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Show Director General Would Consolidate Them Into j Twelve to Twenty Competing Systems. Radical Measure Needed, Need-ed, Hines Says, if Postwar Post-war Operation Is to Be Made Successful. NEW YORK, May 8. Compulsory consolidation of all the railroads of the country, weak and strong, into twelve to twenty large competitive systems, privately' owned, but operated under "thorough-going government regulation," regula-tion," was urged here tonight by Walker Walk-er D. Hines, director general of railroads, rail-roads, as a solution of tho railroad problem. Speaking before the Economic club, Mr. Hines declared that unless some "cure as radical as the one proposed" wero adopted, postwar regulation would prove even more disappointing than the thoroughly unsatisfactory prewar regulation. regu-lation. He made it plain, however, that he was speaking for himself alone and did not reflect the -sentiments either of President .Wilson, who still was maintaining an "open mind," or the railroad administration, "which has no official function to perform in this regard. re-gard. ' ' WOULD ATTRACT NEW CAPITAL INTO FIELD. Coupled with his proposal for compulsory com-pulsory consolidation of the strong and weak roads into great systems of relatively rela-tively equal earning power, Mr. Hines urged that the new systems be officially official-ly appraised and capitalized and that earnings sufficient to attract new capital cap-ital into the field be guaranteed by the government. As an incentive to initiative, Tie suggested sug-gested that the systems be permitted to enjoy excess earnings resulting from efficient ef-ficient management, sharing the excess, however, with labor and with tho public. Prefacing the outline of his plan with a review of railroad history, Mr. Hines declared that the principal difficulty in the past in regulating the railroads had been the fact that there were many strong railroads and many weak ones, and that rates fixed had given excessive exces-sive earnings to the stronger lines, while tho weak lines had suffered sc-' vcrely. PUBLIC SUSPICION IS ! CITED BY DIRECTOR. ; Another difficulty, he said, had been the "persistent suspicion" on the part , of labor and the public at large that the railroads were overcapitalized and ! that increases in rates would inure wholly to the benefit of capital. These difficulties, he said, would be wholly eradicated under the plan he proposed. ' ' Having gotten rid of the embarrassment embar-rassment of the weak roads and the embarrassment of a suspicious capitalization,'' capitali-zation,'' ' he continued, ''a definite and workable standard ought to be cstab- j limited as to the net earnings which the j rates ou:ht to produce. T believe the i effective way to etabH.sh this stand- j ard is to provide that the earnings shall ' be cuouizb to produce a moderate re- I turn on the value of tho property, say or 5 per cent, and also enough to admit of 1 per cent addition to be reinvested re-invested in the property, but not to bo j capitalized. j WOULD END ONE i SOURCE OF UNREST. j "Tiii.-. would Mjpply a dofirii Lf ncss ; vjji-h hrus always been k i n in the j a.-t rnd also i!t at rest aiu.thcr so-ir'-c ! of unrest in the pa:-t the fivlin that ' ; railroads Mere investing in thr proper- j j (Continued on Pago 2, Column 2. I MiERMIOTS MIL LIS PROPOSED (Continued from Page One.) ties out of earnings largo amounts ot: excesM profits which were merely working work-ing to swell the total value belonging to tlio private owners of the roads." ThU arrangement, he saiij, in order to bo eal'u enough to attract to the roada a minimum investment of $l,0OU,O0U,'J0O a year lor development, bhould be backed by some form ot government guarantee that tbo stipulated interest on investment would be paid promptly. " I appeal to you,M ne concluded, ' ' don 't favor any form ot regulation that is oing to leave this great unsolved question of weak ami strung' roads iu a much more difficult condition than that question was before the war. APPEALS FOR AN END TO ALOOFNESS. "Don't favor a plan which perpetuates perpetu-ates this condition of aloofness between be-tween the private management and the public, reulatinx body. Don't favor a plan which leads anew to anxiety and dismay to railroad capital. Don't let the public pay unnecessarily hih prices simply for the privilege- of having uncertainty un-certainty when the government, through a businesslike, direct assurance, instead of an indirect and qualified assurance, could get the results it wants, and could get theni ou a much cheaper basis for the public. And all that ran be accomplished, ac-complished, and at the same time, through a participation in the profits, there can be realized that vital point, the preservation of private initiative." |