The Science of Railways

portance of this gain to the Community as compared with the income derived by the owners of railroads from their properties may be illustrated by the following Exhibit: Thus the Interstate Commerce Commission, in its report for June 30th, 1903, gives the cost of 94.4 per cent of the mileage of the Railroads of the United States as $10,973,504,903. Estimating the cost of the balance at the same relative value, the total cost amounts to $11,624,475,533.

"It appears from the foregoing that the public received a dividend in 1903, in the shape of reduced rates (as compared with 1863), equal to 42.90 per cent of the total cost of the Railroads of the United States. The owners of the Railroads, on the other hand, because of the reduction they had made in rates, received in the way of interest on bonds and dividends, a return of only 3.74 per cent on the total cost of their property; a return on capital invested that no manufacturer, business man, merchant or banker would consider adequate.

"As every railway company, naturally and properly, seeks to maintain rates, the foregoing shows how futile are their efforts when conditions are averse. Rates are governed by natural laws, by economic conditions, the same as the price of bread stuffs, and the railroad companies must of necessity adjust themselves thereto. If there are perversions of this economic law, they are exceptions, and as one to a million compared to the value to the internal commerce of the country of leaving the railroads untrammeled-except in this that they shall not discriminate between shippers; shall not give special rates nor allow rebates, and shall publish and post their tariffs, as the Government requires."

In what I have to say herein in regard to governmental ownership I point out merely what may be termed economic and social objections-the cumbersomeness of such method, its lack of adjustability to conditions and the friction and hardship it entails to the private citizen. I have not attempted to exhaust the subject but merely point out the more glaring objections to such ownership. There are, on the other hand, grave objections of a purely fiscal character that I do not allude to at all. These I refer to in another volume of this series devoted to the subject of Safeguarding Railway Expenditures and to that I would invite the attention of those interested in such matters.

In the book in question I have shown that under governmental operation the discretion of managers and their power of initiative are reduced to the minimum, or practically negatived, through the observance of unavoidable formaliities. One of these is the necessity they are under of compliance with foreordained budgetsnecessarily approximate only-of expenditures for specified periods, which budgets must run the gauntlet of ministries and legislative bodies and be molded, finally, by political considerations with perhaps but little reference to the actual needs of the properties; moreover, such forecasts cannot accurately take into account the unforeseen exigencies of practical operation, nor, as a matter of fact, be based on the actual needs of a property. Hence they result in handicapping a management if actual conditions do not harmon

ize with preconceived ideas and guesses, or else lead managers to meet the dilemma by padding their estimates and by such subterfuge invite both extravagance and waste afterwards. Indeed, from whatever point of view the subject be considered-whether public, commercial, economic, fiscal or internal - the conclusion cannot be avoided that the governmental operation of railways must be inconvenient to managers, wasteful in commerce, and pedantic, slow, cumbersome and extravagant in administration. Moreover, where governments operate railroads we are never sure that we know the real cost of operation, the accounts being aggregated or juggled to save the face of the government, it being in such cases a political as well as an economic question.

Grāmatas