Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-07-11
EFFECT ON THE RATES
INFLUENCE OF GOVERN
HENT REGULATION.
It is Claimed That It Tends to Prevent
the Lowering Of Freight Charges
by Railways.


comb before the Senate committee on inter-
state commerce on the last day OF the re-
cent hearings Senator Foraker asked Mr..
Newcomb to prepare for the committee
statement showing the effect on the decline
In rates OF governmental Interference with
the fixing of rates in other countries. This
statement has just been completed by Mr..
Newcomb and sent to the committee
II Is impossible. he says. to state accu-
rately the extent to which governmental
regulation in other countries has tended to
make railway charges stationary and to
prevent the declines that might be expect
ed to follow from the Improvement of ia
,,ilities and the increase in traffic, but the
facts presented by Mr.. Newcomb seem to
indicate that 1t has had an important in
fiuence In that direction.
In discussing conditions in England be-
fore and after the going into effect of the
railway and canal act of 1894, Mr. New
comb points out that in the ten years pre-
ceding this legislation the average freight
rate per ton decreased AS per cent. while
in the ten years following this legislation
the decrease was only % per cent.
This, contrast is made the more striking
by comparison with the record of the
United States for the same periods. In the
first decade rates in the United States de-
creased 21.3 per cent. as compared with
the English decrease of 14.5 per cent, and
in the second decade the decrease in this
country was 1872 per cent, as compared
with the English decrease of but % per
cent.
Alleged Effect of Regulation.
I In support of the theory that this marked
falling of in the rate Of decrease in Eng
land was due to the interference of the
government In the business of rate making.
Mr.. Newcomb quotes the following from
Mr.. w. NJ. Acworth. the leading English
vx,rgta railroad nuaStiopS
THE legislation of the years from 1881 to
1894 has done much to prevent any natural
and gradual lowering of rates. A railway
company Is still free to lower. 1t has
desire to lower q rate. hoping thereby not
only to benefit trade. but also, by iLcreas-
Ing largely the volume Of traffic, to Increase
his own net earnings. But 1t Is only
hope In the nature of the case certainly
Is not attainable In advance. A prudent
manager, therefore. will not unless his
hope is closely allied to certainty. lower a
rate when he must face law suit before
he can raise 1t again. Still less will a COLI
ference of managers-and most important
rates affect many companies-allow one OF
their number. more sangune or. 1t may BE-
more ar-sghted than the rest, TO go aneao
and make experiments. -
Mr. Newcomb, after discussing condi-
lions in each important European country
closes his statement as follows:
View Of Government Control.
I'm tracing briefly government control
and ownership in the leading countries OF
Europe certain conclusions seem unavoid-
able:
"First-Stringent control as In the united
kingdom and France, tends to prevent re-
duction of rates. Without the ability TO
raise rates to their former level, expert
meuts in lowering rates in order to build
I'D traffic are not likely to be Freely maue.
"Second--A comparison of freight rates
on the railroads of Europe operated or con-
trolled by the state with those IN force IN
the United States shows that the latter
have enjoyed not only much lower levei
of rates, but a much more rapid decnne
Low rates on the continent, as In the case
of Russia, were accompanied by raploiy
diminished net earnings per mile and an
absence of profits.
sThird-The higher charges on European
railways have not. however, resulted In
profits Where private management pre-
walls decreases IN rates go hand In manu-
with greater financial success on the part
of the railroad but under state control
frequently reduces rates, thus benehting IN
diyidual interests at the expense of the
general body of taxpayers.
"Fourth-Private ownership and opera
ton without excessive legislative restric-
lions appear to be necessary In order to
obtain the utmost economy in railway man
agement This conclusion Is supported by
the results of the exhaustive investigation
and is admitted by the great majority OF
students of railway policy.
Political Considerations.
''Fifth-The greatest danger. perhaps.
from state participation in rate-making Is
the substitution of political for economic
considerations in the determination OF
charges Low freight charges on interna-
tional traffic under all forms of manage
ment are frequently guaranteed by compe-
tition between rival routes. But when the
national desire to foster export trade Is
added the incentive to increase shipments
abroad becomes too strong and frequently
results in the establishment of unremu-
nerative rates that constitute a burden on
internal traffic. Under general state own
ership competition as a means of determin-
ing rates is abrogated. With the with
drawal of competition force in deter
mining rates. political pressure on the part
of certain classes becomes too strong an
influence In Germany this danger is es-
pecially conspicuous.
High rates. without general favorable
financial results; more costly management;
the delegation of rate control to persons
more amenable to political influence than
to business necessity-these the most