A cheap form of transportation, either electric trolley, with or without track, or buses, is absolutely necessary. Buses and individual jitneys cannot, where the business is heavy, carry passengers as cheaply as the electric street car, but for a more limited traffic the buses may take their place, and for still less traffic jitneys can find a useful occupation. If buses and jitneys are allowed absolute freedom without restrictions as to schedule or route they will skim the cream from the street transportation business and so reduce the revenues of the street cars that they will have to discontinue operation. A thing so undesirable that the public will have to subsidize the street cars and guarantee a certain percentage of earnings or take over their ownership, run them at a nominal fare and let the taxpayer take care of the deficit. By these means those persons who ride their own automobiles, the heavier taxpayers, who are, or should be, most vitally interested in maintaining cheap transportation for the unfortunate residue who cannot possibly afford automobiles, yet whose labor is absolutely essential to the industrial and commercial prosperity of the city, will be required to pay a portion of the upkeep of street-car transportation. If a subsidy be adopted it would be better that it should not be a direct guaranty of a fixed percentage of earnings for in that manner there is no premium on efficiency as our Government found to its cost in dealing with the railroads during the recent war. It would be better if some sort of a sliding scale could be worked out whereby the lines should be relieved of occupational taxes or license fees in proportion as they lowered fares, and such that the lower the fares the greater the percentage of profit they might earn.
The contract or charter might provide that all earnings above a specified percentage, due allowance having been made for operation, repairs, and upkeep, on bona fide capital invested should be turned over to the city as a license for the use of the streets. For example with a fare of three cents the city might guarantee a 5 per cent income, but allow, by reduction of taxes and all payments to the city an earning of 10 per cent; on a five cent fare guarantee 3 per cent and allow earnings of 8 per cent; and so on as shown by the accompanying table the figures of which are merely illustrative:
| With a fare of | The City Guarantees | And allows an earning of | |||
|---|---|---|---|---|---|
| 3 | cents | 4 | per cent | 10 | per cent |
| 4 | 3 | 1⁄2 | 9 | ||
| 5 | 3 | 8 | |||
| 6 | 2 | 7 | |||
| 7 | 1 | 6 | |||
| 8 | 0 | 5 | |||
To make a workable contract of this sort there would first have to be an agreement as to the corporation capital upon which earning percentages are to be based. If this could be made equal to the real investment it would be absolutely just to both the public and the corporation. However, the so-called unearned increment would in some cases have to be considered. Publicity in accounting, capitalization, bonded indebtedness and earnings, and the feeling engendered that the public is in a sense a co-partner with the corporation would add to more harmonious relations between the two.
Similar contracts might be arranged between bus lines and the city, or between bus lines and the state where rural roads are used, and between railroad and other transportation corporations and the Federal Government for interstate lines.
Objection may be raised to this plan on the ground that it violates usury laws. Nearly every state in the Union provides by law for a maximum rate of interest. Laws of this kind have existed almost since the beginning of history and are so imbedded in the minds of the people that they believe 6 or 7 per cent is all a public service corporation should be allowed to make on its investment, when as a matter of fact all sorts of private businesses are making profits many times that amount without hindrance by law or public sentiment. People who risk money in adventures which are in general for the good of the public should be allowed returns fully as high as those suggested, even though they do go beyond the customary 7 percent. Whatever the right figures are careful accounting and publicity will have a tendency to establish, and once established they ought to be as stable and permanent as life insurance rates and thus encourage the investment of funds in such enterprises.
Legitimate Fields of Transportation Agencies.
—Agreeing, then, that the present systems of transportation should not be put out of business by less efficient ones, what seems to be the most feasible interrelations that will allow all of them to live and let live?
There seems to be no doubt but what the railroads can and do transport large quantities long distances quicker, better, and more efficiently than can be done on the highways. Highways may be considered as feeders of the railways. With good roads the zone from which the railway can profitably draw products for long distance or quantity transportation is widened, and again widened very materially when better roads allow the use of motors in place of horses. This, if no other railway interferes, means a larger grand total of traffic hauled. Again the character of the farming along the zone served by a railroad will depend upon the facilities for marketing as well as soil and climate. Those products ordinarily called perishable may be raised if the roads are good so that they may be marketed quickly and cheap enough to compete with other localities. Such produce yield a larger net return per acre than the staple grain products. Intensive farming is usually necessary in such cases so that a smaller farm will support a family allowing an increase in rural population, a thing most highly desirable in this country. The railroad benefits again, then, because of the increased produce raised by intensive farming brought about by quick marketing facilities, and by increased freight and passenger traffic necessary to supply the greater population.
Furthermore, if roads were good throughout the year marketing would be spread over the entire period and there would not at times be a glut with corresponding scarcity of cars, and other facilities for handling. If cars, warehouses and elevators were sufficient to care for these periods there would be an over supply of facilities at other times and capital would be unnecessarily tied up producing larger overhead charges. With good roads there would likewise be less need for large quantities of money at particular periods of the year as uniform marketing would allow a smaller capital to be turned oftener. Moreover, unproductive branch lines would by the increased traffic brought to them by the improved highways be either made productive or they could be dispensed with altogether. The unproductive short-haul traffic would then be cared for by electric railways, motor trucks or even by horse wagons.