;;: Is l.e eiven pi "fer'Mi'-e in 1 1 a n "-prt a t 1 o .-i . imt tlie pnara ial smew s of war del -end In lur-e measure nr..:i i ii.- hueces-sfd opei.i- ; t inn of our man ufa ' nriiu; pla nt s a iid i hiisiness es' abh-lnnen i s. i ) ,oji.'iir in t ii'- jew ! It a ; 'the si ma - j lion does not permit of t em poi i.i n u." hut i 1 am crin vinced 1 i in t the si rout a rm of" loverun-cT' fa ! auh.'r.iy is esseot.al if ti-e t ia ri"pc: a, ion sit'iaton is i" 'ne radi-'aliy J im;rrc,cd. Thai mUhnritv un.sl be Uni- j ped to make jn-'i-iide a -hnn that i- both, -igorois and coi'.sis t en t . If t he pi es ab-n t eb-i is 1 o e v,; rcise tlie pov, pr S '-n him i.Ufier tne. a-'! U ppl O'-" ed A ng.JSt L'-t. 1 '.'l '. :c, take r.o-.-es'shn and a'-'smne control of tl,.- 1 ranM'C:ta : ion svf t i,s, I h-lieve that va'iv i n ifrro "d i pur ; n -.oTdi t ion.; L an be piompll- e. ui'-d. F-'or thj? ronr I . u'i.-lation a.ss-i'i iug th-- rrb-rs a fair re-t re-t urn iiihv lie appi oprldl e. Congress Should Act. '' Die prebhM,t does not so rierf. it is iii v iadmu'-ut I ba t the a il t borit y ov cr la" a t ii n of ra ' I road ( ji porat jon ! now c'.-i'il in t!- several aerjr-.ies re-eri.o re-eri.o in. v.bh sin'ii njnrdificni ion a;-, may . ):e ne-'e.-sa sliouhi he prompt ly cm- ' 1 1 a h '(: j by act r. j ,-otigiec. All of (b Ifor't -. now at work upon the problem, iu-I iu-I eluding the I'arrieis ee.-uti'c committee land i l s nuinei . .us s-1 -on i mi 1 1 per,, could j tie ai on- uii!i."d under a sIhgIa hov-erniMciiial hov-erniMciiial ail nun istral i va control.' |