the companies, so far as they may do so by the establishment of reasonable rates, to earn a return upon the original investment without deduction for depreciation except when due to mismanagement, this standard has in certain cases proved of little practical value, as many of the companies are apparently unable, under any rates which they may charge, to earn a fair return upon that basis. Moreover, in any event, the measure of value in the case of purchase or condemnation of the properties is not necessarily the same as when the value is fixed for rate-making purposes. In the case of ordinary land takings, no one would think of basing the compensation upon original investment, and it would be difficult to demonstrate that this should be the rule in the present instance. If the commonwealth should acquire the properties, there seems no good reason for departing from the general rule by paying more than their present worth or reasonable market value. The special tribunal in assessing the damages to be paid by the commonwealth, would undoubtedly give due consideration to all pertinent facts and indicia of value, such as the original investment, the physical condition of the properties, the character of the territory served, the market value of securities, the recent course of net earnings and the extent to which the possibility of additional earnings has been discounted by increases in fare already made. How are the Properties to be Managed and Operated? There is room for wide difference of opinion in considering this question and we shall now attempt only to outline a general plan which might be followed, if all the properties were acquired with the two exceptions above noted. Management and Operation. (1) Management. Somewhat the same plan might be followed as in the case of federal operation of the steam railroads, namely, the appointment by the governor of one man as Director General of Street Railways, with authority to retain the present organization or to build up such other organization for their management as might seem to him desirable. No doubt he would wish to subdivide the system into relatively small districts in charge of responsible managers, so that the advantages of direct local supervision over service might be secured, but to handle certain other matters, such as the purchase of supplies, or plans for rehabilitation, through a central department. In our judgment a single-headed direction of this kind is preferable to a board of trustees, there being less division of responsibility, quicker action and less liability to change. The advantages of consultation with others could, of course, be secured through the appointment of advisory committees. Such a director general should be given a reasonably long term. of office, say five years (the governor retaining the power of removal for cause), and receive a salary comparable with those paid in private employ for similar responsibility. The position would be a difficult and trying one at best, and some assurance of adequate tenure and compensation would be necessary to attract a man of the requisite capacity. (2) Rates. The director general could be given full power to fix rates in accordance with certain general principles laid down by the General Court. There should be a minimum fare, we believe, of not more than 5 cents, but with this exception he could be given discretion to establish such schedules as would, in his judgment, produce the maximum revenue consistent with the free movement of traffic, the prevention of congestion in the city centers, and the proper development of the country districts. Very likely this would result in a return to fares not widely different from those which were in force. four or five years ago, although higher in certain instances. The establishment of substantially lower fares than those now prevalent would make it possible, without harm to the public interest, to eliminate most of the special reduced-rate tickets, and it would also be consistent with the theory of public operation to eliminate half-fare tickets for school children. These tickets, however, are so firmly imbedded in the customs and traditions of the state that their elimination might be inexpedient, regardless of theory. (3) Supervision. It is our belief that the roads should continue, for the present at least, under the supervision of the Public Service Commission with respect to accounting, service and accommodations, and it is by no means certain that there should not be an appeal to the Commission on rates as well. The director general would be primarily an executive officer, and experience with federal operation of the railroads has shown the need for some independent, semi-judicial and public tribunal with authority to act, in effect, as an arbiter of disputes. His time ought not to be taken up by long public hearings, but such hearings ought to be given by some tribunal, when the public believes that sound basis for complaint exists. The presence of an independent commission with powers of investigation would also help the governor in appraising the quality of the management, and would tend to prevent certain abuses which might otherwise gradually creep in. - (4) Jitneys. If the street railways should be publicly operated at low rates of fare, the commonwealth would be entirely justified in protecting itself against destructive and unnecessary competition. A corollary of public operation, therefore, would be complete public control over the "jitney" situation. Excepting ordinary taxicab and carriage service, if any other common carriers of passengers are desirable upon the public highways, in addition to the street railways, the commonwealth should itself operate them, through the medium of the director general. (5) Taxation. If the street railways should become public property, there seems no reason for retaining present schemes. of taxation, unless it