"Under Government control discriminations against localities would cease, whereas now localities are discriminated against because managers are interested in real estate elsewhere, or are interested in diverting traffic in certain directions....
"Another, and an incalculable benefit, which would result from National ownership, would be the relief of State and National legislation from the pressure and corrupting practices of railway corporations, which constitute one of the greatest dangers to which republican institutions can be subjected. This alone renders the nationalization of the railways most desirable, and at the same time would have the effect of emancipating a large part of the press from a galling thraldom to the corporations....
"Estimated net annual saving to the public which would result from Government control:
"It would appear that, after yearly setting aside $50,000,000 as a sinking fund, there are the best reasons for believing that the cost of the railway service would be some $310,000,000 less than under corporate management.
"That $6,000,000,000 is much more than it would cost to duplicate existing railways will not be questioned by the disinterested familiar with late reductions in the cost of construction, and that such a valuation is excessive is manifest from the fact that it is much more than the market value of all the railway bonds and shares in existence."
The above quotations from Mr. Davis' article hardly do it justice, and it should be read in full to appreciate its full force. Many of the predictions and estimates are undoubtedly in the main correct, yet upon the whole it must be admitted that it is a rather rosy and too hopeful view to take of Government ownership of our railroads.
4. State ownership with private management.
This is a compromise between a public and a private system of railway ownership and management. It is claimed by the advocates of this system that if the Government would acquire by purchase or through condemnation proceedings all of the railroads of the country, pay for them by issuing its bonds, and then lease the various lines to the highest responsible bidders, prescribing a schedule and rules of management, most of the benefits resulting from state ownership of railroads could be secured while nearly all its disadvantages would be avoided. It is proposed to purchase railroads at their actual value and to issue in payment bonds bearing the same rate of interest as other Government securities. This would deprive managers of every opportunity to manipulate the railroad business for purposes of stock speculation. It would also reduce the fixed charges of our railroads at least 50 per cent., the benefits of which reduction the public would chiefly share. The acquisition of the railroads by the Government would, moreover, afford the conservative capitalist a safe and permanent investment, which, with the gradual disappearance of our war debt, might become a national desideratum.
It is proposed by the advocates of this system that the Government fix rates of transportation for a certain period, to be reviewed at the end of that period upon an agreed basis. The operating companies would be required to keep their roads in repair and give sufficient bonds for the faithful performance of their contracts. If found guilty of persistent violations of the terms of their leases or of such laws as Congress might enact for their control, their bonds and leases might be declared forfeited. A new Government department or bureau would have to be established and charged with the duty of exercising the same control over railroads which the Government now exercises over national banks, and in addition to this complete publicity of the service would have to be relied upon to prevent the introduction of abuses.