Evening journal., 1917-07-10
The Railroad Situation
0rom The New York Tribune).

There is now vacancy in tho
Interstate Commerce Commission,
caused by the death Of Judson c..
Clements. Congress IS pretty certain
to pass before the present session
ends an act increasing the member
ship OF the commission from seven to
nine. In that event President Wilson
will soon have an opportunity TO re-
organize and rovitalize the commits.
sion. TO broaden its point OF view and
10 make It a constructive instead Of
a merely constructive governmental
agency
The commissions recent rate case
decision was disappointing IL settled
nothing; IL was a temporary COM
promise II did not even represent a
majority verdict. Three members SUP.
ported it and three dissented. In order
TO give 10 effect one OF the dissenting
members signed II. although he did
not think 1t gave the carriers adequate
relief The two other dissenters held
that 10 went too far In granting relief.
The commission is therefore divided
against itself. 10 has no clear policy
of regulation. It's judgment has be-
come confused. 10 needs "A new I'm.
pulse TO unity and helphilness. and
that impulse can come 10 Il only from
outside.
There are two theories OF railroad
regulation. One aims exclusively at
restricting dividend returns to the
owners of railroad properties. Accord
ing TO it, the sole function OF the com.
mission Is TO protect the shipper by
hitting the carriers only such profits
as viii insure a moderate return on
invested capital The commissions
figures show that the ratio of operat
Ing income to investment for all the
Class A carriers has varied IN the
last ten years from 409i per cent. TO
64OO per cent IL has been above 6
per cent. once, between and 6 per
cent six times and below 5 per cent
three times. So long as the earnings
of the roads have been kept low the
commission has considered it's duty
accomplished II has acted merely as
board Of accountants. pledged 10
enforce cheap freight rates and I'M
concerned about The other larger as.
poets Of regulation such as the main
tonance Of railroad credit and the de.
velopment OF railroad efficiency for
purely national purposes.
Railroad transportation is a basic
industry In time OF war the railroads
become a military fundamentally OF
vital Importance Sound public policy
therefore requires that the roads
should be constantly strengthened,
their carrying capacity increased and
their service facilities improved. They
are a national asset both for peace
and for war. The second and broader
theory Of regulation recognizes these
facts. According 10 Il. the government
is simply caring for its own interests
when IL solidihes railroad credit by
allowing the carriers earnings sufii-
cient TO attract new capital VIXEN Il
stimulates betterments, when a. per.
mits the railroads to prepare them
selves for the demands OF tho future
That rs tho policy OF regulation
which Tho Tribune has always advo
Gated not I'm tie interest of tho
stockholders OF tho roads, but IN the
interest Of the country. For years
such doctrine awakened only n sligh
response. Railroad mismanagemen
and exploitation had left bitter mem
cries. Tho public's one desire was Il
| discipline the carriers. Granger re-
sentiment persisted. even after tn
worst of the ancient abuses were eli
minated. and the governments att
! tude toward the roads reflected pOpu
! lar animOsity The Interstate Com
MERGE Commission was not alone n
accepting the punitive and restrictive
view Of regulation. Congress was
strong for 10: every succeeding Presh
dent favored a.; the shippers stood
behind il to the last man.
NevVtheless. IL was mistaken
view. IN the last twenty years-ever
in the last ten years-the country has
become educated up TO the saner, con
structive theory of regulation Con
gress. the place in which outgrown
nreiudices persist longest has recent
~ begun TO waver. President Wilson
has shown himself responsive to lib.
eral ideas. Even the shippers, as 3
body. are coming around TO the be
lief that their interest lies less in in
sstng on very cheap freight rates
than 10 does In securing better soryic'
and increased facilitie| and paying
more for Thorn. Tho Interstate Com
merce Commission Is drifting awal
from It's old beliefs. II is a sign o
the passing OF old dogmas when out o
that body can come so clear a state
ment of the true theory of regulation
as is contained in Commissioner Har
lan's recent opinion
The Tribune has criticised Mr. liar
! Ian I'm the past. when he too, was
partisan Of the narrow school of regu
lation Il is all the more pleased Il
quote from his dissenting judgmen
/ such enlightened sentences as these
"What the county as a whole need
] Is much larger terminals, more tracks
more cas-. more locomotives. This en-
largement of facilities is not requires
merely 10 meet the eXigencies grow
ing out OF the war but to keep on
transports ton facilities up to th
measure of the country's GROWN
volume OF business. A fCAnda
ton should be laid without delay 70
a definite plan for the development
and building up OF oar transportatio
| system. Our population an
commerce have largely expaie<ed. hu
there has been no expansion, relative
/ ~ speaking. in our transportation IA
cilitics. The record I'm m