354. THE OUTLOOK.—In view of the defective character of regulatory legislation previous to 1900, government ownership of railroads did not seem unlikely. But since the acts of 1903, 1906, and 1910, and especially since the passage of the Transportation Act of 1920, there has been such high promise of efficient regulation as to minimize the movement toward government ownership. Not only are old abuses now more likely to be remedied, but the Interstate Commerce Commission is now empowered to relieve the roads of many undeserved burdens. Especially is the Commission keenly appreciative of the necessity of stabilizing the credit of the railroads. Until this is done the investing public will have little confidence in the railroad business, and the roads will continue to be inadequately financed.
Perhaps the greatest problem now before the Commission is to complete the "physical valuation" of the railroads begun in 1913. This valuation aims to discover, by investigations conducted by expert appraisers, the actual value of all railroad property in the United States at the present time. On the basis of this valuation the Commission believes that it can estimate the probable amount of invested capital which the railroads represent. After this has been done, the Commission can calculate what rates the railroads must charge in order to earn a fair dividend on their money. The completion of this physical valuation is, therefore, necessary if the Interstate Commerce Commission is to fix rates which are just and reasonable from the standpoint of the public on the one hand, and from the standpoint of the railroads on the other.
QUESTIONS ON THE TEXT
1. What is the economic basis of natural monopoly?
2. Describe the regulation of local utilities.
3. Give the chief arguments in favor of municipal ownership.
4. What arguments are advanced against municipal ownership?
5. What is the extent of municipal ownership in this country?
6. Name some of the fundamental conditions of municipal ownership.
7. Outline briefly the development of railroads in this country.