Omaha daily bee., 1919-10-06
Limitation of Cain
(From the St. Louis Globe -Democrat.)


We discussed yesterday the opinion OF
Charles E. Hughes on the feature OF the Cum
minis railroad bill which provides that the In
terstate Commerce commission shall determine
what is a fair return on the actual value OF any
railroad or group of railroads organized under
the law, and if the carrier has received more
than the fair return fixed by the commission
the excess shall be paid to that body and in
vested or expended by it in number OF spec--
fed ways Mr.. Hughes view is that this would
be confscation of private property exceeding
the constitutional authority of congress. The
mere fact" he says, that it is proposed to de.
vote the moneys or property Of carrier or OF
any other person to good uses cannot be re-
garded as Iustifying the deprivation OF the car.
rer or such person of the right to enjoy and
retain his own property, except as It may be
taken for proper governmental purposes
through valid taxation or for public use on the
payment of just compensation" Justice
Hughes, of course, considering the matter
from the legal standpoint only, but Samuel
Rea, president of the Pennsylvania Railroad
company, in his address to the American Bank
ers association Wednesday, considered the
same section of the bill from the standpoint
of the practical railroad man and the discern
ing business manager, and found objections no
less weghty.
The Cu1nmins bill is an honest effort to
solve the great railroad problem, one of the
most complicated and difficult that ever con-
fronted congress. 1t is the product of the SEN
ate committee on Interstate Commerce, Of
which Senator Cummins is chairman, and it is
admittedly tentative bill, presented for dis
custom and examination, in the senate and out
But it and the Esch bill, yet to be reported to
the house, will undoubtedly be the foundation
of legislation governing the future of the rail-
road industry in this country. We are quite
sure that it is the wish of congress that the
new railroad law shall be practicable and equi-
table, and this result can be greatly promoted
by intelligent analysis and criticism of the bills
by the men outside of congress whose ability
and experience best equip them for competent
Judgment, among whom Mr.. Rae may we'll be
numbered. His views may be, and no doubt
are, influenced by his association and interest,
but that would be more or less true of all whose
interests are involved, and it is through the
measuring of points from every side of the
question that approximate right may be at
tanned.
Mr. Rae finds much to approve in the Cum
minis bill, and the criticisms in his address are
aimed to be constructive, not destructive. There
is merit in all of them, but we are particularly
concerned with his objections to the disposition
of excess earnings, communicating of earn
ings," as he expresses it, for we are inclined to
consider this the most Objectionable feature of
the Cumrnins bill, many of whose provisions
we favor The provisions relative to COM
Wandering and using for other railroad com
panies and for railroad employees the so-called
excess earnings of individual railroad COM
panies," says Mr.. Rae, will throw many rail-
road investments again into condition of I'M
certainty, because fair return for COM
pany, and for one year, may at the lapse Of
the next year be- reversed by the commission,
or be varied for other companies. There will
be no incentive to any carrier to earn any
money in excess of the payment of an ordinary
dividend" Both of these criticisms are cogent,
but the last one goes to the root of the stua-
ton. The strongest objection to government
ownership is that it removes the incentive to
advancement and practically abolishes initia-
tive. The public is demanding the restoration
of the railroads to private control because it
initiative. But if the roads are returned under
conditions that inhibit initiative we will have
defeated the chief purpose The railroad in
private hands is a business institution. The
we have built has been built for gain, even
those that have been promoted and assisted by
the state. 1t is initiative that creates business
and develops it. and the sole inspiration of in
itiatlve in business is gain. 1t was private in
itiative that made the United States the coun-
try with by far the greatest railway mileage
and railroad development, the extension of
railroads and the Improvements in railroad
service, were most marked when the gains of
the railroad business were greatest. To limit
gain is to limit initiative, to check enterprise,
tot fix point where effort for betterment must
cease because there is no incentive to go be-
yond it. The power to fix rates vested in the
commission, (which shall at all times be just
and reasonable, as stated IN the BILL IS
proper function of government, and this in
way is limitation of gain but it is no limita-
ton upon the amount of business an individual
railroad may obtain through superior service
upon the economies it may effect through
superior management The incentive to initia-
tive, to enterprise to efficiency, is not impaired
if the rate is adequate, for greater gain is still
possible. The rewards of individual energy,
of better organization, of more intelligent d.
rectlon, should not be denied, for if they are
the incentive to betterment vanishes.
But the railroad business is not alone con-
eerned in this question. If" Mr., Rea says,
this system is once established for the rail-
roads it will in time be applied to all public
utility companies at the outset, and later to in
dustrial and manufacturing concerns, because
their products are just as essential for the
daily life of the citizen as railroad transporta-
ton That is at least possibility, and one
that contains very grave dangers.
The Apple Vote.