Evening journal., 1919-06-21
INTERSTATE COMMERCE COMMISSION AND ADEQUATE
RAILWAY REVENUES

ga SsuNING that the railways are TO be returned t.
IA private operation, the heart Of the railroad prob
lem Is the question OF how the companies TO be
sured adequate operating income" says the Raiwa,
Age. II adds that Tho determination Of what the road
shall be allowed to must be left entirely to IN
Interstate Commerce Commission. because the recor,
shows the commission In the has refused to let
earn sufficient returns.
This Is denied in quarters says the Railway Age
Commissioner McChord Of the Interstate Commerc
Commission points out that net operating income in th
three io5i97 was the largest earned thre
consecutive years. This proves nothing
"The most pertinent and convincing evidence regard
ing tho failure Of the old policy OF regulation
afforded by the tendency OF railway development
H. Before the State legislatures and commissions and the
Interstate Commission began 20 make reductions and pre-
vent advances in rates in spite OF advancing operating
costs, the mileage OF railways built annually
about 5000 miles. Since 1907 10 has equaed 5OOl
miles and in the last three years before the United States
entered the war II less than 1900 miles a year
There corresponding declines the other facilities
provided.
Attention Is called TO the fact that this downward tend
ency respects facilities was reflected in the sta
tctics regarding new investment The investment made
in 1910 s77sOOOOO and In 1911 ssOs 10000 In 1911
the Interstate Commerce Commission rendered its decision
In the first rate advance refusing TO grant the
rers the advances for which they asked In the year
si1sOOOOOO; in 1914 s5siOOOOOO; in 1915 3lOOOOOO and
In 1916 S26sOOOOOO In every year from 1911 TO 1916
cept 1911, there decline in investment and in 1916
the investment made less than one-ihrd what it
nve years before
'why was there this decline in Investment" the Age
inquiries The average percentage Of operating income
from 1910 to 1915 reported by the Interstate Commerce
Commission was as follows: 1910, 573 per cent 1911
is7 per cent 1912 i62 per cent 1919, 5i2 per cent
i9i i9 cent? 1915 400 per cent The return
In the five years ending with 1905, according to the
commission, i97 per cent; in The five years ending
with 1910 5h per cent, and in the five years end
ng with 1915 only 456 per cent The percentage earned
In 1915 the smallest since 1929. The tendency Of
operating income under government regulation down to
and including the lscal year ended June 90 1915
downward and its downward tendency caused the decline
Of Investment"
is shown that in the fall Of 1915 however the rail-
began TO feel the tremendous Of industrial
activity In this country caused by the in Europe,
and in the year ended June 80 1916 there
crease Of 2 per cent in freight traffic and OF 2i per cent
in freight earnings No such Of traffic
and in earnings occurred before or probably ever
Will n,There resulted large operating
income. The trafc and earnings in 1917 showed a still
further increase although because OF large increases in
expenses there was decline IN net operating income.
The meaning Of the Foregoing facts is obvious, il is
asserted Under ordinary business conditions the old
policy Of regulation resulted in steady decline Of the
income earned by the railways This crippled the COM
panies in raising capital and providing facilities
Then suddenly owing to abnormal conditions created by
the war there was tremendous increase in traffic and
earnings. This abnormal increase business explains
the fact that m 1916 and 1917 the net operating Of
the railways large-for it was only in these two
years Of the three Mr. McChord mentions that it was
large II normal conditions had continued the percentage
earned probably would have continued 20 decline.
md rr,o
know that Just before this abnormal increase in traffic
came more miles Of railways were in the hands OF re-
ceycrs than before They know this affords better
than the earnings 1916 and 1917 Of the fairness
and wisdom OF The old policy Of regulation
But this is not the whole story When in December
1911 il became clear that large advance rates would
necessary II increased expenses were 10 be Offset the
problem presented by sending special report to Con-
Iress indicating that could not grant the advances in
ates which were needed 10 keep the railway companies
olyent Within month government control was
dopted Before we had had six months OF government
ontro freight rates further advanced % per cent
md passenger rates 50 per cent
To who knows this record It Is futile 10 cite past
experience to show that The railway companies need
fear OF future regulation by The Interstate Com
ncrce Commission They have the best Of grounds for
caring any legislation which would leave almost entirely
its hands The determination Of what return the rail
ways shall be allowed TO earn
There available certain other methods which may
'e adopted Congress may fix by law The minimum per
enage OF return the railways shall be allowed TO earn
nd what basis II may specifically instruct the com
Mission TO hx rates 20 make net operating income
uncent TO enable the railways adequately TO develop
heir facilities II may delegate The determination Of
What return they shall be allowed to earn 10 other
governmental body. The Esch-Pomerene bin is fatally |
effective because 10 leaves the determination Of this |
question to The commission without in any way indicat-
ng that matter Of public policy rates must be made
dequaie.