New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-12-20
One Act of Justice to the Kali
roads Should Be Followed by
Others.


!, i conceded in most quarters that puohc
or;nion won a striking moral victory in the rail-
road rate decision. The material Dement'S 10 the
,ailroads will be considerable, yet they VIII not
IN themselves restore the proper balance between
railroad investments and earnings. The increases
allowed in rates will bring in $5O,OOO,0OO accord
inc TO some calculations, and only SSO,OOOOOO' ac-
cording to others. That an addition OF TINS sorV
10 the revenues of the carriers is inadequate ap
noars from the Interstate Commerce Comms-
sion's own statement.
Since 1908 the railroads in the official classif-
cation territory-that is, those affected by III
DAVIS decision--have increased their property IN
vestment 81 300 100000. The surplus for l9oo,
after deducting S1O2OOOOOO paid in dividends
was s47 600 600 whereas for the last fiscal year
the dividends paid, amounting to SllS,ooo'OoV'
drew on the accrued surplus to the extent OF
SIS 2OOO 900. The new investment, instead OF earn
ing SIS. 100000 year, is earning only SSOOOooo'
Last wear there was an actual shrinkage IN &C
crued surplus of sG4,57s,2ss, and that occurred
in spite of the fact that the railroads had CT
down maintenance charges to point where a
threatened.
Other increases in rates will be required to
overcome the long drain of increased taxes, IN
creased wages. renovations in equipment and the
higher cost Of all railroad materials on the earn
ing power of the railroads Since 1908 every
new law passed by Congress or state eglsat-
ure. practically every order of the federal COM
or
wage arbitration has worked to cut down rail-
road earnings. TIE stockholders were asked to
make good ever advance in the cost of operation.
Fridays decision although it does less than JUS
tice to the railroads. at least holds out the promise
of new policy OF ofsetting additional demands
o. the carriers by opening to them additional
sources of revenue, and in that respect it is the
harbinger of a new era of equity and sanity in
government regulation.
The commission has now accepted in principle
the theory that regulation should work both ways.
If it restricts the liberty of the railroads to seek
compensation in higher rates for increased cost
charges, due to legislation, wage arbitrations or
economic upheavals, it must do for the carriers
what they are not allowed to do for themselves.
Ii must be a guardian as well as disciplinarian.
Two admissions in the commissions report
sow that it is coming around to rational no
ton of its own functions. owe cannot view with
favor any attempt to obtain an increase in net
-evenue through unduly restricted expenditure
v1on maintenance" is one of these admissions
Hitherto the commission has not been greatly
concerned how the railroads met new burdens,
so long as they met them out of their own treas
uries. The other admission (which we cited yes
terday) is: IF we are to set rates that will af-
ford reasonable remuneration to these carriers,
we must give some consideration to the increased
lire of capital as well as other increased costs"
That would be the merest axiom in any scientific
and rational system Of regulation. But coming
from the present commission it sounds like
sensational rediscovery of a long buried truth
Governmental regulation has been on trial be-
fore public opinion for couple of years past
The public has become thoroughly dissatisfied
with the purely destructive method of regulation
Had the commission not yielded in time public
opinion would have legislated it out of office. Now
there is hope for HodaS CiUendl The commits
sion would be in position to do more good if its
powers were enlarged so as to make referable to
il all wage awards and all legislation increasing
the costs of railroad operation Such measures
should go into effect only after the commission
has provided the additional revenue out of which
I, meet their cost Then regulation would be-
come really two sided and the balance could be
better maintained between the services expected
O" the railroads and the return which the public
ought in fairness to make fer those services.