The watchman and southron. (Sumter, S.C.) 1881-1930, February 27, 1918, Image 6
CONTROL OF THE RAILROADS.
SOMK \M> ol is o| l>is.
MONtX! I I n \\Cl .
'I b? Main Point ?I IssSSSS It I MM* hi
Not Lrgltlsnate Service; Dui the
I n s r?.iilon or a I i i ill** I icld or
i ??? nie Raga: Regeers w be
Kik.u Bcm IU-*t to < iiltitulC loa,
Ikdd.
The railroad gang Is busy and the
people of the I'nlted States must be
on guard The scheme Is to regain
private control of the railroads after
the wnr. On the plea that the taking
over of the roads is only a war ine is
ure the gang doesn't want to take any
chances with congress in the matter
bill hopes to grease the way so that
they may slide buck automatically in?
to private control without any legisla?
tion.
"This must not be permitted. The
government must not return the rail?
roads to private control, either at ;he
clone of the war or at any other time.
On the ether hand, no one who has
studied the proldem deeply wants
'government ownership,' in the sense
that j;o\eminent ownership is under?
stood today Public ownership, yes;
but the railroads have always been
publicly owned. We have had public
ownership under the control of finan
cial pirates. ?Internment ownership,
as It is usually understood, would
amount to nobody-ownership under
the I >ntrol of political buz/.ards."
Is this hard to understand f Well.
Nathan L. Amster is a little hard to
und? i t.iad at Hist. Hut you will un?
dersiand him?that's the kind of man
he Is. Ills principal oeeupa Ion for
scve-al years lock has consisted o'
making himself understood. He is a
railroad investor. Not a magnate. Not i
one of the big adventurers of the
(iould and Hill class, hut a man with
a few hundreds of thousands that he
didn't want to gamble with. Ho
wanted to invest it in something safe.
You know the type; just the kind of
come-on in the railroad field that the
big Insiders go gunning for.
Only. Nathan L. Amster didn't come
. < i uulte according to schedule. When
trained their guns on him, he
dodged. He dodged Into little courts,
where the hunters felt sure they could
sn oke ftpu cat in a week or two. Thev
had alw.i^s I.u able to do it with
others of fgr spoi jest but they had
never tocklcd^rWfe such a nervy lit?
tle scooter before. He scooted from
court to court. He scooted behind in?
junctions und mandamuses and inter
pleadings and writs of this and that.,
nnd finally he scooted Into the Inter?
state commerce commission. Om
bright morning. In fact, he scooted
right into a directorship of the Chi?
cago. Kock Island and Paclile rail?
road and announced that he was
there to fight.
Newspaper readers are quite weil
acquainted now with the fight gsj
made. He fought tin- dlieetorg single I
handed, and when that wouldn't do.
he went buck and had two director.;
elected Insteud of one. IdMfl your he
c*.me In with four directors, repre
?mting the Asustcr understanding,
nnd with a loud minority voice he
won almost all the points he was
lirhting for. For one thing, ho com?
pelled the directors to declare a di?
vidend after they had suhl they
couldn't: also he proved that th<
v I Miami was a profitable proper?
ty after th. \ had labelled it nothing
but two streaks of rust and nil the
other things that go to describe a rail
load in the process of being scuttled
Hut it Isnf the history of the Kock
Ifdnt d tight which I set out to teii.
..'list n??w Nathan L. Amster has set
hmut lf to tin- biggest task of his
life. It is to put a Stop forever to the
sport of America's financial kings?
us-.n - the cre.it public m r\ice propel
ties of the country not as a means of
earning legitimate profits but as trap-*
for the inventing public. ,
' ' "b?Bjl financiers," he says, "ar?
not the I ? u who own the rallro .ds.
Tin i. roa Is have always bOOg own
ed fix the public bv the Im c t.n,
public The millions of stookholden
havo been \itally Interested at al!
times in the su< ? ? <?f the rouds aa
pa> lug properties. I: t they have
gosor bees eogaaJged, Tiny have
enti ui led the n in i g< ment of the
sg gi not |g peepls who rspressnt
tin 10 but to pttppeesd sup-amen in
thi linanciul world whose interest it
has been t?? wreck the properties In
id.
"V few years ago, for Instance,
?.< ? k Nland was selling at Itff, i
share. A few months ago it was sell
mg Had the property deter*
lor ii? d I No; iieconhng to the inter?
state commerce commission, it was
doing a blggei bu - ; and making
i:if,ii'T e.linings than ever before
Kut for gftSSS years the gang ot
iflStfJOtefs In charge had not managed
It. They lud milked it. They had
run It not to maks dividends on the
money Invested but to draw off thr
sarnlngs as fast on thev accrued Into
O" i own polls, Im ib n? ill. in.il in-.'
the rsllway company pay for th
pat Is ss well.
