incomes after some years to the same rate--the same percentage
of invested capital--that the income from other capital represents.
New plants and enlargements of old ones should be allowed to earn
enough to furnish an incentive for providing them as fast as the needs
of the public require it.

_How Insuring a Fixed Amount of Total Earnings would affect the Rates
charged for Freight._--It goes without saying that the general
increase of traffic, while the freight charges remain the same,
increases the net earnings of the carrying companies. Therefore the
policy of keeping the net earnings at a fixed total amount would mean
a reduction of rates for freight and passenger service. We do not here
raise the question how much reduction will be required for the purpose
in view--that of transferring to the people at large whatever now
constitutes a genuine monopoly profit. In the case of some lines there
is, it is safe to say, no such profit, and it will be impossible to
tell how much of it elsewhere exists till some careful appraisal of
plants and equipments, on the basis of the cost of duplicating them,
shall have been made. What we need to know is that, by the aid of such
an appraisal, the state can, if it will, secure in the department of
carrying the result which is automatically secured elsewhere, namely,
the prevalence of charges which afford normal returns on invested
capital as well as wages for every kind of labor.

_Elements of the Problem not included in a merely Economic Study._--It
will not fail to occur to any reader that in making the present study
of railroads a very general and purely economic one we leave out of
account some facts of great importance. We take no account of
corruption within the corporations which do the carrying, nor of
corruption in the relation between them and the officials of the
state. Stockholders within the corporation are likely to have their
interests betrayed by those who are appointed to take charge of them,
and citizens of the state are likely to have their greater interests
betrayed, in a like manner, by their appointed custodians. We cannot
here discuss the various plans by which directors plunder their own
corporations, nor the ways in which public officials betray the
people. All of these abuses are disturbing influences in the economic
system; and all of them interfere with the adjustment which gives the
highest productive efficiency, and contribute a full share toward
putt