The citizen. (Honesdale, Pa.) 1908-1914, 1911-03-03

An immediate fall in the prices of
railway securities was the natural
effect of the decision of the Inter-
state Commerce Commission for
bidding an increase of freight rates
| The railways have contended that
such increase was necessary to meet
the increased cost of operation and
to enable them to earn a reasonable
! return upon their capital invest
ment. The inference is that if they
were right in this, the denial creates
doubt of their financial stability;
if they were wrong, the sound judg-
ment of their administration is call
ed in question. Either way, the in
! vestor hesitates, to see what is to
come of this new situation.
The very great Importance of the
ruling is plain. In some respects
the changes in governmental regu-
lation which it puts into effect are
fundamental. Yet it is very GER
tain that the railways are not going
to stop and that the Interstate Com
merce Commission has no hostile
purpose toward them. The business
of the country must go on and the
railways must meet the require
ments of transportation, whether
protitably or otherwise. Since they
have made shift to carry on their
business hitherto with the existing
rates, it may be assumed that they
will continue to do so. Only they
are evidently facing a period of ex-
acting economies in which the high
est prizes will go to the most eff
cient management.
In the present case, the whole rate
schedule of all the lines in each of
the great divisions was necessarily
treated in it's entirety. The bur-
den of proof was put upon the rail-
ways as a whole to show the neces-
sity of the proposed increase, and the
new schedules are condemned as a
whole. 1t is ordered that they be
withdrawn, as a whole, though the
Commission distinctly indicates the
need of specific amendment in the
present schedules. 1t indicates
farther that if experience shall act
ually show the inadequacy of the ex-
listing rates-which is now said to
be unproved-an application for ad-
justment will be entertained.
This assumes that the railways
will acquiesce in the present order.
1t is subject, of course, to an ap-
peal to the Commerce Court and
thence to the Supreme Court, and
since this is the first action taken
under the supplementary legislation
of last year, it is probable that
judicial ruling will be sought upon
the Interstate Commerce Commits
Sion's own Interpretation of the
powers conferred on it by law. Be-
fore the act of 1910, the Commits
sion was authorized, in effect, to
correct rates which were shown to
be unreasonable; now it must be
satisfied of their reasonableness be-
fore they are put in operation. This
leads logically to consideration
not alone of the relation of the rail-
ways with the shippers, but of the
whole operation of the railways
themselves and their relations with.
their security holders. Thus the
two opinions accompanying the pres
ent order embody a wider range of
economic theory than can be re-
garded as yet definitely established
as legal principle.
1t is none the less apparent that
the whole present trend of railway
management, Irrespective of statu-
tory regulation, is toward the cheap
ening of service by increased eff
cheney and that those systems that
have gone ahead most courageously
to meet the increasing demands upon
them, keeping always on a solvent
basis, are those least likely to be
harassed by restraints upon their
earnings. There will be, no doubt,
a temporary halt upon extensions,
Some orders must be curtailed and
no further increase of wages need
be looked for. The immediate eff
feet of a decision so unexampled
could not be otherwise than de-
pressing. But the business of the
country will accommodate itself to
these conditions, as it always does,
and public policy is usually ad-
justed in the long run to reason and
justice.-[Public Ledger, Philadel-
phia.]