Our Railroads To-Morrow

by Edward Hungerford

The stock distribution of the new centralized company of the holders of the existing stock-certificates of the present companies would be in the ration of the new standard dividend of 6 per cent. to be paid by the U. S. R. R. to the dividends maintained by the present companies for an average period of a certain number of years before the adoption of the scheme. Thus the stockholders of the Santa Fé railroad who have been receiving 6 per cent. would probably have a chance to make an exchange upon even terms; those of the Northern Pacific, who have been receiving 7 per cent. would gain one and one sixth shares of the new stock for one share of the present. New York Central stockholders would have five sixths as many shares of the new stock as of the old.

“Do you think that many stockholders would be willing to exchange their certificates upon this basis?” asks my querulous old railroad friend from out of the West.

I do not think anything of the sort. I believe that they would have to form many lines to the right of the security-holders who could not get to the places of transfer quickly enough. Uncle Sam holding the bag? Uncle Sam’s credit back of our transportation system? Let me ask you, Old Railroader, if you have any fondness for Liberty bonds in your own strong-box?

While the stock would be called in and reissued, the bonds of the American railroads—between ten and eleven billion dollars’ worth and returning an average of 4.30 per cent. during the period of government control—would be called in, principal and interest, by the United States Treasury, and, as we have just seen, new government bonds issued against them—at just enough lower interest to make the thing a profitable banking transaction for our Uncle Sam.

The essentials of this plan are not my own. They are those of the Hon. George W. Anderson of Massachusetts, a most hard-headed and far-seeing jurist, who has had a remarkable experience in transportation law, including some years as a member of the Interstate Commerce Commission. I am putting it forward here for just what it is worth—nothing more. It is most interesting, and seemingly most workable. Judge Anderson and I differ, however, in one large essential. Trained Federal officer that he is, he sees centralization as the one panacea for the situation, which is a characteristic attitude of the Federalist, from the days of Alexander Hamilton until these.

I believe myself that the United States Railroad, should it be found necessary to incorporate it, should be made a Federal corporation and nothing else. The State charters of the present-day railroads would be made virtually null and void once the roads ceased to operate as separate concerns. It is possible, I will admit, that litigation might arise in regard to this delicate point. But in the steady decline of States’ rights in all our political life I can have no great anxiety as to the final outcome of such litigation. Apparently the Federal Government and not the separate State has the power to-day.

I hold myself that once the centralized organization has been created—and I shall refer to its opportunities again in a moment—prompt decentralization is quite as essential to the situation. The Boston and Albanys, the Lackawannas, the Bessemers, all the other successful small railroads of our present-day situation arise to bid me go very easily indeed when I suggest any national centralization of actual operation or of the actual relationship between the carriers and their workers. And Sentiment also crooks a warning finger. I know what she means by her glance.

It would be pathetic, nay tragic, to remove an American railroad name like the Pennsylvania or the Northwestern, to try to paint out the red cars of the one line and the yellow ones of the other. New York Central is too good a name to be scrapped. The same is true of Baltimore and Ohio. How can we prate of morale and then dare to take from under it the things that are its chief support? After all does sentiment count for nothing? And tradition? Have we not possibly become a little too materialistic a nation?

On the other hand Southern Pacific means but little to-day as the name of a railroad which reaches as far north as Portland, Oregon, and as deeply into the heart of the country as Ogden. The Californian railroad has a sense of dignity that ought to appeal to every man of that great State. Such a sense too has the Puget Sound Lines.

What’s in a name?