Every evening, Wilmington daily commercial., 1922-05-03
TROUBLES SOF THE RAILROADS
BY Frederic j. Haskin

washington, May 3.-JThroughout
| tho winter tho Interstate Commerce
| Commission has been engaged upon
nm intensive study OF fixing railroao
freight rates to provide transportation
for American business at reasonabie
charges and at the same time 10 en-
able the railroad corporations TO earn
n fair return on their investment. This
ja n tremendous undertaking. the
Communication has heard Thousands of
uaree OF testimony from experts rep
j rcsenting railroads. shippers, investors
I md the general public. One OF the
most difYicult problems involved Is how
much the Comnission should be guild
cd In fixing rates by tho need OF the
railroad companies for revenue ade-
auato TO pay dividends 10 their stock
holders.
There are two diametrically oppos-
cd schools OF thought on the question
of rate making in relation TO return.
The railroads maintain that the Com
mission should consider the amount OF
money invested I'm railroad property,
equipment and cost of operation and
. then fix rate which will yield a
fair return--say per cent--on this
capital sum. They say that they are
J regulated and not in the free market
Of competition and therefore should
D have rates fixed on a basis which will
;. guarantee earnings.
r In opposition, the shippers present
n some such argument Rs follows: a
/ man owns two houses. Both cost him
h $4,000. including land and building. But
d one Is better situated or better de-
| signed than the other. lie can ge
n a rent Of $50 month for ono house
but only $40 month for the other
After holding them for some time III
n desires to sell. Prospective purchaser
s investigating to learn what these prop
critics were actually worth would fin,
y out what rent they yielded the owner
: Upon discovering that one house pal.
a return Of $40 and the other $50 the.
. would offer higher price for the IS
;. than the other.
In other words, the value Of n prop
erty must be determined by its earn
ing power. The rule sought by IN
a railroads is the reverse, that is. tn
!. earning rate must be fixed srbitraril
by the cost OF the property
y Commission Must Judge.
10 This gives something OF an idea
In the difficult problems which arise !
90 connection with rate regulation. Bo,
va sides have their champions. The Con
mission must decide between them =
,v obtain tho best available inforrnatA
q the Commission gathers eiabora
,eI data. Such a study recently has bee
RI made by DIR. Jean Paul Muller, q
;. attorney, accountant and economist
Washington. He has made a critic
a. survey OF the relative value and ear
q Ing power Of group OF railroads al
:, n group Of industrial corporations. II
figures produced by this study thrc
~ valuable light on the relative positio
- OF these two important busine
groups.
.. The man IN the street who works Z
-, n salary sometimes has difficulty
SOC thinking Of money as flnanclers. /
"a dustriaIists and economists think
II. Tho fact is that money in the lar
&, business sense is n commodity just
~ potatoes, shoes. wheat or steel a
a commodities. Its price and avaiiabi
= ty are determined by tho laws of s,l
ply and demand Just as in tho case
other goods. Money has a price
much AZ cigars. Tho price OF money
expressed as interest. In reality. II
rent. a given amount of rent ia pa
-. for the use Of money for a year. T
- rent Is high or low In accordance wi
- the abundance or scarcity OF (,
~" money and also in accordance with {
relative risk involved of losing Il
U getting it back at the end of the lea
II n man Is sure he will get his mon
yc =, back, he will rent IL for e. lower (
ure. Many men are willing to run
, slight risk In order to earn the high
''' rent for the use Of their money VIII
risky investment pays. No one
willing to run very much. Of a ri
Capital, that is money, Is the m
ia timid commodity in the world.
IT'S Now DR.. Muller has studied a gre
In OF railroads and a group of industl
-or companies for the ten year period fr
-ast 1911 to 1920 inclusive. to ascert
Co., which group pays the best yield.
,ist One thing which governs the SAT
IN Of an investment Is the amount
money already advanced on the secl
ty offered.