THE PROBLEMS OF TRANSPORTATION 109 



panics to titanic contests between consolidations in case of a suffi- 

 ciently severe and prolonged period of depression. 



But whatever the future of competition may bring forth, one 

 thing seems clear. If the carriers are to get together for the ad- 

 vancement of their interests, it behooves the public to do the same. 

 More and more is it being appreciated that ruinous warfare, be it of 

 railroads or between labor and capital, shall not be permitted to 

 jeopardize the welfare of the country at large. And the phe- 

 nomenal development of consolidation which makes such warfare 

 possible adds yet another forcible reason for the people to provide 

 adequately for safeguarding the public weal through governmental 

 supervision. 



Governmental Regulation 



It is often urged against a further extension of governmental 

 regulation of transportation that the interests of the carrier and 

 community are identical; in other words, that the interest of the 

 road in charging what the traffic will bear is a safeguard for the public 

 against charging what it will not bear. There are three objections 

 to this statement, or, in other words, three reasons why the adjust- 

 ment of freight rates under the present conditions of legally unre- 

 stricted private initiative are unsatisfactory. 



These reasons, concisely stated, are : First, that the permanent 

 interest of the carrier is often directly opposed to an adjustment 

 favorable to the commercial or industrial welfare of the community 

 served; second, that even if the permanent interests of the carrier 

 and public are harmonious, yet the temporary interest of the carriers 

 may be at variance with a policy favorable to the public; and 

 third, even if, as before, the permanent interests of the carrier and 

 community are one, competitive forces may prevent the manage- 

 ment of the railroad from doing what it concedes to be best and 

 what it would do if its hands were free. 



Let us illustrate these three possible cases by concrete illustrations : 



The clearest instance of a permanent divergence between the 

 interests of the carriers and the public is afforded by the great in- 

 crease and maintenance of freight rates yielding abnormal returns 

 to the carriers, to which reference has already been made. Let us 

 agree that equality as between competing shippers may obviate 

 any loss of those shippers due to an increase of freight rates; inas- 

 much as they all being raised at the same time simply shift the 

 burden upon the community by raising the price of their commodity. 

 But this very fact merely changes the contest of rights between the 

 shipper and the road to a divergence of interest between the carrier 

 and the consuming public. The case is so plain that it needs no 

 further elaboration. Another illustration of the same divergence 



