Evening star., 1919-02-23

luton. II. is 1iHHilt ~
manifold and subtle interreiatlon-
ship.
1t is no more practicable to make
it over at this late date on lines OF
theoretical perfection. than 1t is prac-
ticable to make over on such lines
large city. the growth of generations
Capitalization or overcapitaiiZatio
has no effect whatever on rate-mak-
ing. nowadays. l doubt whether IL
ever had any.
Valuation as a Factor.
Even the true value of railroad
properties. as ascertained by Vaiua-
tion (to the extent that it can be SO
ascertained) can merely be one OF
the factors in rate making. AS
matter of fact, / believe that from
the practical point of view a valua-
ton of railroad properties such as
the Interstate Commerce Commission
has been engaged in for several
years, at the expense OF prodigious
lars, will prove largely futile. be-
cause l think a fair appraisal on
such principles as the courts VIII
uphold will show that the raliroads
on the whole are not overcapitahzsu
and that existing rates certainty 90
not err on the side of giving more
than a fair return.
But I realize that to satisfy pubic
opinion, a large portion OF "hlSn
suspects the railroads Of taxing the
people to pay dividends on waterea
stock. an authoritative appraisal OF
the true values of railroad properties
must be had.
1t should be borne in mind how
ever. that the completion OF sucn an
appraisal will still take years. ano
that not few of the AWARDS, IN al
probability will have to be review
ed by the courts before they can be-
come definitely established.
My suggestions, in view of these cir
cumstanceS. are:
1. Until the valuations are COM
pleted. let the Interstate Commerc
Comm ission or other authority (haV-
ing first been granted exclusive pow
er in rate -making) be directed to con-
slider the existing rates as prima
facie fair and reasonable on the OASIS
of existing wages and COSTS. SuDJeCt
to such adjustment of inequalities or
injustices between localities and snip
pers as the Interstate Commerce Com
mission may determine Cor better
still, a committee of railroad presi-
dents and shippers subject to the In
terstate Commerce Commissions cast
Wages and Materials.
2. If wages and cost of materials
tionately (as determined, say every
six months), but in no event. pending
the completion of the valuation, be-
low figures which would produce as
near as may be an aggregate return
equivalent to the rental now being
paid by the government for the use
of the railroads, plus fair return
upon such new money as may be put
into the properties.
3. In the new railroad legislation
about to be framed by Congress let it
be precisely defined, instead Of hav-
able formula as heretofore, what
items are to be considered by the In
steEtate Commerce Commission Cor
such regional bodies as may be ap-
pointed) in fixing rates. The principal
ones among those items are, of
course: Wages. cost of materials, a
return on the fair value of railroad
properties at a sufficient rate to at
tract new capital and stimulate en-
terprise. 1t is surely not beyond the
capacity of language to define with
clarity what items enter into the cost
of a product The product which rail-
roads are selling is transportation of
passengers and goods. The price Of
the product is the rate.
OF course, realize that the salts
factory working of the method pro-
posed is still dependent, to an extent,
on the fairness and breadth of view
of the rate-making authority, whether
it be the Interstate Commerce Com
mission or some newly designated au-
thority, and that it does not provide
wor king formula in rate-making is,
! believe. practical impossibflity.
Precise Charter of Rights.
At any rate. under the proposed def
for the Interstate Commerce Com
mission or regional commissions,
with a precise charter of rights
instead of, as in the past. having to
come as fmportunate beggars, throw
ing themselves upon the mercy of the
commission. with the effect of under
mining their own credit by pleading
and perhaps over-pleading the dire
need for higher rates and the disas-
trous consequences which would fol-
low il higher rates were not granted.
And if the commissions disregarded
the rights of the railroads to a. fair
price for their product, they could un-
der the definition above suggested go
to the courts and obtain prompt and
effective redress. which under the
vague terms of the existing law is in
fact denied to them.
l hardly need emphasize that the
views L have expressed do not attempt
to address themselves to complete
program of railroad legislation, but
as far as they offer positive sugges-
tions-mereIy to the matter Of assur-
ing fair rates as against the proposal
of government guarantee of mini
mum earnings.
/ should like to add that, while ]
believe the number of separate rail-
road corporations could with advan-
tage be greatly diminished and the
absorption of the weaker lines by the
strong lines should in the interest OF
good service to the public be facilitat-
ed and encouraged, l am opposed to
the suggestion that the number of in
dependent systems should be SO re-
duced as to give the country over to
very few great regional combina-
tions.
would Diminish Competition"
My antagonism to this proposal
rests on the ground that / believe it
vanishing point and soon lead to gov
ernment operation in fact, if not IN
name.
The open-minded spirit and the con-
scfentiouS and painstaking manner in
which the Senate committee is con-
Quoting the hearings on this. subject
are wholly admirable. In their at
titude toward the problem they are
! l believe, correctly representing the
temper of the public, which never, in
my recollection. has been SO predis-
posed for a tranquil and dispassionate
consideration Of the complex and Diff
cult questions involved. All the more
reason why those who by experience
| and study are qualified to contribute
! to the discussion of the problems
should express their true views with
lat fv~ov IT, nj rNk lwn