The Montgomery advertiser., 1905-07-10
REPORT OF NEWCOMB
GOVERNMENT RAILWAY REGULA-
 TON IN FOREIGN COUNTRIES.
Some lntereatlnR Facts shown in find. tngn-AOst Exhaustive Investt. gation was hy Italy's Con-
 mission m Year 1873.

gatfon was hy Italy's COm- mission In Year 1878. | Washington. July 9.-At the request or Senator Foraker of the Senate Con- mittee on Interstate Commerce. MT. II: T. Newcomb. lawyer, economist ana statistician of this city, who appeared as witness before the Committee du- ring It's recent hearings has embodied into report the results of his inves- tigation Of government regulation or railways in foreign countries. This report. which goes to the Committee today, will take the form of an ap- pendix to the volumes of the hearings before the Committee. Mir. Newcomb has made careful investigation into railway conditions in both the United kingdom and other foreign countries. so that his report will be of especial value.
 The most exahustive investigation of railways and railway conditions ever made was that of the Italian Commis- sion appointed in 1878 for the purpose Of framing a report to aid the govern mont In determining a plan for the control of the Italian railways. The work extended over nearly three years. and the report. in seven vol mental regulation, ownership. and op- eration of railways. The remarkably varied relations between the state and the railroads that have prevailed in Italy," says Mir. Newcomb in his re- port, give especial weight to its con- clusions. which are summarized by President Hadley of Yale as follows
 The state is more apt to tax indus try than to foster 1t: and when 1t at- tempts to tax industry 1t is even less responsible than a private company. Second. state management Is more costly than private management, and great deal of capital Is thus wasted. Third. political considerations are brought into a system of state man. agement in a way which Is disastrous to legitimate business and demoraliz. ing to politics"
 In dealing with the question of rail- way regulation in the United Kingdom MT. Newcomb's investigations lead him to the conclusion that maximum rates have never been of any practical importance, and that it is difficult to say how far the English system has succeeded in avoiding discriminations. Reduced rates on large shipments are permitted, and while nominally open to all if the specified conditions are full filled, they afford opportunities to very large shippers in competition with smaller shippers"
 In answering the question whether the legislation in force in England since 1893 has led to reduced rates, MT. Newcomb quotes MT. w. M Ac- worth. the leading English writer and lecturer on railway problems. as fol- lows:
 The legislation of the years from 1891 to 1894 has done much to prevent any natural and gradual lowering of the rates. A railway company is still free to lower. It has ceased to be free to raise. manager may desire to lower rate. hoping thereby not only to benefit trade but also, by increasing largely the volume of traffic, to in- crease his own net earnings. But it is only a hope. A prudent manager. therefore. will not. unless his hope is closely allied to certainty. lower a rato when he must face a lawsuit before he can put 1t back again."
 The truth of this conclusion" says MT. Newcomb. Ifs clearly shown by official statistics. In the ten years the United Kingdom the average freight rates per ton decreased 14 1-2 per cent. In the decade following the decrease was less than 2 1-2 per cent"
 After dealing with each country in turn. the report embodies the conclu- sions to be drawn from the existing conditions.
 Tn tracing briefly government con- trol and ownership in the leading countries of Europe certain conclu- sions seem unavoidable" says MT, Newcomb.
 "First-Stringent control. as in tho United Kingdom and France. tends to prevent reduction of rates. Without the ability to raise rates to their form CT level. experiments in lowering rates in order to build up traffic are not likely to be freely made
 Second-A comparison of freight rates on the railroads of Europe oper- ated or controlled by the state, with those In force in the United States. shows that the latter have enjoyed not only much lower level of rates but a much more rapid decline. Low rates on the continent. as in the case of Russia. were accompanied by rapidly diminished net earnings per mile and an absence of profits.
 Third-The higher charges on Flu ropean railways have not, however, re- suited In profits. Where private man. agement prevails decreases in rates go hand in hand with greater financial success on the part of the railroad but under state control political rather than economic necessity frequently re- duces rates. thus benefiting individual interests at the expense of the gen. eral body of taxpayers. '
 "Fourth,-Private ownership and op- eration without excessive legislative restrictions appear to be necessary in order to obtain the utmost economy in railway management. This conclu- sion Is supported by the results of the exhaustive investigation made by the Italian Railway Commission, and is admitted by the great majority of students of railway policy.
 "Fifth-The greatest danger, per- haps, from state participation In rate making is the substitution of political for economic considerations in the de- termination of charges. Low freight charges on international traffic under all forms of management are fre- Quently guaranteed by competition be- tween rival routes. But when the national desire to foster export trade Is added the incentive to increase ship ments abroad becomes too strong and frequently results In the establish ment of unremunerative rates that constitute a burden on internal traf- hc. Under general state ownership competition as means Of determin- ing rates is abrogated With the withdrawal of competition as force in determining rates, political pressure on the part of certain classes becomes too strong an influence. In Germany this danger Is especially conspicuous.
 High rates, without general favor able financial results; more costly management: the delegation of rate control to persons more amenable to political influence than to business ne- cessity-these are the most conspicu- ous results of European governmental