d to by expert directors to obtain without compensation the
property of their less sophisticated fellow stockholders. One railroad
could no longer obtain control of another by acquiring an insignificant
part of the sum total of its securities. There would be no longer any
clashing between the interests of bondholders and stockholders, and
railroads would no longer be managed in the interest of a small minority
of their owners.

In addition to the cancellation of all railroad mortgages the State
should require that all railroad stocks should, in the future, be paid
in full. Furthermore, roads should be built only from the proceeds of
the capital stock, and the expense of repairs should be defrayed from
the revenues of the road. Dividends should only be paid from surplus
earnings and should in no case exceed a fair rate of interest on the
actual present value of the road. The statistician to the Interstate
Commerce Commission suggests the creation of a special commission
charged with the duty of converting the actual capitalization of
railroad lines into a just value of their property. To do justice to
both the railroads and their patrons in the fixing of rates, it is
important that the just value of railroad property be ascertained, but
the work could probably be done with less friction by a cooperation of
National and State commissions. A number of reforms are needed within
the province of railroad management. Passenger rates are, as a rule, too
high, and out of all proportion to freight rates. Many passenger
tariffs still recognize the old stage-coach principle of fixing the fare
in an exact proportion to the distance traveled. Thus a passenger who
takes the train for a five-mile trip pays only fifteen cents for his own
transportation and that of one hundred pounds of baggage, while the
passenger who buys a ticket for a journey of one hundred miles pays, on
most American lines, exactly twenty times the amount paid by the
five-mile passenger. Here the principle of collecting terminal charges
is entirely ignored. Sufficient inducements are not held out to the
passenger to prolong his journey, and as a consequence of this
short-sighted policy of the railroad companies the average distance
traveled in the United States by each passenger, instead of having
gradually increased, has gradually decreased of late years until it is
now only 24.18 miles. The average freight haul in the United States is
120 miles, or about five tim