? These palls were cnllod holding
tompanica. The general public
NMM'1 knOW w h it a holding com?
pany is. Call it a pail anil it may gel
across more quickly. It is something
which a UnaNi u-r holds when ho
uses a ra I t oad lor a cow.
"Th' ir wove two of these compa?
nies, one in Iowa ami one in New
.1? i -ey. The ROOk Istend was capital?
ized at $7 ?,000,000. The holding com
pail leg wire capitalized at $850,000,
000, Thev Issued their stock as fully
I. Put actually no payment was
made on either. Then upon motion
of !>. (J. Heid, the entire stock issue
of the New Jersey company and the
entire bond issue of the Iowa company
were placed with the Central Trust
? onnwiny of New York, under an
11? cement that they ware to he ex
? h i need for railway company hold?
ings on the basis of $-7o in the hold
kng companies' stocks and bonds for
$lo0 of railway stock.
Inder tins agreement, D. G. Rel 1.
W. II. Leeds. J. II. Moore and W. II.
Moore disposed of about $20,000,000
of railway stock for which they re?
ceived over $11,000,04)0 in the other
securities. The only revenue of the
holding companies' stock came from
tho dividends of the railway com?
pany, and the stockholders stamped
ed, as expocte.l, to ex,?hange their se?
curities. All but $1,000,000 of the
original Rook island stock was thus
exchanged.
? Nov.. under the agreement. tli<*
lailway stock was to be held by ihi
trust company as security lor th
Iowa company's bonds. 11" the In?
terest on the bonds eouhl not be paid,
the railway stock would be sold; and
lour men w ho had held only about a
fourth of the railway stock had
wormed themselves into a position
where tiny could make the road pay
or not pay as it suited their Interests
best.
The road paid.. That is, it paid
somebody How much it paid theso
four men. the interstate commerc
commisskn was unable to ti ll. When
the series of dtali which resulted In
receivership was dually investigated,
Mr. Raid testilied that lie always
"tuned hll books at the end of each
nicnth.
' I tut the road didn't pay the stock?
holders. Note this letter from a
roughueepsie girl. She was working
to help support her father, who was
nearly blind. Her father had invested1
a few hundred dollars in Rock Island
which hut been drawing lo per cent
dividends. When the dividends stop?
ped, because of llnanical difficulties
which the girl didn't understand, she
couldn't bear to tell her helpless fath?
er. She paid the dividends out of her
Own earnings. She kept up this deceit
as long as she could, year al ter year, I
lit Mr. Raid and others- wen- burn?
ing their books.
< u- this from Concord, N. H.: "i
am t widow, and the loss of $886
which I paid for my bond means a
good deal to me, as I am too old tn
earn a living now.'
"Why wasn't tho interest bein^
paid? Was it because wages were
higher every year and because the
road COUld DO! raise its rates to meet
thaml it is far more to the point U>
read the history oi the Frisco deal, a
precious bit of ?llnancing,' by which
tho Rock Island had $00,000,000
drawn out of its treasury to meet an
obligation of the Iowa holding com?
pany, an obligation for which the
railway company wus in no wise re?
sponsible ami from which it receive,1
no benefit.
Alien the small investors in
Poughkeepslc and Concord read, away
back in 100ti that an agreement had
been made between the holding com
i nil - nid the .1. I'. Morgan company
to tXChnngl the stock of the St.
Louis and San Franscis-co Kail way
company lor their securities, the in?
formation didn't mean anything tan?
gible to them. Hut under this agree?
ment $28,040,100 of Frisco stock was
exchanged for $84,718,800 of the
holding companies' stocks and bonds,
and the Frisco sbpek was deposited as
collateral for the bonds of the Iowa
company, Then in December, 1900,
this stock was resold to 11. F. Yoakum
Tor $::7.."?o a share, or $10,052,000, m
amount insulin lent to redeem the
Iowa com pain's bonds. The Iowa
company then issued $7,G00,000 of
these bonds" to the RoCk Isla lid Rail*
way company, receiving $7,800,000 in
c sh. which the railway company had
borrowed from the First National !
lank of New York. It was subs
quontly round that the Iowa coin
puny bid no assets to retire these
bonds, and more than $0,000,000 was
taken from the Kock Island treas
iii y for |h0 purpose "
It was over this deal that Mr. Ai l
ster as a <dmk holder, sued the Held
Moore combination as individuals and
recovered more than $8,000,000 for
the stockholders. He insisted, how
lever, that Ihf deal was only one of
la long aeries of ho railed financial op?
eration; Which had resulted in more
titan $80,000,000 loss to the mad, and
ibat Mimllar opcratlonn fire the rub.
not the exception, In the great Mime
of railroad financing.
