I submit a table, No. 2, that is a statement containing a list of the railroads which under column 9 of the foregoing table would earn more than 6 per cent. The mileage. value per mile according to property investment account, the amount of net operating railway income, and the amount in excess of 6 per cent after apportioning one-half of the mail pay. This includes the 93,249 miles of railroad in the western district which would earn more than 6 per cent. This was for the same calendar year ending December 31, 1919.

TABLE 2.—A statement containing a list of the railroads which earn more than 6 per cent.

I submit a table, No. 3, of roads earning from 4 to 6 per cent, comprising 26,366 miles of road, with an aggregate net operating income of $13,649,941.

TABLE 3.-Statement showing a list of railroads earning from 4 to 6 per cent.

There were 12,000 miles of railroad earning less than 4 per cent, and operating at leficit principally. The net operating result of those 12,000 miles of railroad was ,000,000 deficit.

I have not the percentage figures in the document which I have as to the individual ilroads, but there were a number of these roads which would have earned a very gh earning upon their property investment account, and that was the only figure at we had, but Mr. Thorne worked up a method of reducing property investment count to the equivalent of the valuations that have been made of the railroads of e United States, so far as they had progressed, and that showed 83 per cent of the operty investment account.

Now, adjusting on that basis those roads which have not been valued, and adjusting the basis that they actually were valued, those railroads which the Interstate Comerce Commission valued, I worked up the figures to show what would be the value, d the value per mile of line, of these different railroads.

The valuation was the most disastrous thing. It was a valuation commanded by v for the purposes of rate making. That is an unknown term, an indefinite term, indefinite as is “a fair value," as is a "reasonable rate" itself, and where the object to secure some basis for a reasonable rate, and you take factors which are themselves uncertain and undefinable as the ultimate object to be obtained, you gain nothing it: you had better jump to the conclusion at the outset, short-circuit in one shot to what is a reasonable rate. And you never can beat that. You can study every y, at least I could study every day until I was 100 years old and that won't be so gand could not reach any other conclusion, in my opinion.

I have tried to work out in my mind what would be the remedy which would be propriate, and the only remedy that Congress can adopt that will relieve this unppy situation. I wish to advert again to the point that so long as those who produce basic wealth of this country have no profits left with which to purchase, the induses, finances, commerce, and every other thing, including the railroads, must be in tate of paralysis; they must be in a state of paralysis just as long as that condition

ists.

Now we have built up this country on the theory, so far as the West is concernedd that is what I am speaking of-by the foresight and the far-seeing wisdom of great en who constructed the railroads to move the traffic; their idea was that they would velop a country that in the long run would make these railroads great and prosrous properties. They were liberal in their dispositions and thought, and they did and thus it was that our country was built up.

Now we find a vast territory capable of supporting the entire population of the ited States in the things to eat, to say nothing of things to drink, which is a matter ly to be thought of in connection with history. That territory lying in the semiarid d arid countries, the intermountain countries, and the plains adjacent thereto. far ay from the points at which they must find markets, incapable of development at unless they can find those markets. Now these great railroads were built for the rpose originally of developing all along their lines, and so, as far as farming made gress the country did develop, until it reached that area where it would require igation and where there was mining and where there was timber, and then by the lux of population the country was developing to some extent, until this era of king money out of the railroads by high financing, or by financing at all, and king every part of every railroad pay a profit, arrived, and the high rates were put the intermountain country, and they have paralyzed it and left the Government th a great territory that will never be developed unless it is developed on the theory it what they make they can ship and sell at a profit, and not throw potatoes in the er and hunt places, as they have in California, to dump the onions or, has as been ne in southwestern Texas, on the Brownsville line of railroad, where 1.500 cars of bbage, I am told, rotted this year, and the onion crop could not be marketed. The intry is simply paralyzed by the inability to get what they thought they would get en they went there that is, transportation at reasonable cost. Now, I say I have tried to work out, in view of all these situations, the plan that I nk will be the only one that can be adopted to restore us to the chance of a developint of the business of the country, and the return to the maximum of railroad traffic. e maximum of employment of labor everywhere, the maximum of employment of ingenuity of men in the manufacture and the sale of commodities to those who will ve something left to buy them with, and that must come, in my opinion, from the jund.

