Imperial Valley press., 1913-11-22
Both Sides of
Railroad Problem

San Diego, Nov. 22-Government
regulations of public utilities has not
produced financial i'll health, but has
only developed the fact that it eX
lists" This was the answer given in
advance by John NJ. Eshleman, pres
ident of the California state railroad
commission, to the position later
taken by William F. Herrin, vice
president of the Southern Pacific
company.
Both were speaking before the
California Bar Association which
opened its annual session here last
night. Neither had knowledge of
what the other would say and, as
both read set papers, the association
called their two addresses a SYM
postum, not a debate.
President Herrin confined him
self strictly to the problems in hand.
His position was that the railroads
must have more money for improve
ments and extensions critically and
Immediately necessary and that they
cannot get it until the various state
and national commissions will allow
them to charge rates which shall
make the return on their securities
more attractive to investors. Gov
ernment ownership or higher rates
was his alternative.
Undoubtedly, said the speaker, the
removal of the one evil of secret
rates and rebates had fully justified
government regulation, and there was
in addition to be remembered with
gratitude the elimination of the old
competitive conditions under which
shippers of large tonnage, and even
important commercial centers, were
able to extort rates unjust to others
and to the carrier.
President Eshleman declared:
"Regulation has come. 1t is now
sought to be shown in many quarters
that this regulation is responsible
for the financial plight of the utilities
in the United States.
"If physician who discovers that
a man is afflicted with a disease
which the man knew nothing about
is responsible for the disease, then
public utility regulation is responsible
for the financial plight of utilities.
Regulation has merely served to dis
cover the condition which has made
investors hesitate to put their money
into utilities.
"The utility managers say to us
that they cannot build extensions on
air, that they must have money to
extend their facilities; and we agree
quite readily with this contention,
although there are those unkind
enough to say that they have quite
successfully built their properties in
the past on water. But all we say to
them is, restore your financial health.
"Only expect the public to pay you
a return on what you have sacri-
ficed, and if you are not willing to
do this, the public will have to do
this business itself.
Il for one shall always be willing
to accord rates that will pay for do
ing the business which the utility
has undertaken to do, and in addi-
tion will give, not a miserable just
above-confiscation return on the in
vestment, but a liberal and substan-
tial fair-play return in every instance
after it shall be determined the
basis upon which the return shall be
allowed.
"This position, which is being as
sumed by the most thoughtful com
missions in the country, may lead
TO temporary inconvenience Of the
public, but no more should it be
condemned than a treatment for d
disease which, although it finally
cures, makes the patient little sick,
while he is taking the medicine.
The utility contends it is hard to
get money at present rates and
therefore the rates should be raised
When these rates are raised, money
may be secured because, as it is
urged, the earning power Of the
Utility will justify the investment OF
more money in it. But this position
is assumed in many instances with
out any knowledge and apparently
without any desire for knowledge oi
what return on the investment the
| present rates are yielding.
| "If utility has an investment oi