518 TWENTY-THIRD ANNUAL YEAR BOOK— PART VII 



the present cost of reproduction of the farms in said zones or districts 

 in their present condition. Further, be it 



"Resolved, That as an incident to the foregoing guarantee that con- 

 gress shall also be requested to guarantee (1) that we won't have a 

 drouth this summer, (2) that our sows will bring forth of their kind 

 bountifully and plentifully, and (3) that our eggs will hatch, our hens 

 will cackle and our roosters will crow. 



"Seriously, we condemn in the most unqualified terms the provisions 

 of the guarantee embraced in the legislation said to have been agreed 

 upon by the joint conference committee having under consideration the 

 pending railroad legislation. Such a rate of return is practically un- 

 known to the farming industry as this committee is proposing for railroad 

 security holders with the government guarantee back of it. There are 

 literally billions of dollars in this country on deposit in savings banks, 

 entrusted to insurance companies and invested in farms which yield a 

 much lower net profit on present values and do not have any government 

 guarantee back of them." 



Gentlemen, in regard to that rate of return, just a word. It has been 

 said that by 2 or 6 per cent is low. In Great Britain the parliament has 

 fixed as the basis of the after-the-war returns the average that existed in 

 1913 just prior to their entrance into the war which was 4.27 per cent, 

 and to that they have added 5 per cent on subsequent improvements. 

 You have adopted 5% to 6 per cent, and lately your commission has 

 adopted 5% per cent. That per cent of 4.27 was what Britain has fixed 

 as a return for their railroads as a basis of computing what is reasonable. 



That may sound inadequate to some folks. You must divest your 

 mind of the consideration of single companies. You are considering the 

 average of all companies in an industry, the rich and the poor the great 

 and the small, and the failures and the successes. And you must also 

 remember that in most all business the bulk of them make failures. If 

 you adopt a standard in the railroad industry that will enable a weakling 

 to survive, you are treading close to a law that will compel the survival 

 of the unfit, reversing a basic principle in economics that exists in all 

 other lines of business activity. 



As to whether that 5% per cent is adequate or not, do not answer this 

 by the consideration of any one industry. When a man tells you that 

 the railroad industry is only making about 4 per cent, or a little less, on 

 the value of the property, please don't forget that the tentative value 

 about which he is speaking is two billion dollars greater than the market 

 value of all railroad stocks and bonds outstanding in the hands of the 

 public. I said two billion dollars greater than the market value. I meant 

 two billion dollars greater than the par value. The market value is about 

 75 cents on the dollar on an average in the country as a whole. 



In conclusion, you stated: 



"We believe that such legislation is economically, socially and polit- 

 ically unsound. Those who father such legislation must be held respon- 

 sible for the results which will inevitably follow, in higher transportation 

 costs, in higher wages, and in the establishment of a dangerous prece- 

 dent. Such legislation should receive the condemnation of the farming 

 industry of the entire nation." 