Now, I will take up the subject:

REDUCTION OF RAILROAD RATES ESSENTIAL TO THE NATIONAL PROSPERITY AND THE DUTY OF CONGRESS TO THE PUBLIC AS WELL AS THE RAILROADS.

With the enactment of the act to regulate commerce, approved February 4, 1887, the Federal Government entered upon the experiment of protecting the helpless public, shippers, and communities against unreasonable, preferential, and discriminatory rates by commission without power to prescribe the rates. Failing in that, for lack of power, Congress in 1906 passed the Hepburn Act, giving the power which was beneficially exercised for 15 years, but now unhappily yet undeniably we have come to the point where that power is taken away by our efforts to perfect it by a statutory rate-making rule that leaves the public and shipper without a remedy. Not even the railroads can make reasonable rates, nor can a single road reduce its rates. The States are shorn of their powers, the shippers deprived of adequate remedies, commerce and production are stifled by rates 65 to 100 per cent above the average of the 25-year period of prosperity next before the war. Net earnings are much less, notwithstanding the exorbitant rates which are bankrupting the farmer and stock raiser, depriving producers of their accustomed markets or materially reducing them, both as to domestic and export, and depriving the consumer of access to wide fields of production for what he lives on, and making the high cost of living permanent: limiting the scope of commercial transportation from places of industrial production and resulting in closing down factories, mines, mills, and enterprises, and causing unemployment everywhere.

Generally speaking, it costs as much to ship corn and oats as the farmer gets at home. So it is with vegetables, melons, and potatoes, where rates are often prohibitory. Poorer quality of cattle and sheep often do not more than pay the freight, and on medium qualities shipped long distances the freight is more than 50 per cent of net value at home. Hay is often not worth the freight to available and usual markets. Agriculture is thus hopeless because the producer has nothing left; his buying power is gone; in consequence much less is shipped. Whatever the farmer buys in macninery and supplies comes with these rates added. The buck is passed to him on the f. o. b. factory price. In thousands of instances industries have wholly or partially closed Exports and imports are in like manner burdened, so from the remotest parts of the world important commodities like wool and frozen meat, hides, etc., can be shipped to our ports cheaper than from any of our own fields and places of production.

The wonder is that no relief is proposed to reach the cause of the lessened traffic unemployment, higher cost of living, and the paralysis of our great bankrupt live stock and farming business, and crippled condition of most industries. The cry is, loar us some more money, help us float more obligations, and paraphrasing the Lord's prayer, "forgive us our debts." Conceivably, it is because of the heralding of specious fallacious arguments that the bad financial, often bankrupt, condition of our railroade forbids reduction of rates, but calls for higher rates.

This is merely indicative of the havoc wrought by the arbitrary rate-making rule of the transportation act, section 15a, of the commerce act, guaranteeing 54 per cen net return on the aggregate of all railroad valuation used by the commission for rate making purposes. The country can not pay it, and the railroads can not earn it i there were no regulating law, and yet it seems they are so tenacious of these exorbitan rates resulting from the effort to make that return under this iniquitous law and s powerful as to prevent a repeal of it by Congress, that the country and the railroad must go down together in this vain attempt to do the impossible. They are intelli gent men, and we should expect-indeed, do expect-that they will soon see it in a different light.

The railroads must stand their share, and it should be by reducing rates and increas ing traffic rather than reducing traffic by high rates to bankrupt patrons.

It is charged by them to labor cost, and specific advances of rates and fares wer asked for and obtained to meet the $625,000,000 added by the Labor Board; yet whe that was reduced by half no reduction in consequence thereof was made in the genera level of rates. Traffic continues to decline, and if the standard of the rate-makin rule used by the commission is reached still higher rates will be required on traffi that must move. While some rates are being reduced at the suggestion of the con mission, it is a confession that it is without power since the rate of return is not pro duced. Thus we take what the railroads see fit to give. We could always have don that.