? It is the chance to renew those
operations," he snld, "which the so
I railroad nianagors are looking
for now. Tiny are not particularly
concerned about the joli of .supplying
freight; and the $75,000 salaries and
Slue,nan bonus* s to presidents and of?
ficials are only an item in the pro?
gramme. It is the job of irresponsi?
ble private financing which they want,
for the railroads, from the very na?
ture of the industry, must he contin?
ually linanced. They cannot he fin?
anced from their earnings. Every
year imperatively calls for greater
and greater extensions to meet grow?
ing demands] for better terminals,
more trackage, more up-to-dale
equipment and more and better roll?
ing stock. The roads then, havo
been oompelled to do business with!
the banks, and no one can object, if
the banks are called upon, to tholr
getting adouv/ite remuneration for
their services. But the tendency of
such a system is inevitably to turn
the railroads over to the money
trust.
' The money trust," he said, "is able
to get away with all this, simply he
cause it is organised, The obvious
remedy is to organize the one section
of the American public which has
never been organized before, the
small investors. The remedy is not
to be found in abolishing Wall street
and its legitimate business in the
buying and selling of securities. The
remedy is not to bo found in the abo?
lition of responsible ownership and
turning our Industries over to the
temler moroles of a political bureauc?
racy. I don't object to public owner?
ship so-called because it is too radi?
cal. I object to it because it isn't
radical enough. It is pseudo-radical?
ism, the lasy substitution of an eco?
nomic phrase for the actual correction
of an economic evil.
"The trouble with the railroads is
not that their stockholders have
been making a legitimate protit
Some of their worst evils have ap?
peared when they were making no
profit at all. The trouble with Wall
street is not that brokers get com
mis-ions for the legitimate ex
(hange of securities. The trouble
with both institutions is that they
have been under Irresponsible private
control."
As th the railroads, Mr. Amster's
plan is B Simple one. He would hare
tive it leral corporations organised
by the government, each corporation
to take over all the existing railway
lines in a given territory?one for
the south, one for the northwest, etc.
All the roads in a given territory
thus merged ifit'o one combination, wo
would do away with most of the
present evils of competition, duplica?
tion of terminals, special routing, etc.
While the government would or
anlse thess systems and they would
be under government control, their
actual ownership would he vested, as
now, In private stockholders. Stock in
each should be sold to the public or
exchanged for present railroad hold?
ings and the ? rvernment should be
the one financier for all.
Dividends In these federal corpo?
rations, Mr. Amster thinks, should he
fixed by law with a maximum and
minimum rate. There should be no
opportunity to gamble for high
.-ti kes, but each investment should
be made secure and some encourage?
ment should be given to the investors
to help make the enterprise succeed.
' And how about the actual direc?
tion of the enterprises?" I aski d.
"That," he said, "should be vested
in the various Interests served. The
primary Interest is unquestionably the
public at large. That is the reason
Tor railroads?to serve the public. The
dominant voice in the directorate
should be the public's. But the stock?
holders should also he represented;
and no scheme of public control would
be complete without giving adequate
representation to the other interests."
"The other interest?"
"Certainly," said Mr. Amster.
"Kailroad labor. Under government
control it is unthinkable that the in?
terests of labor shall be ignored. On
the other hand, it is unthinkable that
these millions of workers shall have
no voice except the strike. Strikes,
in fact, must be made impossible; hut
it would amount almost to slavery to
pass a law to that effect and let it
go at that. If labor la not represent
ed in the actual management of the
property to which it gives its life and
strength, it wouldn't be democracy at
all.
"Labor should not only he repre?
sented in the management, but pro?
vision should be made for the work?
ers acquiring dividend paying stock,
stock whose dividends shall be deter?
mined largely by the faithfulness and
efficiency of the labor performed.
Union labor has one valid objection
to even the most advanced profit
sharing plans today, but this objec?
tion WOUld disappear in stich a sys?
tem of public service. Today the
profit sharing plan may lie used to
keep individual workers from joining
(he unions, ami keep them from
striking against the profiteers who arc
exploiting them. Hut railroad labor
does not think of the striking directly
against the people of the United
Slates.
"Under this system there would he
no profiteers to arouse the envy of
the toilers. The representatives of
the workers would si: with the other
directors, not as pleaders or as an?
tagonists, but as equals whose inter?
ests are known to be one with the
other interests concerned. And in?
stead of striking for higher wages
when a higher Income seemed neces?
sary they would be arranging doubt
mmimamww??n .n iiiiiimi ?.?? m i
less fop an additional dividend Inj
stock stock whoso actual value
would be determined by their ( wn
responsibility and loyalty in future
service."
"Just tell me," Mr. Amsler con?
cluded, "if such a System isn't a rr ore
reasonable form of publie co-opera?
tion than, say. the postofhoe is to?
day. In the POStofllce labor has no
voice at all. The general public is
served, after a fashion, but no great
body of the people care a, hang
whether the enterprise pays or not.
