The heart of the railroad problem: The history of railway discrimination in the United States, the chief efforts at control and the remedies proposed, with hints from other countriesParsons, Frank
History
The heart of the railroad problem: The history of railway discrimination in the United States, the chief efforts at control and the remedies proposed, with hints from other countries
Parsons, Frank
Railroads -- Freight -- Rates -- United States; Railroads and state -- United States
Germany tried private railways for 25 years, and Austria tried them over
a quarter of a century, and they have tried the two methods side by side
ever since the public system was organized. In New Zealand, also, and
Australia the two systems have been tried side by side. And in every one
of these countries where they have thoroughly tried both systems the
conclusion by an overwhelming consensus of opinion is that public
railways serve the public interests best, and also make lower rates and
serve the people at less total cost. Switzerland, after a careful study
of both systems in various parts of the world, came to the same
conclusion, and her people voted 2 to 1 to transfer the railways to
public ownership and operation. All this is very strong evidence, and if
we turn from the tangled web of an international comparison of averages
and look at the principles and causes at work in the case, it will be
clear that public ownership tends to lower rates as well as to conserve
the higher wealth.
In the same country and under similar conditions otherwise than in
respect to ownership and control, public ownership tends as a rule to
make lower rates than private ownership. This tendency results from the
fundamental difference of aim between the two systems. Private monopoly
aims at dividends for stockholders; public ownership aims at service for
all. A normal public institution aims at the public good, while a normal
private monopoly aims at private profit. It serves public interest also,
but such service is incidental, and not the primary purpose. It serves
the public interest so long as it runs along in the same direction and
is linked with private profit, but when the public interest departs from
or runs counter to the interests owning or controlling the system, the
public interests are subordinated.
The conflict between public and private interest is specially strong in
the matter of rates. The rate-level that yields the greatest profit is
much higher than the rate-level that affords the greatest service, or
the greatest service without deficit; and since private monopoly aims at
profit it seeks the higher rate-level. Public ownership aims at service,
not at profit, and therefore gravitates to the lower rate-level, where
traffic and service are greater.[419]
There need be no hesitation, therefore, on economic grounds about
pressing toward the dominance of public interest, either in the form of
regulation, or, when political conditions justify it, in the more
complete form of public ownership. And this dominance of public interest
is the only thing that can eliminate unjust discrimination and establish
an impartial railway service.
Public-domain text, read in full here on John Shaqi.
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