The Case for a Special Railroad Reorganization Court

Abstract

As this article is being written, it seems probable that no legislation be enacted at this session of Congress with respect to the largest of America's ailing corporation-type industries-the railroads. In that event, the particular bills before the present Congress,' and the reasons for their failure, are less important than the unanswered question of what, in a democratic government such as ours, can and should be done to help the railroads. A well-maintained and economically sound transportation system is essential not only for our economic and social well-being but also for purposes of national defense. Although railroad earnings started to improve even before the outbreak of the European War, it is delusive to suppose that the improvement which has occurred will in itself 'solve the transportation problem' or render constructive attempts to deal with it unnecessary.2 The troubles of the railroads would appear due to a variety of causes3-among others: loss of traffic to trucks, airplanes and waterways, the slowness of the managements to appreciate that they no longer have a monopoly of transportation and to adjust their service and rates accordingly, incredibly complex capital structures which interfere with the obtaining of credit for the modernization of their equipment and facilities for effective competition, the weakening of some of the stronger systems by ill-advised purchases of stock of other railroads in the boom days, higher taxes and costs of operation, loss of export markets, the decentralization of big business which has progressed with increasing momentum during the last decade, and the fundamental fact that with a nation-wide system of highways