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THE BECOBD OF BEGTJLATIOlf. 



Have we had too much regulation? Let us consider one or two facts: 

 Conditions since the world war have been abnormal in all industries. When 

 the railroads were taken over by the government at the beginning of the 

 war, after thirty years of regulation, they were making, above all expenses 

 and taxes and interest on debt, a rate of return on their capital stock out- 

 standing in the hands of the public, approximately double what it was when 

 railroad' regulation commenced thirty years ago. They were making practi- 

 cally double the amount per mile of line which they did when the Interstate 

 Commerce Commission was created. Their total net earnings above all 

 operating expenses and taxes during three years ending with 1917 were 

 practically three times what they were thirty years ago. And the average 

 amount earned on the capital stock outstanding in the hands of the public 

 was practically double what English railroads were earning. 



During the three years ending June 30, 1918, the last three years of 

 governmental regulation before the carriers were taken over by the govern- 

 ment, American railroads earned on an average the' largest net earnings 

 above all expenses and' taxes and the largest rate of return on their property 

 investment or book value which they ever earned since the steam engine 

 was invented, so far as records have been kept. 



In the light of such a record as that, no man can honestly claim that we 

 have had too much regulation. The great question is have we had enough 

 regulation? Have the railroads obtained control over the powers that we 

 have set up to control them? That is the great issue. 



WHAT HAPPENED DURING THE WAR. 



Now let us consider briefly what transpired during the war period. 

 Every other great nation on earth either owned its railroads or took over 

 the control and operation of its railroads at the beginning of the World' War. 

 The United States was practically the last great nation to take this step. 

 The war necessity demanded it. 



But when we took our carriers over, we immediately placed them under 

 the control of railroad men, but we required consolidated, unified activities. 

 In his address at Omaha on June 10th, 1919, Mr. Hines, director general of 

 railroads, made the following statement: 



"I want you to remember this fact. When the government took 

 possession of the railroads, not a single railroad was put under the 

 direction of a man who was not a railroad man. Almost without excep- 

 tion every railroad was left under control of the very same operating 

 men who had controlled it under private operation, and when the present 

 government control ceases and the railroad's shall be turned back to 

 private management, these same men will continue to control the rail- 

 road operations." 



There were some national policies which the central administration, also 

 composed of railroad men, required these operating officials to adopt. When 

 we took over the roads we guaranteed regardless of how high labor costs 

 should go, and regardless of how high the price of materials would reach 

 we guaranteed the railroads a net income over and' above all expenses equiv- 

 alent to the average of the most prosperous three-year period in their entire 

 history. During that period, when some folks profiteered and other folks 

 went broke, when all industry was centered on war activities, during that 

 period of great change and hazard and uncertainty, we gave the carriers the 

 equivalent of a government bond equaling their net income for their most 

 prosperous period. And at the close of the war, when everybody else was 

 forced to reduce their charges, at a period when American Industry was 

 trying to readjust itself in getting back to normal, we deliberately authroized 

 these same railroads to increase their prices, attempting to give them one 

 billion, five hundred million dollars through increased rates. 



