The Railroad Problem Part 20

[20] "A curious light was thrown on this condition in connection with the Shreveport rate case. Texas, in order to keep Louisiana merchants from competing in its markets, had fixed a number of rates within the State applying between points of production and jobbing centers and markets in the direction of the Louisiana line. These rates were substantially lower than the interstate rates from Shreveport, Louisiana, to the same Texas points of consumption. The United States Supreme Court sustained the Interstate Commerce Commission in raising the Texas rates so that Louisiana business men could get a square deal.

"Thereafter Senator Shepard, of Texas, introduced a bill in the Senate to abolish the doctrine of the Shreveport case. In a hearing on this bill it developed that while Louisiana was protesting against rate discrimination on the part of Texas, the city of Natchez, in Mississippi, was making a similar protest against the action of Louisiana in fixing rates which excluded the business men of Natchez from the Louisiana markets. Moreover, one of those who appeared in favor of the bill was Judge Prentice, chairman of the Virginia Railroad Commission, which was at that time complaining that the state rate-fixers in North Carolina had discriminated against Virginia cities.

"In short, an appalling condition of interstate warfare was revealed that was hurting business generally and killing railroad development."--Harold Kellock in _The Century Magazine_.

[21] When one comes to consider the possibility of the Interstate Commerce Commission being made supreme in these matters of railroad regulation, he must a.s.sume that the members of this Commission are to be held immune from interference; save by the actual and necessary processes of the higher courts. The objection by Senator c.u.mmins, of Iowa, recently to the Senate's affirmation of the reappointment of Commissioner Winthrop M.

Daniels, is in this connection, most illuminating and disquieting. Senator c.u.mmins was careful to say that he held no quarrel against Mr. Daniel's character or personality. He added that he would be glad to vote for a confirmation of appointment to any other government position.

Unfortunately, Commissioner Daniels had written several of the commission's opinions advocating recent raises in railroad rates. For this offense the Senator from Iowa sought to punish him by blocking his reappointment. Fortunately, however, Mr. c.u.mmins carefully conceived revenge failed of execution. The Senate promptly and generously confirmed the President's appointment. But the episode shows clearly a great potential danger to which the members of this Commission, as well as all other regulatory boards, are subject if their honest opinions, as expressed in decisions, run counter to the whim of popular opinion.

[22] "No one who has traveled about the world will seriously contend that there is any other country where the quality and quant.i.ty of rail transportation is so good or so abundant as in the United States. In most European countries rail transportation is furnished by the government at great cost to the public, both directly in the form of heavier taxes and indirectly in the form of high rates. In this country it is furnished by the investment of private capital. This capital is supplied by about 2,000,000 persons. It is absolutely at the mercy not only of the Federal Government, but, within their boundaries, of the legislatures of forty-eight States. How much it may earn depends upon the whim of these masters. How much it may lose has never been determined; for when a certain point is reached the courts step in and administer the bankrupt's business.

"Last year the railways of the country earned about $1,000,000,000 net, a greater sum than ever before in their history. It was less than six per cent on railroad property devoted to the use of the public.

"The record earnings of the railroads in 1916 are being used and will be used to urge Government ownership. But how about the lean years? If in the most prosperous year of their lives the railroads of the country cannot earn six per cent, what happens in poor years? Ask the courts. They know.

"It is possible now, by right administration, to make particular railroads yield liberal returns to investors; but under Government ownership there could be no such incentive to careful management; the bad would be lumped with the good; the profits in one quarter would be required to meet the deficits in another; the Government would have to a.s.sume all necessary capital, and this would by so much impair the Government's borrowing power.

"If the people of this country can once be brought to appreciate the importance of maintaining the quality and expanding the quant.i.ty of rail transportation they will see to it that private enterprise is supported, not hampered, in furnishing this most vital of public services. They will manifest overwhelmingly a wish that the roads be set free from the conflicting authorities of forty-eight masters and be controlled by only one, greater than all the rest put together. They will demand that the Federal Government allow such rates as will permit earnings sufficient to attract private capital actually needed to supply public service. They will insist that the Federal control and regulation of transportation shall be as constructive and helpful as Federal control and regulation of banking. It is painful to look at the Federal Reserve system and then to contemplate the plight into which haphazard regulation has brought the railroads."--The _New York Sun_.