bonds of the
railways, it is not proposed that it shall really assume any risk, as
will be seen from the further description of the powers and obligations
of the operating corporations.

These should be essentially private companies, but there should be two
or three representatives of the government on the Board of Directors.
They should be required to operate the roads in a safe, efficient, and
economical manner, and to keep accurate and simple records, open to the
inspection of the Government Commissioners, of the receipts and
expenditures on every separate line of road. The rates of fare and
freight should be, first of all, stable. When once fixed they should
neither be raised nor lowered except by the direction of the Government
Railway Commissioners. Next--and this is the cardinal feature of the
whole plan--it should be the endeavor to fix the rates of fare and
freight at such a point that the total receipts would be sufficient,
first, to pay the whole expense of operating and maintaining the road;
second, to pay the annual rental of 31/4 per cent. interest on the cost of
the road; and, third, an annual dividend to the stockholders of the
operating company of from 4 to 8 per cent. The capital stock of the
operating company should be fixed by law at about 11/4 times the actual
cost of rolling stock and machinery. The operating company should be
allowed to issue only one class of securities, and these should
represent at par the actual cash capital invested by the operating
company.

Under this plan it is evident that every community would pay its
equitable share of the cost of transportation, since the rates would be
based on the cost of service.[6] Instead of roads running along,
bankrupt for years, as now, we would have every community paying for
its transportation facilities just what it cost to furnish them. But if,
on any road, such a rule would raise the rates above a certain
prescribed maximum point, then the rate could be lowered, if necessary,
to a point where it was only great enough to pay the operating expenses;
and part or all the bond interest would be paid out of the government
railway fund.

[6] It should be explained that it is only proposed to base the
_rates as a whole_ upon the cost of service. As regards the relative
rates on different commodities, the author, in common with all who
have given careful study to the question, recognizes that the only
equitable principle for