people seem to be able to see what the effect of a street railway rate is as regards the railway's ability to render service. Street railways are one of the most important adjuncts of our civilization. The more they are impaired the faster will be the decrease in the number of comforts and conveniences which we possess. If they go from bad to worse much longer something radical will have to be done. The country has got to have them, and if it can bave them in no other way the municipalities will be obliged to acquire and operate them; but in the long run this is not likely to help the situation in the least, for it is a safe assumption that the municipalities will have no more success in operating them than the federal government has had in operating the steam railroads. As we have said, the government has asked Congress to advance $1,200,000,000 to help it out; think what a state of affairs we shall have if the municipalities throughout the land have to resort to the same practice in connection with the street railways!

These are only a few cases; they might be multiplied indefinitely. A few words, however, should be said about private industry, over which the government has not tried to exercise anything like the control which it exercises over public utilities. Here we find ignorance of the proper methods of industry on the part of both employers and employees. While there are many shrewd employers, there are also many incompetents, as anyone can see for himself by turning to the proceedings of the insolvency courts; and while there are many shrewd, sensible, well-informed employees, there are also many ignorant, unthinking ones. The worst of the labor situation is that many an employee who knows better allows his policy to be dictated by bis ignorant associates, the effect being just as bad as if he were ignorant himself.

Now if what we have said, or any considerable part of what we have said, is admitted, one need not hesitate in declaring that a dangerous situation exists. An English writer of high reputation said recently that this is a half-baked world, and he is probably right. Everyone of us, in fact, knows that as regards many things he is half baked; that is, he has an insufficiency of knowledge for handling these things. Each of us has some specific knowledge, enough to accomplish necessary results. A sensible man is pretty sure to know that he has many limitations; but the less one is conscious of this the more he thinks he knows everything.

Let us, for the sake of brevity, and without any invidious intent, admit the view of our English friend that this is a halfbaked world. It follows that we cannot be too quick in making it a wholly baked world. We need to find out with some approach to accuracy just what we know and what we do not know. We must confess that the task is a puzzling one, and yet with democracy spreading like wildfire over the face of the earth, and with the demands of the average man finding readier acceptance with government, it is as plain as daylight that something should be done more properly to capacitate the average man to play a beneficent part in human affairs. As we have said before, it is really not a question of making the world safe for democracy, but of making democracy safe for the world. This world always has been, is now and always will be a safe place for anyone who knows how to use it. It is said that the surest way to teach a person to swim is to throw him overboard, but that is the very worst way to teach a person to be a safe member of society. It is a sad state of affairs if a man can become a safe member of society only by being brought face to face with the fact that he is in a life and death struggle. It is too late now to apply an educational draft and it looks as if we could learn wisdom only by hard experience. We have had hundreds of millions of dollars worth of experience in running the American railroads after a novel plan, and it may cost us hundreds more before we have learned all there is to be learned. This is only one experience through which we are now passing, or may have to pass.

Burdening the Needy

The Federal Government has shown concern over the situation of the public utility companies throughout the country. It realizes that the scale of wages which it felt obliged to establish through the Federal War Labor Board, together with the high cost of materials and labor in all branches of the operations of utilities, has made it difficult for them to give service and care for their financial needs. The Federal Government has felt that it had no power to order increased rates to meet these added expenses, but it has tried in such ways as it could, to induce local authorities to increase rates.

Now it is proposed that the President appoint a special commission which will investigate the condition of the utilities

so that moral influence may be brought to bear on local authorities and help in making just conditions for the utilities to operate under. In spite of the necessity of relief measures in the income tax bill, Congress, nevertheless, imposed upon the utilities taxes which have borne very heavily, because they dip into the small margin that is left after paying operating expenses and interest, and thus the utilities have earned much less than is necessary to their successful continuance. These taxes, though seemingly levied against the owners of these properties, must, of course, come finally out of the users of these utilities. Either the companies are not able to give the service that they would otherwise give to the car riders and users of electric light power and gas, or if the companies get any relief in the way of rates the rates must be just so much higher because of these taxes. Under the circumstances there seems no good reason whatever for retaining them. The one thing that Congress can surely do to relieve the utilities is to remove these income taxes.

THE PUBLIC UTILITY SITUATION

It is our belief that despite the difficulties of the war period there is a solid basis for optimism in the public utility situation, and that, at present prices, with conditions improving, the opportunity is open for profitable investment in many securities of established companies. President Wilson, in his recent message to Congress, has called the attention of the country to the need of constructive action in regard to public utilities. Acting upon the joint recommendation of the Secretaries of Commerce and of Labor the appointment of the Federal Electric Railways Commission was announced on June 5th. This Commission has been instructed to investigate and find a solution of the street railway problem. The question, therefore, of restoring public utility credit has become definitely recognized as one of the most important domestic matters to be solved during the coming period of readjustment.

This credit must be re-established on a basis that will insure to this great industry, representing an investment of rising twelve billions of dollars, not only an adequate return on the capital already invested but also sufficient safeguards for the new capital that must continually be attracted so that utilities may serve in the growth of the Nation. One must lose faith in our institutions and in the common sense of the American people to believe that necessary readjustments in rates for service will not continue until capital is again forthcoming for investment in this industry.

The service rendered in supplying light, power, gas and transportation in our cities and for our manufactories is as fundamental to the industrial and economic life of this country as are our railroads, our mines, our oil fields, our agricultural lands and our factories. It is estimated that the urban population served by the street railway and its interurbans is upwards of 43,000,000, and that they move over 20,000,000,000 passengers annually. More than 60 per cent of the industrial and factory power of the country is furnished by light and power companies and the proportion of our total population of about 107,000,000 not touched by either electric light or gas is very small indeed. The savings of the country invested in this branch of industry as reflected in the holdings of public

utility securities by savings banks and societies, by trust companies, life insurance companies, endowment funds of educational institutions, hospitals and churches, besides the holdings of thousands of individual investors, both rich and poor, are more far-reaching than most people realize.

Yet, this great group of public service companies, serving national needs, shouldering all the higher costs of labor, taxes, materials and supplies occasioned by the war, received practically no financial aid from Governmental sources and no assistance in a comprehensive plan for effective and speedy relief in the way of securing higher rates and fares, except as could be worked out by each individual company through the slow method of application to the State Commissions, municipal authorities and referendum vote. This great industry was obliged to "carry on," and the record achieved instead of deserving the more or less popular comment, "What is the matter with public utility credit?" is more worthy of the question, "Why is it in such comparatively good shape as it is?" The fact is, that public utilities did "carry on." In spite of the difficulties of operation they took up the war burden with no guarantee such as that which went to the farmer for the price of wheat, and with no fixing of minimum prices for their product such as was placed on other basic commodities in order to encourage production, and with no guarantee from the Government such as was established in the control of the railroads, telephones and telegraphs.

Capital had to be secured to take care of maturing obligations, amounting in 1918 to over $225,000,000, at interest rates in many instances much higher than the fixed rate of return allowed on the investment by franchises and other regulations, and with the temporary sacrifice in many cases of a large part of the equity value. In normal years the amount of new money required annually by public utilities for extensions to plant aggregates from $600,000,000 to $700,000,000. During the period of the war these requirements were cut to approximately $250,000,000 per annum, but this money had to be raised in addition to the maturing obligations. In not a few cases new plant was supplied and financed for war requirements which may prove unnecessary when peace conditions are completely restored. No broad provisions were made to enable public utilities to write off expenditures of this kind to "war loss," yet we read that in the operation of the railroads the