TWENTY-FIRST ANNUAL YEAR BOOK— PART VII 601 



for the year ending December 31, 1919, $104,527: They made over 60 

 per cent net over expenses and taxes both years. 



I cite that not to prove that it is a typical railroad case, because it 

 certainly is not. I cite it merely as a demonstration of the wisdom of 

 taking any statement about the necessity of increasing rates for the pur- 

 pose of improving service with a grain of salt, unless the situation is 

 known to yourself or is vouched for by someone in whom you have con- 

 fidence. 



Must Have Good Service. 



In building up our railroads, there has been antagonisms engendered 

 because of bad faith in the past. We must take a broader view of things 

 than to punish our carriers. That is a thing of the past. The public 

 must have adequate service. I know of one man who bought a calf over 

 here in Omaha and put it into a car and shipped it out to his shipping 

 point in order to get a car to ship a load of cattle to Chicago. I know 

 a man who lost over $3,000 on a carload of grain this summer because 

 he couldn't get a car when he wanted it. I know these illustrations can 

 be added to. 



I know that adequacy of cars is more important than rates. If I 

 want a watch — as I have used the illustration repeatedly before — I don't 

 want a bum watch; I want a good watch or none at all; and yet there 

 is a limit to what I will pay for that watch, isn't there? Simply because 

 I want a good watch is no indication that I am willing to pay anything. 

 And at the present time when you folks aren't making cost of produc- 

 tion, you are laboring under a system wh ch compels the payment of cost- 

 plus to our carriers. You are living under the burden of paying more 

 than you paid during the war period, plus 6 per cent on the investment. 



Now do you ask, was the guarantee during the war period too low? 

 Let us see. You take as a basis for the war period the average net earn- 

 ings — and no man has ever yet successfully contradicted this statement. 

 One attorney attempted to before the commission, and I challenged him 

 to cite the period, and he didn't answer. You use for the basis of the 

 government guarantee during the war period the net revenues for the 

 most prosperous three-year period in the history of the American rail- 

 ways. It was so high, the guarantee was so large, that Senator Cum- 

 mins filed a minority report protesting against it; and yet we have now 

 added to that during the period of greatest depression that you people 

 have labored under for many years. 



I wish that I could have your time and your patience, now or here- 

 after, sometime, to sit down with you people and carefully, coolly and 

 slowly go thru this matter, and see who is right and who is wrong. I 

 think that the attitude of Iowa citizens is going to determine this thing 

 to a substantial extent. 



You have heard a great deal about credit. Of course, they must have 

 credit. Now, what happened about credit? During the last one of that 

 three-year period, Mr. Oldham, of Boston, was the leading banker who 

 took the stand. On cross-examination, under oath, Mr. Oldham admitted 

 that the railroads had been able to borrow money at a better rate of 

 interest than any other industry in America. A leading expert from New 

 York, appearing as a witness for the bankers, admitted that his own 



