EIGHTEENTH ANNUAL YEAR BOOK — PART VII 423 



want you to so state; if it was correct, we want you to support us. 

 There is one thing true — you and I are both working for the same object, 

 and if we are possessed of the same information, our conclusions are apt 

 to be the same. I had no ax to grind except to serve you people, and I 

 knew that you did not want to be unfair to anybody. We took the position 

 that there was' no emergency in railroad earnings, but that there was an 

 emergency in the financial markets of the United States. We want more 

 cars; we want better terminal facilities. This means the investment of 

 additional capital. Where shall it come from when the financial markets 

 of the country are practically closed to industrial investment? 



We took the position at first that during the period of the war we 

 favored government operation of American railroads; second, in lieu of 

 that we favored a government loan. If the railroad revenues are ade- 

 quate, why should we take that position? I want to frankly and freely 

 discuss these facts with you and see whether our reasoning is sound. 



The railroads immediately adopted the suggestion of a government loan. 

 President Rea, on the witness stand, was asked if it was possible to 

 secure the needed money for cars and engines by the sale of securities on 

 the market. In a letter which has just been written by the railroad board 

 to Senator Newlands, which appeared in the papers of yesterday morning, 

 the railroads completely reversed their position. President Rea's state- 

 ment was made under oath on the witness stand. It was immediately 

 supported by the leading financial and news publications of the United 

 States that are friendly toward the railroads. It was followed up by a 

 request from the railroads for a loan of at least a billion dollars a year. 

 And now, within two weeks after that position was taken, they announce 

 that they don't want any government loan; that they couldn't use the 

 money if they had it. Somebody has made a mistake somewhere. 



Mr. Rea is president of the Pennsylvania Railroad System, which is the 

 largest railroad in the world. It handles one-fourth of the traffic between 

 the Mississippi river and the Atlantic sea-coast. President Rea is a 

 broad-gauged, big man in every sense of the word. He is a statesman 

 first and a railroad official second. 



Now, as to whether the financial markets of the country are open to 

 securities, listen to this statement from President Rea on the witness 

 stand: 



"Mr. Thorne: Yes, but at the present time, is it your judgment that 

 the railroads, or any other class of industrials or public utilities, would 

 be able to sell securities at a reasonable rate, whether this advance is 

 granted or not granted? 



"Mr. Rea: I would answer that more positively by saying that they 

 should not come into the markets while the government is trying to 

 secure money to prosecute the war? 



"Mr. Thorne: And that answer holds whether this advance is granted 

 or not granted? 



"Mr. Rea: It does. 



"Mr. Patterson. Later, is it or is it not going to be absolutely necessary, 

 when the time comes, to make all of these improvements out of earnings, 

 and to reimburse the treasury by the sale of securities when they are 

 available? 



