There are two general arguments for government ownership of Railroads, one, that they have been run badly in the past, and two, that the Post Office is an excellent example of the efficiency with which the Government can run a large business if it applies itself. Both arguments are ridiculous.
There is no question that Railroads, or some of them, or most of them, have been badly run in the past. There has been a tremendous amount of financial legerdemain. Their stock has been watered. The managers have been known to have deliberately debased the value of the stock in their companies, in order to make speculative profits on the market. It is even reasonable to say that this mismanagement has resulted in the present financial condition of Railroads, in that they are still paying interest on capital which was filched from them, in one way or another, by the bankers and managers of the past. All this may be true.
But all these same things have happened in private business of all types. Some would advise government ownership of all private business for this reason. That is the conclusion to which all those who argue for Government Ownership of Railroads must logically be driven. But Germany has been carrying on her industries with great success since 1884, under a rigid governmental control. This control has been emulated in the Securities Bills recently passed through Congress here. At least we can give them a chance to be tested in practice.
As for the Post Office, if this be an example of the best the Government can do in the conduct of business, it is a great argument against, not for, Government Ownership. Witness patronage continued through all the jobs throughout the system. Witness the recent fiasco of a "balanced budget" in the Post Office department, this after the postal rates in first class mail had been raised fifty per cent. Witness the scandals about air-mail contracts. Witness the franking privilege to Congressmen. It is enough to imagine James A. Farley, or his counterpart, running the Pennsylvania Railroad, to vitiate the boast that the Government is yet capable of running a large business.
The answer is not government ownership. The answer is government control. It has worked in Germany for fifty years. The first step should be a complete reorganization of the financial structure of Railroads. Perhaps we could all get our mail sent across the country for two cents if the Post Office were privately owned. Certainly this would be more sensible than Government Ownership of Railroads.