New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-07-09
The Railroad Situation


Commerce Commission, caused by the
death of Judson c. Clements. Congress is
rretty certain to pass before the present
session ends an act increasing the men,
bership of the commission from seven to
Zine. In that event President Wilson will
soon have an opportunity to reorganize and
revitalize the commission, to broaden It's
point of view and TO make 1t a construc-
tive instead of a merely constructive gov
ernmental agency.
The commissions recent rate case de-
.ision was disappointing. 1t settled noth-
ing; it was a temporary compromise. II
aid not even represent majority verdict
Three members supported it and three dis
sented. In order to give 1t effect one OF
the dissenting members signed it, although
he did not think it gave the carriers ade-
uuate relief. The two other dissenters
held that it went too far in granting re-
lief. The commission is therefore divided
against itself. 1t has no clear policy OF
regulation. It's judgment has become con-
fused. 1t needs a new impulse to unity and
helpfulness, and that impulse can come to
it only from outside.
There are two theories of railroad regu-
lation. One aims exclusively at restricting
dividend returns to the owners of railroad
properties. According to it, the sole func-
ton of the commission is to protect the
shipper by holding down freight rates and
permitting the carriers only such profits as
will insure moderate return on invested
capital. The commissions figures show
that the ratio of operating income to In
yestment for all the Glass carriers has
varied in the last ten years from 4.O9l per
cent to 6.4O0 per cent. 1t has been above
Ter cent once, between 5 and per cent
six times and below per cent three times.
So long as the earnings Of the roads have
been kept low the commission has con-
sidered its duty accomplished. 1t has acted
merely as board of accountants, pledged
to enforce cheap freight rates and uncon-
cerned about the other larger aspects Of
regulation-such as the maintenance of
railroad credit and the development Of rail-
road efficiency for purely national pur-
poses.
Railroad transportation is basic In
dustry. In time Of war the railroads be-
come a military fundamentally of vital
importance. Sound public policy therefore
requires that the roe / should be con-
stantly strengthened, their carrying ca
pacity increased and their service faclli-
ties improved. They are national asset
both for peace and for war. The second
and broader theory Of regulation recog-
nizes these facts. According to 1t, the gov
eminent is simply caring for its own IN
terests when it soldifies railroad credit by
allowing the carriers earnings sufficient to
attract new capital, when it stimulates
betterments, when it permits the railroads
to prepare themselves for the demands Of
the future.
That is the policy of regulation which
The Tribune has always advocated-not
in the interest of the stockholders Of the
roads, but in the interest Of the country.
For years such doctrine awakened only a
slight response. Railroad acknowledgement
and exploitation had left bitter memories.
The public's one desire was 70 discipline
the carriers. Granger resentment per-
sisted, even after the worst of the ancient
abuses were eliminated and the govern
ments attitude toward the roads reflected
popular animosity. The Interstate Com
merce Commission was not alone in accept
Ing the punitive and restrictive view of
regulation. Congress was strong for it;
every succeeding President favored it; the
shippers stood behind it to the last man.
Nevertheless, it was a mistaken view.
In the last twenty years-even in the last
ten years-the country has become edu-
cated up 10 the saner, constructive theory
Of regulation. Congress, the place in
which outgrown prejudices persist longest,
tas recently begun to waver. President
Wilson has shown himself responsive TO
liberal ideas. Even the shippers, as a
body, are coming around 10 the belief that
their interest lies less in insisting on very
cheap freight rates than it does in secur-
ing better service and increased facilities
and paying more for them. The Interstate
Commerce Commission is drifting away
from it's old beliefs. 1t is sign Of the
passing Of old dogmas when out Of that
body can come so clear a statement of the
true theory Of regulation as is contained
In Commissioner Harlan's recent opinion
The Tribune has criticised Mr.. Harlan
IN the past, when he, too, was partisan
" the narrow school Of regulation. IL is
all the more pleased 10 quote from his
hissenting judgment such enlightened SEN
fences as these:
what the country as whole needs is
much larger terminals, more tracks,