United States Senate in regard to Increased Price of Shoes have been printed in four parts (Washington, pp. 118).

The United States Shipping Board has issued The Shipping Act and Merchant Marine Act, 1920, revised to June 1, 1920 (Washington, pp. 151).

The Merchant Marine Act, 1920 has also been separately printed by the American Exchange National Bank of New York (pp. 40) and by the Committee of American Shipbuilders, 30 Church St., New York City (pp. 35).

The Division of Foods and Markets of the New York State Department of Farms and Markets (Albany) is publishing a monthly bulletin entitled Foods and Markets. It has also printed an eightpage circular on The Public Market, in which the advantages and disadvantages of such a market are contrasted.

There has been received the Fourth Annual Report of the State Market Director of California and Third Annual Report, State Fish Exchange (Sacramento, 1920, pp. 129).

The Industrial Commission of North Dakota has issued a pamphlet on The North Dakota Industrial Program, which contains a report on the organization of the North Dakota state industries, and the administration of related laws covering the protection and promotion of agriculture and other industries (Bismarck, May 21, 1920, pp. 86).

The National Foreign Trade Council offers to students of foreign trade or economics copies of the Proceedings of the National Foreign Trade Conventions at special terms. Information in regard to this can be obtained from O. K. Davis, Secretary, National Foreign Trade Council, 1 Hanover Sq., New York City,

Corporations

REPORT OF THE FEDERAL ELECTRIC RAILWAYS COMMISSION. Although the technique of regulation and the application of principles of financial practice already known in the field of public utilities occupy the major part of the report (Report of the Federal Electric Railways Commission to the President, August, 1920, pp. 30), it also contains some features of general economic interest and two with reference to taxes which will be of special interest to the economist.

The Federal Electric Railways Commission had no statutory basis. It was appointed by the President about June 1, 1919, in accordance with the suggestion of the Secretary of Commerce and the Secretary

of Labor, who pointed out the financial crisis of the street railways produced by mounting costs and inflexible fares, and urged an investigation by a broadly representative body of eight made up of one representative of each of the following groups: Treasury Department or War Finance Corporation, Department of Commerce, Department of Labor, National Association of State Public Utility Commissioners, American Cities League of Mayors, Amalgamated Association of Street and Electric Railway Employees, American Electric Railway Association, Investment Bankers' Association of America.

After holding hearings covering more than 6,000 pages of transcript and obtaining a great mass of information by means of questionnaires, and causing a thorough analysis to be made of the evidence so obtained, the commission met and framed a report, which reflects, as the commission confesses, decided concessions by some of its eight individual members.

Summarizing the commission's conclusions relating to regulatory technique and principles of financial practice, which have a general economic bearing, the commission declared that municipal ownership and operation do not at this time promise relief from the financial or social problems of street railway management, this largely because the city governments are not responsible enough for such undertakings, but that eventually such changes might become possible, especially if the relations between the companies and the cities can be rationalized and simplified by the adoption of the principles recommended by the commission; that efficiency of the street railways requires credit; that their credit has been destroyed by early mismanagement, particularly excessive capitalization and neglect to provide against depreciation; by overbuilding; by payment of excessive rentals to affiliated lines, and responding to excessive exactions of holding companies; by oppressive franchise burdens with regard to street paving and the like; and finally by mounting costs and inflexible franchise fares. The commission recommended the adoption of the indeterminate contract with the flexible rate; that the initial rate be fixed after a valuation, in the determination of which the original cost shall be primarily considered and which valuation shall then determine the capitalization; that regulation should be comprehensive, covering rates, service, financial accounting, depreciation reserves, and security issues; that such regulation although instantly local should be, especially as to service and rates, subject to final jurisdiction of the state commission; that the "cost-of-service" contract of the general type now employed in Cleveland and Dallas in which the invested capital is assured a fixed

return through a fluctuating fare varying with the net revenue may well be considered by urban communities if it be accompanied by proper reservation in the public of the right to become the owner of the property. The commission considered that the public gasoline conveyance should not be so restricted as artificially to deprive the public of a service which the street railway is unable to afford, but that it should be subject to taxation and regulation, in general equiva lent to that imposed on the railway, and that it should be required to obtain a certificate of public convenience prior to being allowed to compete directly with it. As to labor, the commission recommended a recognition of the right of collective bargaining, but emphasized the responsibility of the labor organization to insure compliance with arbitration awards and to procure the efficient coöperation of every individual for whose wage it bargains.

With reference to taxation of street railway property the commission in effect takes the position that the degree of taxation should vary inversely with the degree of regulation.

