110 TRANSPORTATION 



of interest is also often found in the establishment of a local industry 

 in a new country. Suppose it is a question of establishing a new 

 paper-mill at Denver, Colorado. The carriers serving Denver have 

 enjoyed a remunerative traffic in the carriage of wood-pulp paper over 

 a long haul from Wisconsin or elsewhere. The establishment of this 

 paper-mill will mean the substitution of a short haul to and from 

 Denver of wood pulp from Colorado, and of paper carried to a local 

 market in the same state. Argue as you may that every industry 

 added to Denver inures to the permanent interest of every carrier 

 which serves that city, yet the fact remains that the loss of traffic 

 is direct, while the ultimate gain is indirect and will have to be 

 shared with other roads serving the same territory. That this 

 argument is a cogent one may be illustrated any number of times 

 by the dog-in-the-manger policy which is too often taken by traffic 

 managers. 



Our second principle is that, conceding a joint permanent interest 

 of carrier and public in a certain policy, the temporary welfare of 

 the management may often be directly opposed to that of the 

 community. 



The best illustrations of this contingency are found in certain 

 phases of speculative finance which, like the poor, are always with 

 us. Of what use is it for the far-sighted traffic manager to seek 

 permanent development of his territory if a gang of speculators are 

 in control of the situation. What care they for the future growth 

 of the territory at large. They may merely hold the control of that 

 road for a few months in order to sell it out at a profit; or, perhaps, 

 to secure profits by speculative manipulation vastly exceeding 

 any legitimate earnings from operation. A huge volume of earnings 

 must be made, let us say, to attain this result. Efficiency or safety 

 does not count. Expenditures for permanent improvements are 

 sidetracked and the country is practically exploited until such 

 time as these speculative interests have accomplished their object 

 by selling out to their rivals, or perhaps, have been forced out of 

 control by bankruptcy. 



Results of the experience of the last ten years in the field of high 

 finance emphasize the necessity of some adequate supervision by 

 federal authority, not only of rate-making, but of financiering. 

 This is perfectly evident. Such notorious episodes as the reorgan- 

 ization of the Chicago & Alton in 1899, by which its capital stock 

 was watered four times over; the stock-market raid upon the Louis- 

 ville & Nashville in 1903, by which its sale to the Atlantic Coast Line 

 was forced; and the entire process of financing of the Great Rock 

 Island system, all emphasize the need of reasonable control. It is 

 useless to control rate-making so long as juggling with securities in 

 this way is possible. In this respect, both investors and the public 