could be shown that their elimination would result in an unfair burden upon communities having a disproportionate amount of street railway real estate. In any event, however, we believe that the present excise tax should be abolished, and some working agreement substituted between the municipalities and the commonwealth with respect to the maintenance and renewal of the street surface between the tracks. Undoubtedly the presence of railway tracks to some extent increases the expense of caring for the streets. The plan which we recommended to the Street Railway Investigation Commission last year was as follows: (1) Abolish the present "excise" tax. (2) Require the companies to maintain in good repair, but not to renew, the street surface between their rails and tracks or, at their option, to reimburse the municipalities for the cost of such work. (3) When this surface is renewed, or replaced with a different form of paving, require the companies to bear one-third of the labor cost, the municipality paying the remainder and the entire cost of all materials. (6) Rehabilitation. Direct acquisition of the street railway properties would enable the commonwealth to provide the capital necessary for rehabilitation and improvement, by the issue of State bonds. It would, of course, be proper to issue such bonds to cover the cost of additions and betterments. It would also be justifiable, we think, to spread the cost of extraordinary renewals necessitated by past neglect, beyond those which would normally be made from year to year, over a period of years by issuing serial bonds payable in annual installments. - (7) Apportionment of Costs. Under the system proposed, a portion of the cost of street railway service would be met by the car rider, while a further portion, unless conditions radically change, would fall upon the community as a whole, being paid in the first instance at least out of the state treasury. This latter portion could be levied upon the cities and towns served by the railways, in proportion to trackage or population or both, following the plan adopted in the special Boston Elevated statute of last year, or it could be met directly by the commonwealth through an increase of certain special forms of taxation, such as the inheritance tax, the income tax, or the tax upon automobiles. This would be purely a question of public policy, and of obtaining the best average results for all concerned. Any general increase in real estate taxes would be met, no doubt, by an increase of rents or prices, and it might prove that the burden could be carried more easily and to greater public advantage in other ways. One great objection to the state's carrying the burden directly through some form of general taxation would be the fact that the properties taken over would probably not include those operated by the Boston Elevated Railway Company. This objection, however, would be met in large part if the present Boston Elevated statute were amended to provide for a return to something like the old rates of fare, any deficiency being paid out of the public treasury, for in such an event the railways in the Metropolitan district would be placed upon substantially the same basis of operation as those in the rest of the state. The Public Burden Involved. It is practically impossible to give any accurate estimate of the burden which might fall upon the public treasury, if the properties were so acquired, for the following important factors are uncertain: --- (1) No one can foretell the purchase price which it would be necessary for the commonwealth to pay. If what we conceive to be the usual rule in condemnation proceedings were followed by the courts - namely, to measure the damages by the amount in dollars which a purchaser, not under compulsion to buy, would part with to obtain the property and which a seller, not under compulsion to sell, would accept for it the best that can be said is that the amount would probably be substantially less than the original investment. In view of the accrued depreciation, the deferred maintenance, the present market value of the securities, and the fact that certain lines in the state which were permitted to charge practically what they pleased have been abandoned and sold at scrap values, it is inconceivable that this would not be the case. (2) No one can foretell what the revenues would be. While the plan contemplates a return to moderate fares, it provides for protection against jitney competition, and it is also probable that the lower fares would in themselves bring back gradually much of the traffic which has been lost as rates have been increased. An important factor would also be the return of the soldiers to the state. The commonwealth, moreover, would be at liberty at any time to place a larger share of the burden upon the car-riders, if such a course were deemed expedient. (3) No one can foretell what the expenses would be. While it is not likely that wages will fall, the efficiency of labor may increase, since the quality has undoubtedly deteriorated during the shortage caused by war conditions. Prices of materials and supplies may, however, decrease, and this is especially true of coal, which is a big item in railway expense. It seems hardly probable that the present abnormal rates for water transportation will continue, and these have played a large part in the high. cost of fuel. Expenditures of capital for rehabilitation and improvement. are likely to bring reduction in expense, as hereinafter shown, and direct public responsibility for the roads should increase good-will, make better traffic regulations possible, and lessen injury and damage claims. The results from operation of the railways in 1918, which differ widely from the results in 1917, are not now available. They can be secured, however, at a comparatively early date and it will then be possible for the Commission, by making due |