Herbert Hoover photo

The President's News Conference

January 02, 1931

GEORGE E. AKERSON

THE PRESIDENT. The only news item I have at the moment is that Mr. Akerson is leaving the White House service. Someone has offered him two or nearly three times the pay the Government can afford, and he has responsibilities to his family that I cannot deny. I do greatly regret to lose an old friend out of my personal service.

RAILROADS

I would like to talk to you for a moment about the railway situation-but not for publication or for any use. It will be disclosed as I go on. It might be interpreted as being rather pessimistic in a time of sensitive public mind, but I would like for you to know something about the background that lies behind this whole position, largely for your own instruction--wholly for your own instruction--so that you may know what sort of a problem we are confronted with.

The situation of the railways--not in the immediate sense of the depression, because we will come out of that in due time, but in the longer sense--is one of the, if not the greatest, economic problems that we have confronting us. The competition of the buses and the trucks, the automobiles, of the waterways, and especially of the pipelines and of electric power, have--all of them--contributed to steadily undermine the railway traffics. Probably the most menacing one of those is the pipelines. We are now engaged in building gas pipelines from Texas and Oklahoma into Chicago and Minneapolis and Washington, D.C., and the net result is a constant diminution of coal traffics, which particularly affects cooperating roads. The electrical power gets the coal traffics. The gasoline pipes that are now being laid throughout the Midwest in particular are taking a tremendous area of traffic away from the railroads. So that we have to look forward to a period of either reorganization or of continued distress in what amounts to our largest single industry, and the one on which probably public recovery depends more than any other one industry.

The lines open to the railways to meet the situation lie either in reducing their operating expenses through the elimination of duplications and the building up of sounder methods of transportation through electrification, through more economical operating terminals and other devices which require very large expenditures, or alternatively, wage reductions. If they are to get back the traffics which they have been losing, they must get them back by being able to meet that competition. It means lower rates, and lower rates cannot be made except by broad economies in methods, or alternatively, by wage reductions. If they do not get their traffic back they cannot reemploy their men, and the stress of those pressures which have become particularly acute in the last few years, more especially in the last year by the extension of pipelines, give no little anxiety for the recovery of that industry. When you come to the practical results of recovery, the difficulties of recovery will not lie in the rich and strong roads so much as in the weak sisters around about.

So that I am greatly impressed with the fact, and I know that every other thinking person, who has given the matter long study, is anxious that we do not enter into a period here of railroad distress that will prolong our whole national depression. A good deal of our Government business is built not only on the operation of the railroads but upon the expenditure of $1,500 million of improvements and betterments. And with these forces working against the traffics, the financial consideration becomes more difficult all the time, and the consolidation--the unification--of the roads tends to build up their financial stability and their ability to secure resources with which to carry out the fundamental engineering improvements that they must make if they are to meet the situation. More especially, in the eastern territory here, there was domination of railways which are impregnable in their situation by virtue of their connections between the large centers of production and distribution, but other groups have not the entry into these points which gives them anything like equality nor stability of competition. So that a group of railroads in such a fashion as to give each one of four groups the connection between each one of the producing and distributing centers would bring about a stronger competition and better fundamental public service.

Now the details of the plan that has been evolved will probably be subject to criticism. Probably five or six thousand miles of weak railroads involved in the plan, which none of the stronger railways want to take, and those which have taken them may be subjected to criticism from one point of view or another. In any event, I have no doubt that when the details of the plan are known they will be subject to criticism, as any plan will be. The plan follows the five-system plan of the Interstate Commerce Commission except upon the division of weak roads among the strong roads. The difficulty with the plan was the fact that the five-system was an aggregation of the weak roads, and they have to be distributed around amongst some of the stronger brothers.

So far as this office is concerned, I have taken no part in the formulation of the details of the plan. I could not tell you at this minute the details. It is a matter the railways have to work out for themselves with the Interstate Commerce Commission, who has the full obligation and the courage and independence to take care of it and make any such readjustments in it as they think necessary, or deny it altogether, or do what they like with it. But in any event, the purpose is not only to give a little more courage to the American people but a little more confidence. The purpose at this time is that this country is not as yet entirely devoid of enterprise and ability to reconstitute itself for larger exertions, and also that the whole Nation looks forward for a term of years ahead. It is no new notion, as you know. It is no invention of mine. Congress itself had laid down the lines 10 years ago on which it was then thought and is still thought, I think, by most people is the necessary and ultimate development.

And that is all that I have today.

GEORGE E. AKERSON

Q. Will you permit us to go back for a minute to our friend Akerson, and ask whether you care to make any announcement as to his successor ?

THE PRESIDENT. I haven't anybody in mind whatever. I have got to look around and find somebody.

Q. Mr. President, when is it to take effect ?

THE PRESIDENT. There is no special date. Sometime in the middle of the month, whenever I can find a successor, and he can be spared.

Note: President Hoover's one hundred and sixty-fifth news conference was held in the White House at 4 p.m. on Friday, January 2, 1931.

On the same day, the White House issued a text of the President's statement about the resignation of George E. Akerson as Secretary to the President (see Item 2 ).

For the consolidation plan involving the eastern railroads, see 1930 volume, Items 428 and 429.

Herbert Hoover, The President's News Conference Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/211784

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