Omaha daily bee., 1908-07-29


feet legal restraints Of trade and monop-
olies. and legislation either inducing or
compelling them to subject themselves TO
seslstry snE op Ptotpp r. BeDartment of com.
merce and Labor.
Construction Work Naturalization.
The field covered by the Industrial com
binations and by the railroads is so very
extensive that the interests Of the public
and the interests of the business concerned
cannot be properly subserved except by
recognition Of bureaus in the Department
of Commerce and Labor, OF Agriculture,
and the Department OF Justice, and a
change in the jurisdiction Of the Interstate
Commerce commission. It does not assist
matters TO prescribe new duties for the In
~terstate Commerce commission which 1t is
practically impossible for 1t TO perform, or
to denounce new offenses with drastic pun
ishment, unless subordinate and ancillary
legislation shall be passed making possible
the quick enforcement In the great variety
Of cases which are constantly arising OF
the principles laid down by Mr.. Roosevelt
and with respect TO which only typical in
stances OF prosecution Will the present
machinery are possible. Such Legislation
should and would greatly promote legiti-
mate business by enabling those anxious TO
obey the federal statutes to know Just what
are the boupnds of their lawful action. The
practical constructive and difficult work,
therefore, OF those who follow Mr.. Roose-
welt IL t6 devise the ways and means by
which the high level OF business integrity
and obedience to law which ne has estab-
lished may be maintained and departures
from II restrained without undue Interior
ence with legitimate business.
Railway Traffic Agreement.
It Is agreeable to note in this regard that
the republican platform expressly ana the
amendment to the Interstate
law, by which Interstate railroads may
make useful traffic Agreements II approved
by the commission. This has been strongly
m by President Roosevelt and
VIII make for the benefit of the business.
Physical Valuation of Railroads.
Some of the suggestions of the democratic
platform relate really to this subordinate
and acillary machinery to which l have
referred. Take for instance the so-called
physical valuation of railways. IL Is
clear that the sum OF all rates or receipts
of a railway. less proper expenses, should
be limited to a fair profit upon the reason
able value of its property, and that II the
sum exceeds this measure, II ought TO be
reduced. The difficulty in enforcing the
principle is in ascertalnlng what is the rea-
sonable value Of the company.s property,
and in fixing what is a fair profit. 1t Is
clear that the physical value of a railroad
and It's plant Is an element to be given
wenght in determining its full value; but
as President Roosevelt in his Indianapolis
speech and the supreme court have in eff
feet pointed out. the value OF the railroad
as n going concern, including Its good will.
due to efficiency of service and many other
circumstances, may be much greater than
the value OF it's tangible property. and 1t is
the former that measures the investment
on which a fair profit must be allowed.
Then, too, the question what is a fair profit
is one involving not only the rate Of in
terest usually earned on normally safe in
tine but also a sufficient
10 make up for the risk of loss both OF
capital and interest In the original outlay.
These considerations will have Justified the
company In Imposing charges high enough
TO secure a fair income on the enterprise
asa lwhsle. The fecuritieE at market prices
will have passed into the hands of sub
sequent purchasers from the original In
%vestors, Such circumstances should properly
aFfn,N tha AarfatnR ~ thu tribunal aNRD Rnd
in determining whether the totally of rates
charged is reasonable or excessive. To ig-
more them might so seriously and untustly
impair settled values as to destroy all hope
Of restoring confidence and forever to end
the inducement for Investment in new rail-
road construction which, in returning pros
porous, times. Is sure 10 he essential to our
material progress. As Mr.. Roosevelt has
said in speaking Of this very subject:
The effect OF such valuation and super
vision Of SECURITIES can not he retroactive.
Existing securities should be tested by laws
in existence at the time Of their issue. This
nation would no more iniure securities
which have become an important part Of
the national wealth that II would consider
"a proposition to repudiate the national
The question Of rates and the treatment
of railways Is one that has two sides. The
shippers are certainly entitled TO reason
able rates. but less Is an injustice to. the
carriers. Good business for the railroads
Is essential to general prosperity. Injustice
to them Is not alone injustice to stock
holders and capitalists, whose further in
vestments may he necessary for the good
~ the whole country, but II directly at
fects and reduces the wages OF railway
employees ana indeed may deprive them OF
their places entirely.
From what has been said the proper CON
clusion would seem 10 be that IN attempt
ing to determine whether the entire SEIZED
ule ~ rates OF a railway Is excessive the
physical valuation Of the road is a rele-
want and important but not necessarily a
controlling factor.
VIII Not Impair Securities.
am confident that the fixing of rates
on the principles suggested above would
not materially Impair the present market
values OF railroad securities in most cases,
for l believe that the normal increase in
the value Of railroad properties. especially
IN their terminals, VIII more than make up
for the possible oYercapitallzatton in earlier
years. In some cases. doubtless, Il will be
found that overcapitalizatioh is made an
excuse for excessive rates, and then they
should be reduced; but the consensus of
opinion seems to be that the railroad rates
generally in the country, are reasonably
low. This is why, doubtless, the complaints
filed with the Interstate Commerce com
mission against excessive rates are so few
as compared with those against unlawful
discrimination in rates between shippers
and between places. OF course, In the de-
termination OF the question whether dis
elimination is unlawful or not the physi-
cal valuation OF the whole road is OF
/ have discussed this with some degree
OF detail merely 10 point out that the val
uation OF tho Interstate Commerce commits
sion Of the tangible property OF a railroad
is proper and may from time to time be
necessary in settling certain issues which
may come before II, and that no evil or
injustice can come from valuation in such
cases N Il be understood that the result
is To be used for a just purpose and the
right TO a fair profit under all the cir
icumstances OF the Investment Is recognized
The Interstate commission has
now the power to ascertain the value OF
THE physical railroad property II neces-
sary IN determining the reasonapleness OF
rates. II. the machinery for doing so is
not adequate, as is probable, It should be
The republicah platform leg
islation forhidding' the issue In the future
of Interstate railway stocks and bonds
without federal authority. II may occur
IN such cases that the full value OF the
railway. and, as an element thereof, the
value OF the tangible property OF the
railway, would be a relevant and important
factor in assisting the proper authority
10 determine whether the stocks and bonds
TO be issued were 10 have proper security
behind them. and In such case, therefore
there should be the right and machinery
ID make a valuation Of the physical prop
ertv.
National Control of Corporations.
Another suggestion In respect TO suboT,
dinate and ancillary machinery necessary
TO carry out republican policies is that OF
the Incorporation under national law or IN,