420 TWENTY-SECOND ANNUAL YEAR BOOK— PART V 



carriers as a whole * * * earn an aggregate annual net railway oper- 

 ating income equal, as nearly as may be * * *." 



They shall do it! That is not permissive! They must do it! Don't 

 you see? Now, the commission has done it. 



What have you got? You have got a law which says that the commis- 

 sion must fix rates that must produce 6 per cent of the value found, or 

 a little over one billion and eighty million dollars every year. That is 

 over and above all charges — over and above all operating expenses; over 

 and above sinking fund for maintenance of ways and structures, and 

 sinking fund for maintenance of equipment and working capital. I want 

 to ask you, my friends in the farming business, wouldn't you be most 

 delighted if you could fix a rate so that you could have your working 

 capital furnished you to make the other fellow turn it over? This is the 

 gospel of the agricultural country, and I tell you its salvation is to get 

 rid of it. 



I put this up some time ago, and a gentleman said to me, "Mr. Clark, 

 you cannot be right when you say that they took into consideration the 

 getting of working capital through these rates." . I replied, "Yes, I am 

 right about it." "No, you cannot be right," he answered, and I said, "I 

 admit it is unbelievable, but it is so." Now, let me read it to you: 



"In properly appraising all these elements of value, we are mindful of 

 the fact that the carriers are operating units and going concerns. This 

 fact has been given due consideration in the light of the financial history 

 of the transportation systems of the United States, as developed by the 

 record and as known to us. The needs for working capital and materials 

 and supplies on hand have been considered and allowance therefor has 

 been made.' 



That is out of ex parte 74 (58 I. C. C. 220-229), in which the ruling was 

 made, and that is the ruling of the commission. Where they need work- 

 ing capital, they are just reaching down into your pocketbook and taking 

 out what they want and putting it into the pocket of the other fellow for 

 working capital. Is that a fair basis for rate-making? I would say that 

 a fair basis for rate-making is the value of the service rendered, and 

 whenever you get away from the value of the service rendered, you go 

 to a false economic basis and it is bound to lead some to ruin, because 

 somebody gets the thing that he doesn't earn. That is the thing that 

 we are working with. 



How can we remedy it? I'll tell you how to remedy it. It doesn't 

 take a genius to write a law. I think I can write one myself. All you 

 have to say is that the congress of the United States shall repeal all 

 these sections of this law and substitute in place thereof that the Inter- 

 state Commerce Commission, in fixing rates, shall initiate and determine 

 rates, and put them into force, that will measure the value of service 

 rendered. Now, that doesn't take very much time, does it? But let me 

 tell you, my friends, it takes a lot of courage, because I know and you 

 know the power that is brought to bear upon the man who wants to 

 represent the public in these matters, and especially the agi'icultural in- 

 terests — he has got to be made of iron. 



The bonds of the railroads of this country are 11 billion dollars. Mind 

 you, 11 billion dollars. I am talking by the books. I don't mean to say 