The argument on this point may be summarized as follows. The evidence shows that on the basis of the five-cent fare, the taxes represent about one half of a cent in the nickel paid by the car rider and thus contribute materially to the necessity for fare increases. It has been contended that the car rider should not be required to support the schools, almshouses, and other city institutions, but that the company should pay in taxes only such an amount as would reimburse the city for actual cost due to the presence of the street railway. Although there is much force in this idea, the time is not ripe for recommending its general adoption. The present heavy taxation came into being during a period of prosperity when the companies were essentially private concerns, relatively free from regulation, and therefore subject to taxation in no less degree than other private corporations. When a company comes to subject itself to such a comprehensive regulation as renders its property in effect a public instrumentality, tax exemption begins to be in order. This course has, indeed, been followed in Cleveland. To the extent that it may become possible in any community to exempt street railway property from taxation, the rider's carfare will come more nearly to represent the actual cost of rendering the service of transportation-in itself a desirable result. But the status of the company as a public agency should be well assured before such exemption should be attempted.

It is to be noted that the commission does not undertake to say how this tax, which is simply for the purpose of reimbursing the city for

its actual cost due to the presence of the street railway, is to be collected. Whether it be in the form of a tax on distributable net revenue or in the form of a property tax on a reduced basis, the consequent differentiation in the basis of profits or property taxation would naturally come to be applied to other public utilities under regulation-to gas works, telephones, electric light and power plants, and steam railroads; because in the social motive for reducing their cost to the minimum, and in the constitutional criteria for differentiation in their assessment, these agencies of public service are all assimilable. In other words, the Federal Electric Railways Commission has opened here for consideration a point which if it is to be dealt with at all, must lead us to contemplate an entirely new determination under modern conditions of the fiscal contributions of public utilities—a determination based upon the degree of their socialization. And such a new determination in turn necessarily suggests that to private property and activities unaffected with a public interest would increasingly be shifted the burden of supporting the machinery of our expanding governments. Here are implications penetrating deep into the old economic interrelations on which the typical state fiscal system in the United States has in the past been based.

Somewhat novel, but calling for changes far less fundamental, is the commission's suggestion that the property owners whose real estate receives new value through the construction of a street railway extension, particularly of a subway or rapid transit extension, should, in whole or in part, pay for such construction out of such resulting benefits. The commission, giving concrete examples of the enhancement of land values in New York through extensions of its subway system, and referring to testimony as to similar enhancements in Philadelphia, urges that the procedure generally employed in the United States for paying for the construction of streets and other public improvements out of assessments for benefits, be adapted to financing such street railway extensions. The suggestion is that the construction be paid for in the first instance by the city, at which time the property in the benefited district would be affected by a lien of limited but undetermined amount; that appraisal of benefits be made perhaps five years after construction; that owners be given the right to pay their assessments in instalments over a course of years; and that the amount finally payable to the city by the company as rental for use of such improvement depend upon the extent to which the total aggregate assessments might cover its cost, the rental being nominal if that aggregate should equal the cost. It is presupposed

that there exists such public control of accounting methods as would cause the resultant saving to the company to be exactly represented in its rate of fare.

By this method of financing the construction of extensions, says the commission, the public can avoid the dilemma presented by the fact that the higher fares necessary to fund a costly extension intensify the very congestion which such improvement is intended to relieve. It is urged that where such method appears practicable, it should be established whether by ordinance, by statute, or by amendment to state constitution.

The success of such a plan of financing an extension would depend largely upon the degree of special benefit reasonably certain to arise therefrom, so that in many situations the idea would not be practicably applicable. In addition to its most obvious advantages, it would tend to prevent improvident overextension through undue influence of land speculators, a typical evil of the past, now somewhat controlled by regulation. If wisely applied, it need not operate to deprive a city of such extensions as would be reasonably necessary. As pointed out by the commission, the problems incident to a city's owning waybearing structures and leasing them to the company have in the past been successfully handled in Boston and elsewhere.

Both of these suggestions of the Federal Electric Railways Commission in the general field of taxation ought to provoke fresh thinking and will, it is hoped, be at least helpful in the search for new bases of adjustment. LOUIS B. Wehle.

CONTROL OF PUBLIC UTILITY RATES IN THE STATE OF NEW YORK. One of the most important problems throughout the country has been the proper adjustment of street railway fares and other public utility rates to the increase in operating costs since 1914. The general difficulty has been the lack of effective machinery by which rates are fixed. In most instances the crucial point has been the investment entitled to a return; the amount has not been determined and there have been wide differences of opinion as to how the valuation should be made. Other perplexities have been the past excessive returns and how they should be used in the face of present deficiencies; franchise restrictions upon rates in relation to important privileges granted to the companies by the same franchises; interpretation of statutory law in relation to rates, and the powers of the public utility commissions.

In the state of New York all these difficulties have prevailed, and the legal situation has become more confusing by recent decisions of