-it will do all it can toward securing an
approximation to the condition which affords the largest product of
social industry. It will help to make the resources of the people do
their utmost in yielding an income. Total returns covering all costs,
a reduction of those charges on local traffic which have prevented
industries from springing up at intermediate points between favored
centers, a gradual increase of local production without any positive
repression of production elsewhere--such are some features of the
general change which the future should bring and which only the power
of the state can make it bring.

_How the State may secure what Competition secures in Other
Fields._--In general industry the rivalry of entrepreneurs carries
prices to a level fixed by costs, but in transportation the rivalry
has so largely disappeared as to prevent such an outcome. The state
cannot restore much of the vanished rivalry and would cause an
unnatural condition if it did so. We have seen toward what an abnormal
level of costs a sharp "freight war" carries rates. What the state can
do is something which an instinctive judgment of the people is
impelling it to do; namely, to adjust rates directly and bring them
gradually toward the standard to which competition, if it were working
as it elsewhere works, would automatically bring them, namely, that at
which wages and interest are fully covered. A surplus above these
outlays could always be temporarily secured wherever a special economy
had been effected, and the source of legitimate profit would be open
to carriers as it is to producers generally. How much should be
reckoned as interest depends on the question how the capital itself is
estimated, and here again the instinct of the people has been correct.
It will not accept as a measure of true capital the market value of
all the stocks and bonds the railroad has issued. The quotations of
the market make the total values of the stocks and bonds equal a
capitalization of its total earnings, and these may include a profit
due to monopoly. If a state were to figure the capital in this way,
and then so adjust rates as to allow ordinary interest on the sum thus
computed, it would merely leave total returns as they are. It might
change comparative charges, but not the sum total of all of them.

_How Capital should be Estimated._--In that static condition in which,
as we have shown, capital is as productive in one subgroup as in
anothe