New-York tribune., 1921-12-04

and,
3. Equality of resulting crates of re-
turn" on value of railway property
employed between the various systems
resulting from consultations.
Let US note what is involved in
these. The intent of the first is to
prevent possible ''monopolistic .exploita-
ton by railroad system of its sster-
ritory," by providing each "territory"
to as large an extent as possible with
an alternative route or routes There
seems to be the underlying thought
that. unless prevented by this "comue-
tition," there would be natural ten
dency for railroad managers to "ex-
plot" their territories ''monopolisti-
cally'-that is, to restrict volume Of
business and charge the highest possi-
Bile rates for it.
Such natural" tendency would i'm
ply either that the interests of the
railroads were Fundamentally antaro-
nistic to those of its patrons or that
railroad managers would so regard
them. The former is the obvious con
trary of the facts. and so. though less
demonstrably, is the latter. 1t is the
very law of the railroads life to in
crease the volume of its business. Even
in the old rate war" days railroad
managers instinctivelv felt this, al
though they misapprehended the conse-
quences Of their acts. and although
they wrecked their properties in "com-
petition of the wrong kind The urge
20 get business" is fundamental. and
the plain fact is that it is almost as
strong on the part of division mana
gers on a single railroad, one against
the other, as it is between managers of
rival railroads at common points
In short, this provision OF the act is
concession to vestigial fears and
preludices, and it is very little more
AS things are nowadays, the kind of
"coIlpetition" whose results are de-
sired in the shape OF "service and de-
volopmcnt" for the territory concerned
is inherent in the law of railroads
beng, and will take care of itself
whether there are ''alternative routes"
or not. The present generation of
railroad managers know the claw" of
tkeir business in this respect. This
clause in the transportation act is lit
tie more than pinch of incense
burned in honor Of an old fetish.
Second Point Vital
The second thought OF principle in
the paragraph quoted is vital, funda-
mental and touches the very heart of
the existing equilibrium between
towns, districts, regions and territories
so far as the competitive interchange
of goods is concerned. Few people out
side those actually engaged in rail
road transportation realize the delicacy
OF the structure on which this euui-
librium depends.
The nearest analogy that l think of
is that of half dozen spiders webs.
each more or less connected with the
others so that disturbance of thread
in one web will not only disturb, all
that web but may disturb all the others
in greater or less degree. The webs are
the regional rate structures. These
rate structures both reflect and pre-
serve the routes and channels of trade
All were originally of purely empiric
origin, but they now have a prescrip-
tive status which should be inviolable
and violation of which on any large
scale might easily make or break
towns, districts, or even whole regions.
The purpose of the second clause is to
maintain that prescriptive status. Of
the three clauses which | have quoted
it is by far the most important. It's
intent is that all consultations that
are made under the act shall disturb
the status as little as possible.
HE tIiIIu CiduSc tS dltHcU IVY
at that part of the railroad problem,
roads. What is "weak" road? 1t is
either:
(a) A railroad built in advance OF
the needs of the district it serves in
that there is not enough business in
the territory to return proper yield
on the capital invested in that road, OF
(b) A railroad which. as result OF
incompetence or dishonesty, or both
has "watered" capitalization.
In either case it's weakness" con-
sists in its inability to get money
enough either from earnings or new
capital to enable it to provide as much
or as good service as "strong" road
ssWeak'' and ssStrong''
This third clause is intended tc
merge the "weak" roads with the
"strong" roads and to make systems OF
approximately equal strength Ap.
parently the authors of the act had
also in mind the simplification of rate
regulation for the various regional
groups by avoiding the difficulties
arising from combination of uniform
rates with unequal returns" from
those rates. Inasmuch as, however, the
provision elsewhere in the act for re
capture of return" above a certain
rate takes care of that difficulty this
/ particular aim of the clause is not Of
great Importance.
1t seems to me q speak with full
measure of diffidence) that given dis
trict or territory is entitled to the
quantity and quality of railroad trans
portation that it can support, and that
it is not entitled to any more or any
better, provided at the expense of any
other district or territory. This prin
ciple is recognized clearly in the choice
of the regional group" as unit fol-
rate regulation instead of cont
mental" group. If "region" is ex-
pected to pay for it's transportation
and to get only the transportation il
can pay for. why not district in thai
region? Why should the territory
served by "weak" railroad in 8
regional group be provided with guam
tity or quality of transportation partly
paid for by another or other territories
within the group? This is what must
happen if weak" roads are merged
with STRONG" roads unless the terms Of
merger are such as to reflect and ex-
press the weakness" of the weak
road. The act says nothing about ths
terms or basis upon which mergers
shall be made.
1t is obvious that the valuations
made by the commission need not nee.
cssarilv correspond TO actually existing
facts, for the valuation" principles
provide no way Of dealing with an in