REGULATION OF RAILWAYS BY SAMUEL O. DUNN The Regulation of Railways The American Transportation Question Government Ownership of Railroads D. APPLETON COMPANY Publishers New York REGULATION OF RAILWAYS INCLUDING A DISCUSSION OF GOVERNMENT OWNERSHIP VERSUS GOVERNMENT CONTROL BY SAMUEL O. DUNN ITOB OF THE RAILWAY AQB AT7THOn OF THE AMERICAS TBANPOBTATION QUESTION AND GOVERNMENT OWNERSHIP OF RAILWAYS D. APPLETON AND COMPANY NEW YORK LONDON 1919 COPYRIGHT, 1918, BY D. APPLETON AND COMPANY Printed in the United States of America PREFACE When the preparation of this book was begun the United States was at peace with all the world and in a state of industrial depression. While the book was being finished the nation was mak ing gigantic preparations for developing and exerting its tremendous potential strength in the Great War, and was also in the midst of a period of extraordinary, al though perhaps not healthy, industrial activity and pros perity. Before the book could be published President Wilson decided that the system of private management and government regulation of railroads, which had prevailed since the Hepburn act went into effect in 1906, was not adapted to securing the efficiency in transportation re quired during the war and on December 28, 1917, he took, on behalf of the federal government, direct control of all railroads. He appointed a Director General of Railroads having supreme authority over regulation and management. The foregoing summary statements show how rapidly important developments recently have occurred in the field of transportation. The new system of government control is designed to serve merely as a war measure. It contemplates the re turn of each existing railway in unimpaired physical condition to the management of its owners on the com ing of peace. But to return to the old system of man vi PREFACE agement without first making important reforms of regu lation would be extremely undesirable. It would mean a revival of the influences, tendencies and conditions which brought railway development almost to a stop be fore the war which made it almost impossible for the carriers to handle all the business that came to them in the year and a half before this country entered the war and which made it entirely impossible for them to do so after this country entered the war. If the railways are to undergo no radical alteration in their ownership and management, their welfare and that of the public will require many changes in our past machinery and policy of regulation. The changes which the writer believes should be made in regulation are indicated in the fol lowing pages. Perhaps radical changes should be made in our sys tem of private ownership and management, as well as in our system of public regulation. Some able students of the subject believe that to solve our railroad prob lem under private ownership we must create a number of regional railroad holding companies. The govern ment, under this plan, would guarantee a return on the stock sold by these companies and with the proceeds from its stock each company would acquire control of all the railways operating in an entire section of the country. The objects of this plan are to take the finan cial control of many railways from Wall street to sta bilize railway securities to solve the problem presented by weak and strong roads in every territory and to eliminate the wastes attributed to competition. The regional railroad holding company plan is discussed in the following pages. Many person believe not only that government con PREFACE vii trol of railroad management during the war will make government ownership inevitable, but that government ownership and management will best solve our railroad problem. The question of government regulation versus government ownership also is quite fully discussed in the following pages...