Evening journal., 1919-09-16
CuMAuNs BILL WOULD PROMOTE RAILROAD IN
EFFICIENCY


attacks OF the main provisions Of the cummlns
railroad bill upon the ground that II would have direct
tendency promote neclency IN the operation OF many
railroads
"The Senate probably VIII be important factor
than the House." says the Railway Age, "in OBTAINING
the railroad legislation which will be passed sub
committee OF the Senates Committee Interstate Com
merce has drafted what Is known the Cummlns bill
Most OF its provisions indicate that those who drafted 1t
have staiesmanlike grasp OF the railroad problem I'M
fortuntey the bill Is weak just where it is most import
ant that it should be strong
"If the legislation deals wisely with the question
OF railroad revenues II will probably be successful even
though in other respects II may not be well designed
II it does not deal wisely with the question Of railway
II will be failure matter how skilfully 1t
may deal with other phases OF the problem.
"The Cummins bill provides that for the purpose OF
rste-makng the Interstate Commerce Commission should
divide the railways into rate-making groups and shall
from time time determine the value Of the property In
each group and lower advance the rates OF trans
portaton as to provide fair return upon the value OF
the property the group. It requires the commission
to consider among other things the requirement for adj
ditiona capital in order enable the carries to perform
their duties to the public and the conditions under when
the same can be secured But the bin contains pro
vision which seems TO be inconsistent with these and
adapted largely to nufy the good effects which they
would tend to produce Section provides that II any
carrier shall receive from operation in any year more
!han a fair ,eturn the excess above such fair
return shall be paid to The transportation board within
The first months Of the succeeding year This pro-
vision II we interpret IL correctly, means that II any
railway company shall any more than tho commits
sion shall have held be far return all such surplus
earnings shall be taken from it and used for purposes
which have relationship TO the progress or prosperity
Of the railroad earning The surplus.
students Of railway regulation know what is meant
by "a fair ,eturn upon value This phrase invented
by The courts to indicate The limit below which reguat-
ing bodies cannot so fixing rates without unconsiitu-
onaly conscang property For ten years the old sys-
tenn Of regulation has been attacked upon the ground
that railroad commissions have constantly tried to make
railway rates as low they could without coniscating
property instead Of making them such as to enable the
railways TO render good seNce and adequately develop
their facilities The Cummns bill would specifically en-
act the restrictive and destructive principle upon
which the regulating commssiQps have acted
ION any road which is or might become able to earn
fair return the incentive efficiency Of op
Grafton would be destroyed The managers Of railway
company which is or which became, able TO earn the
maximum return. unless they were angels rather than
human beings, would begin casting about for means OF
preventing the net return from increasing. The result
might be- and probably would be- the payment of excess
slye salaries, oxorbitant expenditures fo maintenance
and perhaps the payment of exQbiiant prices for ma
terlals and supplies Probably The government would
then intervene but government Intervention would never
be an effective substitute for the initiative and enterprise
OF the owners and managers
II will require changes in these provisions to make
the Cummins bill good bill II might be changed to pro-
vide that any railway company earning more than fair
return" would be allowed to retain only hreeourths or
iwo-lhrds or one-half one-lhrd, Of its surplus
earnings depending upon how large the surplus earnings
were As long as every inc in efficiency will result
I'm some Increase in the amount OF return The company
will be allowed to earn and for lis purposes the
incentive to increase efficiency will not be destroyed all
though should be frankly recognized that even partial
limitation Of the profits Of nd idua companies will tend
to reduce the incentive to efficiency.
Il is now generally conceded in this country that pri
yate management preferable TO goysnmen management
of railroads upon the ground that it is efficient but
many of those who concede this do not TO recognize
the further fact that the greater efficiency Of private
Is almost entirely due TO the fact that here
tofore the relative profits earned and kept by individual
railroad companies have depended upon how efficiently
they have been managed Destroy the opportunity to in
crease the profits OF individual railroads under private
management by increasing efficiency and the superiority
Of private management by increasing efficiency and the
superiority Of private government management viii
speedily disappear.