The cause of this condition-these exorbitant rates-must be reduced. There no other remedy. The remedy that increases the interest charges by floating add tional securities and which they are asking, and indeed being in instances permitte

should be the principal qualification of the commissioner. He can not apply judg ment as to what is just, fair, and reasonable and fix rates accordingly as heretofore. The best that could be done in the first instance is to repeal section 15a and leave the commission to prescribe rates according to its sound judgment, according to the facts and circumstances of the case where shippers and the public have a tribunal to whom all can go to submit to its judgment the controversy and abide by that. WHATEVER BY WAY OF GUARANTY IS REQUIRED MUST BE THE NATION'S OBLIGATION, NOT IN SHIPPER'S RATES.

The old rule of railroading was axiomatic that development of tonnage by rates that the traffic would bear and freely move, has been discarded; so no longer are rates made to develop but rather to destroy. But the rule is sound; it was the development from experience. It affords the only true remedy. Whatever course may be followed to do it plainly must embrace the reduction of rate by force of law. The national must pay the price to the extent that it should be paid and producers can not be burdened with that obligation. The national, not the pruducers, must shoulder the guaranty. That is what ails them now. The direct calamity which the railroads predict to themselves, the farmer likewise suffers, his losses will not be replaced or earnings guaranteed. But what would result to the railroads before the volume of business is restored and cost of labor, materials, and supplies reduced to put them back to doing business at the same old stand in the same old way can and should be taken care of by the Government in performance of the Nation's duty as a whole by providing for such aid as will protect the railroads to the extent to which under close supervision it may be found needed. Let the loan to each be by supplying the funds, sufficient when added to their net earnings, which will enable each to pay its interest and taxes, to be paid back on an amortization plan out of the net earnings above that figure derivable from future operations as earned, with the proviso to except cases of overcapitalization interest charges and to take care equitably of other special cases to the ends of just and fair treatment.

True this would require close scrutiny of expenditures and to see that only operating expenses are charged to that account and that the needs for the loan to augment net earnings for paying fixed charges be correctly ascertained. That scrutiny is absolutely necessary in any event so that the public can know the real net earnings. As it is they know what the railroads report.

This scheme of the transportation act makes the public the guarantor of the correctness, propriety, and necessity of everything charged in operating expenses by guaranteeing the net. Under this plan suggested above the Government could lose nothing and the railroads would be forced to gain back the traffic and restore industry which they seem unable to attempt by reducing the rates to the former standards plus enough to take care of what the Labor Board has allowed to be added to former wages. Keeping in view the strictest economy and efficiency of operation under close watch would greatly benefit the roads. Rigid requirements to prevent employment of any army for propaganda and traveling and local advocates to further their plans and give publicity to specious arguments in support of the railroad's views, is another way to reduce expenses. They should not charge operating expenses for that as they do. Again, in the repeal and change of provisions of the transportation act there should be borne in mind that one tribunal can not make the rates and another tribunal fix the wages. So that, to that end wage control must be in the tribunal which controls the rates. Too many boards, like too many cooks, spoil the broth. So it may be with respect to fuel to some extent. If the public is to have reasonable rates unreasonable expenditures must cease, at least when the public guarantees the net.

It requires no peculiar knowledge for any one to see that with rates restored business will be rapidly restored and unemployment cease to an enormous degree. It is next to folly to preach protective tariff to stimulate production and keep home markets from disastrous competition, yet allow rates which lay such burdens upon our own production in getting it to consumers as we now "enjoy.' The unwisdom of "captains of industry' in running railroads and government has been abundantly demonstrated. Why prate of the high cost of living when dressed carcasses of beef cost 114 per cent more to ship from western packing houses than it did before the war. When thousands of cars of fruits, vegetables, melons, and potatoes have rotted because of prohibitory rates. Why don't they voluntarily reduce these rates? Take a chance. Stand their temporary loss to get themselves and the country going again?

If that can not be compelled by statute or by so changing the law that the commission can do it, and if we are to continue these high rate bases, there is no use to have any regulation by statute; it must all be left to the roads, if such must be the rule.