598 IOWA DEPARTMENT OF AGRICULTURE 



provided for them in the transportation act, but which ended on Sep- 

 tember 1st." 



Remember, for the first month under the effect of the new law, their 

 net was $4,800,000 greater than provided under the guarantee during the 

 war period, and yet they fell 26.9 per cent behind the amount authorized 

 by the commission as the commission interpreted the transportation act — 

 26.9 per cent below what the commission thought they were authorized 

 to grant under that act, and yet $4,800,000 greater than the same month 

 of last year, or the same period under the war guarantee. 



What the Roads are Earning. 



Now, whether it is the transportation act, or whether it is the com- 

 mission, just think a moment! Isn't that somewhat different from your 

 situation? So far as the federal government is concerned? Isn't it some- 

 what different when we say that their net is $4,800,000 greater than the 

 government guarantee? It was greater than what they earned last year 

 by that amount, and yet it was 26.9 per cent less than what you are 

 obliged to give them. The harder it is for you and me to pay the rates, 

 the less traffic moves, and the higher the rates will have to be under that 

 system. How are you going to make up your 6 per cent net when your 

 tonnage falls down, if you do not increase rates? That is the cost-plus 

 system. That is the system, gentlemen, that was found so unwise, so 

 fatally wrong, during the war period. I think it is fundamentally and 

 economically unsound and unwise; it served as a blanket on American 

 industry; it is one of the contributing causes about which we have been 

 speaking. I think that in the very near future we should demand the 

 repeal of the transportation act of 1920; we should demand the repeal 

 of that section, and we should demand the reopening of that case. When 

 you force a commission to make an appraisal of the American railroads 

 at a time on data compiled from less than two per cent of the railroads 

 of the countiy, they had to make some sort of a case, didn't they? When 

 you force that case, the appraisal of our railroads, at a time of high 

 prices as compared to what you have heretofore experienced, that is liable 

 to be costly and burdensome for the future. 



Repeal the Guarantee. 



I believe most profoundly in the integrity and ability of our beloved 

 Senator Cummins, and I believe that if he felt that you folks back home 

 here thought that that law should be amended, it would have a great 

 deal of weight with him; and I think before his term of office is out he 

 ought to see that that thing is changed. 



It is unfortunate for American industry that we should have any- 

 thing savoring of a governmental assurance of guarantee. How has it 

 been in the past? We have said in the past that rates had to produce 

 a reasonable return. Yes. But we have said during periods of pros- 

 perity there could be built up a surplus to tide them over lean years. 

 There is an ebb and flow in business just as in the level of the ocean. 

 Suppose during the crisis of the panic of the '90's, when the railroads of 

 the country became financially embarrassed, higher rates had been put 

 into effect, wouldn't it have been unfortunate for America? That was 



