The Saint Paul globe., 1897-10-22

ations in gross receipts to very large
amounts from season to season. A
light crop or a bad year, winter OF
tremendous snow storms, a series OF
costly washouts, general strike
among employees or any of several
other causes may, for any given twelve
months of operation, turn a profit into
a loss, and wipe out the greater part
Of per cent dividend. There are
probably very few railroads, in this
country that would not be glad to take
the bond of a Rothschild for per
cent profit and let the guarantor take
the chances. 1t does not seem as if the
court il deciding on rate, had taken
the risi4s and uncertainties into consld-
Grafton.
The distinction between earnings on
terminal properties and those on the
remaining mileage of the lines is very
strange one. It is held that, whereas
an income of per cent on the cost OF
reproducing the remainder of a sys-
tenn would not be unreasonable, an in
come of 21b per cent on the cost OF re-
producing the terminals would be sutf1-
cient. This is supported by the sup
position that terminal property, being
located in or about large cities, is like
ly to increase more rapidly in value,
and that the company gets the beneht
of this increase, so that it profits
doubIy Recent experience is far from
bearing out this theory. Every one
knows that real estate in the vicinity
of terminal properties has deprecated
enormously of late years. If, as the
court holds, it is not the original cost
of building a railroad line upon which
income must be earned, but the cost OF
reproducing it today, then the same
doctrine must apply to terminal prop
critics; and this wipes out altogether
the theory of profit from enhanced val
uation 1t Is a poor rule that does not
work both ways If road that could
be built more cheaply must fix rates on
the lower basis of modern cost, then
SOS'-N~
not be obtained as cheaply, but for
which a greater sum would have to be
paid if reproduced, it must also be enti-
tied to earn rates based upon present
cost.
These few points, the most striking
ones in the decision, show how compli-
Gated and delicate is the central ques-
ton involved 1t is not at all settled
in this decision-it is hardly sfmplified,
we may say-but only set anew before
the public with fresh interest and i'm
portance The great point that
a reasonable rate must be a living
rate, one that will give fair average
return en- the value of the plant, is
finally established. Eul the many
issues involved will not only
have to be tried again in the
lower court, but will have to be
carried to the supreme court of the
United States before final adjudication
is had Not even the original Granger
cases, in which the power of the state
over railroad properties was asserted
and the right to regulate rates was laid
down, excel in Importance the cases
now under way, in whose determine
ton it will be necessary to establish
some rule by which the reasonable
ness of a given rate may be determined
1t is altogether probable that, before
the case upon which our court has rem
dered its first opinion comes up, the
Nebraska and other cases may have
reached the supreme court Of the
United States and a doctrine be enun-
ciated and laid down.