At the worst, the postoflioe system
is a mess. At the best it is Prussian
Ism. The people of America, I am
sure do not want our railroads and
cur essential industries to go that
way.
"And that is just what the financial
pirates are depending upon. They
are trying to make us think that wc
shall have to choose between the old
system and this spurious government
ownership. Of these two evils, I
believe, the American people will
choose neither."
OFFICERS DESTROY STILL.
Benncttsville, Feb. 21.?R. J.
Paterson, Jr., and Deputy Sheriff
Henry Hubbardj Constables J. C.
YVeatherly and United States Deputy
Collector P. J. Coleman seized the
largest still last night that has ever
been taken in Marlboro county. The
officers found a complete still of 110
gallon capacity, with all fixt ires.
Everything was ready for a run.
There was kindling near the furnace
and three barrels of mash prepared
for distillation. They found three
gallons of whiskey and five ga Ions
of low wines, and 100 gallons of beer.
The Officers left Benncttsville early
this morning and after a search along
the creek found signs where two -still?
had been operated and then located
the one ready for work. Fresh foot?
prints were seen, but no one wos to
be found In charge. The still was
located on a small creek on a place
known as the fruit farm, about six?
teen miles northwest of Bennetts
! vi lie.
Expect Scarcity of Flour.
Minneapolis, Minn., Feb. 21.?With
farmers holding their wheat fo * a
hoped for increase in the government
price, Minneapolis millers expert a
scarcity of white flour In the near fu?
ture. Stocks are said to he practi?
cally exhausted, though figures are
not available, and prediction is less
than half of last year.
Last week 2 4 2,704 barrels were
shipped, against 27<?,?)O0 in the corre?
sponding period last year. Production
was but 151.020 barrels, against 311,
4 30 a year ago.
INCREASE INTEREST RATE.
Half Billion in Treasury Certificates to
Be Issued at 1 1-2 Per Cent.
Washington Feb. 21.?Another
$500,000,000 Mock of treasury certi
cates of indebtedness in preparation
for the third liberty loan was offer?
ed for subscription tonight by Sec?
retary IfcAdOO* This will bear in?
terest at the rate of 4 1-2 per cent,
as against the previous high mark of
4 per cent., and will be payable next
May 28. Subscription books will close
March 5 and payments must be made
between February 27 and that date.
The certificates will be in denomi?
nations of $500, $1,000, $5,000, $10.
000 and $100,000, will be sold at par
and accrued interest and will have the
same tax exemptions as previous is?
sues. The treasury may redeem the
entire issues at par and accrued in?
terest on or after any date before
their maturity set for the payment
of the first irstallment of the sub?
scription prif i of the next liberty
loan.
The right j reserved as usual to
reject any subscription, to allot less
than the amount of certificates ap?
plied for and ;.o close the subscriptions
[at any time v ithout notice
1 About $2,1h)0,000,00 in certificates
' remain to be issued at the higher rate
I of 4 1-2 per cent, before the. third
j loan campaign, probably In April.
War and the Farmer.
The Germans have built monster
submarines with a scope of operation
as broad as the Atlantic; the Belgians
have invented a powder that makes
dynamite seem like a joss stick; the
French have -nounted a 52-centimeter
gun that hurls a ton and a half of
explosive twenty miles; the British
have constructed that terrible land
battleship, the "tank."
But American farmers have done
their share to render these things
possible. They have vied with mu?
nition makers?they have made the
United States a stockyard and a
granary for Europe. They have fur?
nished cotton and wool for uniforms,
leather for harness and saddlery,
horse and mule power for artillery,
beef and grain for the commissary.
They have achieved scientific farming
triumphs parallel to the creating of
great guns and stable aeroplanes and
war machinery. And more people
are becoming farmers or studying ag?
riculture, or reading farm literature
than ever before?well aware th
the farmer represents one of the
gest forces in American lifS tot
Dr. J. M. Fleming and wife hav
arrived in the city to make this their
home. Dr. Fleming will be found
in the future at Hearon's Pharmacy.
a Patriotic
er!
You will make every acre produce its ut?
most in food crops, cotton and tobacco, all
greatly needed by our country- You will
best serve your country and yourself by
fertilizing each acre liberally with
J
0 STEER
RAND 1 LI1
" IT PA YS TO USE THEM"
TIMERS
There is a national car and labor shortage. Delay is dangerous.
'AY
r
ft PAYS JO V5EWM
Manufactured by
SWIFT & CO. FERTILIZER WORKS
ATLANTA, OA. CHARLOTTE, N. C.
Factories: Atlanta, Albany, LaGrange, MouStiie, Savannah, G u
WILMINGTON and GREENSBORO, N. C.f
CHESTER and COLUMBIA, S. C.
ASK YOUR DEALER
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V