Conferences in Washington, at which certain legislative matters were Con- 

 sidered. There have been some charges and counter charges concerning 

 what transpired at these conferences. We cannot believe, however, that the 

 officials of the Federation have knowingly done anything wrong. We have 

 found the leaders of the Federation to be a magnificent set of men, with a 

 high sense of honor. At times there have been differences of opinion, but 

 in the end on every basic policy there has been harmony amongst your 

 chosen leaders. From time to time, as the years go by, you men must expect 

 attacks and counter-attacks upon your organization. These things are 

 inevitable if the Federation exerts any influence in American life. 



THE PRESENT SITUATION. 



Today there are three important problems in the transportation industry 

 confronting us: 



(a) What further reductions, if any, shall be ordered by the Interstate 

 Commerce Commission? In this connection you are interested in the freight 

 rates on many commodities that you consume. We hope that the tentative 

 reduction which will expire July 1st will be made permanent. We hope that 

 as fast as further reductions in operating expenses are effected, freight 

 rates shall be reduced accordingly until the entire advance of last year has 

 been eliminated. The Commission is compelled, by the Interstate Commerce 

 Act, to determine what is a reasonable rate of return to which the railroads 

 are entitled after the first of March. That issue is now pending and up for 

 decision in this general subject. 



(b) The valuation of all of our railroads, which has been in progress 

 for eight years, is now rapidly nearing completion. The final conclusions 

 on this subject will control the level of freight and passenger rates to be 

 paid by this generation and future generations. That industry which bears 

 approximately one-half of the transportation burden of the country should 

 certainly participate in these important proceedings. 



(c) There are some important amendments to the present railroad 

 legislation that should be secured. The railroads are trying to concentrate 

 all regulation in the hands of the central government. In my judgment, too 

 much centralization is just as dangerous as too much decentralizat'on. Our 

 Fathers, who framed this government, conceived a great system which should 

 combine local home rule with a powerful central government. The state is 

 far closer to the needs and demands of the local community than a tribunal 

 a thousand miles away from home. On the other hand, the national govern- 

 ment is far better equipped to protect us from enemies abroad and to com- 

 pel peace at home. It is this check and balance, this dual system, this fed- 

 eral system of statecraft which constitutes the greatest achievement in the 

 science of government in the history of the human race. A tendency to- 

 wards too much decentralization brought on the Civil War; a tendency 

 toward too much concentralization will result in a government by clerks, 

 an incompetent bureaucracy, which will ultimately undermine and destroy 

 the very government itself. We must preserve for posterity this great fed- 

 eral system which has stood the test of more than a century and which other 

 governments today are adopting. Long ago England adopted this principle 

 as to Australia, Canada, and other parts of her Dominion. Today she is 

 being compelled to adopt it as to Ireland. 



A QUESTION OF FUNDAMENTALS. 



If it is wise to abandon this dual system of government as to our rail- 

 roads, it will only be a question of time when other forms of organized busi- 

 ness will succeed in doing what the railroads have accomplished. This 

 proposition strikes at fundamentals; it has to do with the method of gov- 

 ernment. What is it that distinguishes the United States amongst all na- 

 tions? Is it because it is a republic? No. There were republics centuries 

 ago. Is it because it is a large central power? No. There have been larger 

 and stronger central governments. That which makes the American scheme 



