age, was in bankruptcy, and 40 per cent of the stock was not paying dividends. In only one year between 1910 and 1916 was the operating income of the railroads sufficient to pay the dividends on their stock and the interest on their debt; and the average operating income for all these years was less than 5.36 per cent, which the Interstate Commerce Commission held to be necessary in the public interest.

It is evident, therefore, that the railroads have not and cannot meet the vital transportation needs of the country. One of my colleagues will elaborate this argument further, and show that this failure is due to the fact that the railroads are under a system of private ownership and government regulation.

Our case for the Affirmative rests on three points: that private ownership of railroads with government regulation has failed; that the only alternative is government ownership; and that government ownership and operation will meet the vital transportation needs of the country. The Affirmative believes if it proves these points, then it has established its contention that, within twenty-one months after the declaration of peace, Congress shall provide by legislation for permanent government ownership and operation of the railroads in the United States.

Second Affirmative

My colleague has stated for you the grounds on which the Affirmative bases its case, that within twenty-one months after the declaration of peace Congress should provide by legislation for permanent government ownership and operation of the rail- · roads of the United States. He has pointed out to you the three main issues on which this debate hinges. They are:

First: That private ownership of railroads with government regulation has proved a failure.

Second: That government ownership and operation is the only alternative for the country in controlling the railroads.

Third: That government ownership and operation will meet the vital transportation needs of the country. In my colleague's limited time, I think he has proved to you conclusively that private ownership of the railroads with government regulation has proved a failure; for he has shown that under private ownership with government regulation the railroads have failed to meet the vital transportation needs of the country, inasmuch as the railroads have failed repeatedly to meet abnormal demands on traffic; they have failed to maintain proper repair facilities and have allowed their rolling stock to deteriorate; and they have failed repeatedly also to prevent labor troubles from threatening a complete suspension of traffic. He has also shown that private ownership of railroads with government regulation has proved a failure; because under private ownership with government regulation, the railroads cannot meet the vital transportation needs of the country; for they are threatened with complete financial collapse.

We feel sure, ladies and gentlemen, that you must agree with us that private ownership of the railroads with government regulation has proved a failure, in view of the facts that the railroads have not and cannot meet the vital transportation needs of the country.

Now it becomes my privilege to prove for you that the failure of the railroads to meet vital transportation needs of the country is due directly to the fact that the railroads are under a system of private ownership and government regulation. I shall do this by showing you that this system of dual control has brought conflicting aims into the management of the railroads ; and that these conflicting aims have destroyed private initiative, prevented effective coöperation, eliminated responsibility, and substituted dilatory judicial processes for prompt executive action. From these immediate effects of dual control, we need advance but one step further to see the ultimate effects in a failure to meet demands of traffic, a failure to cope with the demands of labor, and a failure to keep the railroads on a sound financial basis.

First, then, let me point out to you the conflicting aims of private ownership and government regulation. Under this dual system of control, the government seeks persistently to obtain maximum service and minimum rates, and the private owners seek persistently to give minimum service for maximum

rates.

What has been the result of this conflict? The government has had the upper hand; for it can fix standards for service and also determine rates. Since the aim of the government, how- ́ ever, is exactly opposite to that of the private owners, the government has made, and will make, its demands for service exorbitantly high, and it has made, and will make, rates extortionately low. These have been the conditions under which private owners have operated the railroads, and whenever the government has consented to readjust them, its consent has been delayed so long by the judicial process of investigation through commissions, that the roads, in the interval, have experienced serious financial embarrassment. The result of all this has been that many roads have been driven into bankruptcy, while others cannot earn an adequate return on the capital invested, and the public has suffered and will suffer in deteriorated service.

The conflict of aims in the unequal partnership between the government and the private owners has worked in other ways, also, to deteriorate the railroad service of the country. It has destroyed all responsibility in the running of the railroads; for with government regulation hampering every move of the private owners, they cannot accept responsibility; and the government, on its part, will not accept responsibility. The hard conditions, then, imposed by the government, and the helpless, irresponsible position of the private owners have destroyed private initiative and therefore deteriorated service. This, however, is not all. The irresponsibility of the government, coupled with its unlimited power of interference, has led to labor unrest, has threatened the suspension of traffic, has raised labor costs without increasing rates, and has thereby deteriorated service. Government regulation in combination with private ownership

has operated in all these ways to deteriorate railroad service, and yet there is one more way in which it has prevented the roads from meeting vital demands of transportation. Under private ownership, initiative in railroad service can be secured only through enforced competition between parallel lines. The government has, therefore, prevented combinations between competing roads; but, in so doing, it has lost all the advantages of a unified system in a natural monopoly.

I believe, then, that I have proved for you that the combination of private ownership and government regulation is responsible for the condition of our railroads. It is responsible for the fact that railroads cannot meet abnormal demands of traffic; it is responsible for the fact that railroads cannot cope with the demands of labor; and it is responsible for the fact that railroads cannot avoid complete financial ruin.

Now let us take a general survey of our case. We have proved that private ownership of railroads with government regulation has been a failure. Next we shall prove that government ownership of the railroads is the only alternative that the country has for the solution of the railroad problem; for private ownership with regulation has failed; and all, or any, modifications of government regulation must fail.

The desperate strait in which the private owners find themselves is made manifest in no better way than by the number of plans they have advanced to retain the roads in their hands. No less than thirty-nine different plans have been advanced, and they vary in their recommendations all the way from a government guarantee of interest on investments to control by the railroad brotherhoods of laborers.

We trust that the Negative will not attempt to uphold any of these plans; for we know that they must realize, as well as we, that no one of them will remove the fundamental defects of all forms of government regulation. There is no one of these plans that will overcome the conflict in aims between the private owners and the government; there is no one of these plans that will restore private initiative; there is no one of these plans that

will secure complete coöperation among the railroads; there is no one of these plans that will fix ultimate responsibility for running the railroads; and there is no one of these plans that will secure prompt executive action in the place of dilatory judicial procedure through investigating commissions. If the Negative has the hardihood to present one of these plans, we wish to know specifically what changes they are going to make in present methods for securing an adequate return on money invested. We wish to know specifically how they are going to restore private initiative. And we wish to know how they are going to make the government accept responsibility for its regulative acts.

The Negative, ladies and gentlemen, cannot present a plan for regulating the railroads that will solve these problems, and therefore they must agree with us that government ownership is the only alternative for the country in controlling the railroads.

Let us briefly now take one more rapid survey of the Affirmative case. We have proved that private ownership of the railroads with government regulation has failed and that government ownership is the only alternative. Our next speaker will prove that government ownership will meet the vital transportation needs of the country. By establishing these three issues we believe that we have proved that within twenty-one months after the declaration of peace Congress should provide by legislation for permanent government ownership and operation of railroads in the United States.

Third Affirmative

The fact is that the railroads under private ownership with government regulation have failed to give efficient and uninterrupted service to the public. Excuses can be made but the facts cannot be denied. It may be contended with questionable accuracy that government ownership in foreign countries has not been an unqualified success. This, however, is no reason