41. M. C. PREFACE THIS series of books owes its existence to the generosity of Messrs. Hart, Schaffner, and Marx of Chicago, who have shown a special interest in trying to draw the attention of American youth to the study of economic and commercial subjects, and to encourage the best thinking of the country to investigate the problems which vitally affect the business world of to-day. For this purpose they have delegated to the undersigned Committee the task of selecting topics, making all announcements, and awarding prizes annually for those who wish to compete. In the year ending June 1, 1906, the following topics were assigned: 1. To what extent, and by what administrative body, should the public attempt to control railway rates in interstate commerce? 2. A just and practicable method of taxing railway property. 3. Will the present policy of the labor unions in dealing with non-union men, and the "closed shop," further the interests of the workingmen? 4. Should ship subsidies be offered by the government of the United States? 5. An examination into the economic causes of large fortunes in this country. 6. The influence of credit on the level of prices. 7. The cattle industry in its relation to the ranchman, feeder, packer, railway, and consumer. 138967 8. Should the government seek to control or regulate the use of mines of coal, iron, or other raw materials, whose supply may become the subject of monopoly? 9. What provision can be made for workingmen to avoid the economic insecurity said to accompany the modern wage-system? A First Prize of One Thousand Dollars, and a Second Prize of Five Hundred Dollars, in cash, were offered for the best studies presented by Class A, composed exclusively of all persons who had received the bachelor's degree from an American college in 1894 or thereafter. The present volume was awarded the first prize. PROFESSOR J. LAURENCE LAUGHLIN, University of Chicago, Chairman. PROFESSOR J. B. CLARK, Columbia University. PROFESSOR HENRY C. ADAMS, University of Michigan. HORACE WHIte, Esq., New York City. HON. CARROLL D. WRIGHT, Clark College. CONTENTS Importance of the railway problem. The basis of the present popular agitation for public regulation. - General plan and scope General complaint of excessive charges. — Railway rates are not high in proportion to the cost of other means of transportation. Comparison of American and foreign rates. - Effect of differ- ent conditions which prevail in other countries. - Reasons why rates should be lower in America. - Effect of lower wages and denser traffic in Europe. - Decline of rates in America compared with the decline in Europe. The advance in American rates since 1899. - A nominal advance compared with a real decline. - The increased cost of operation. - It is essential that railway capi- tal should be allowed a fair return. - Capitalization of American railways. The returns upon the actual capital invested in rail- - The chief ground of complaint against the railroads is that rates are rate. - - - - - modities. Conditions upon which such discrimination is justi- No exact standard for determination. — Instances of excessive charges. Competition is a controlling factor. - Some forms of competition are disappearing. - Federal control necessary to re- move evils which arise in connection with the system of private car-lines, industrial roads, and private terminal facilities. - Federal General scope of the present discussion. - Standard for determining reasonableness of rates. Comparative rates. - Relative costs of service. Necessary that full allowance in rates should be made for the comparative assignable costs of service. Allowance must be made for the relative possibilities of developing a large traffic. Allowance must be made for the relative forces of competition. Little probability that the present Commission would give full weight to these various factors. Difficulty of remedying local dis- criminations where the points in question are served by different roads. Necessity of allowing a fair return. Cases where such considerations do not enter. -Difficulty of determining the actual capital of a railroad. - Cost of reduplication the only proper stand- ard. What constitutes a fair return? — Would the Commission allow a fair return?-State commissions. - Relativity of rates complained of. - Danger of rigidity of rates. Experience in Great Britain. Government rate-fixing destroys the incentive to extraordinary efficiency of management. - Integrity of the action of the Commission in all cases is not assured. Sectional con- The growth of Federal authority over interstate commerce. ditions which prevailed previous to the act of 1887. - Analysis of the Interstate Commerce Law. - The long and the short haul clause. The San Bernardino Case. - The Fargo Sugar Case. The Cartage Case. - The Middlesboro Case. - The Social Circle Case. The Alabama Midland Case. — The Spokane Falls Case. The Griffin Case. - Georgia Railroad Commission |