Knowledge that Transforms

SERVICE CORPORATIONS Public opiinion is being educated by experience to a realization of the evil effects of leaving public-service corporations too much to their own devices. Flagrant and shameless attempts to water stock do not so easily escape detection as formerly. Yet there are subtle and elusive practices strongly suggesting stock-watering which may escape that scrutiny. It is the purpose of this paper to consider over-capitalization in some of its subtler phases, rather than in its grosser and more familiar forms. A public-service corporation is in its nature subject to stricter regulation than an ordinary commmercial monopoly. The attitude of our institutions permits the fullest freedom to all commercial enterprises and carefully avoids interference with their profits except for the purpose of checking practices in restraint of trade. Unless public rights are seriously invaded by interference with trade or by frauds on the investing public, it is to be expected that wide liberty will be allowed all ordinary commercial monopolies in the methods of conducting their finances. A public service corporation, on the other hand, is subject to stricter regulation than a "trust," because it is a public servant, and as such has special responsibilities and obligations. If it is inefficient in discharging its duties it should be dealt with as drastically as any incompetent public official; while if it is efficient i should be permitted every reasonable privilege and every legitimate opportunity which may lead to increased profits. The only way in which such increased profits may legitimately be earned is by an exceptional degree of skill in furnishing the public with superior service at minimum prices. If these general principles are borne in mind, many problems which have heretofore beeni confusing will become simplified. In Massachusetts, where the regulation of public utilities has reached a high standard, the advantages of limitation of capital are to some exent offset by the policy of sanctioning high dividends. Dividends of gas and street-railway companies in Massachusetts are nmulch in excess of an equitable rate fair alike to the public and to the corporation. The average dividends of the six leading Boston companies involved in last year's gas consolidation, for the vear

The fact is established that Germany has lately made great industrial advance; that the amount of goods proiduced and consumed has enormously increased; that her foreign trade has grown at a greater rate than that of other European countries. But the ultimate aim in studying the econoimic onditions olf a country is not to establish the amount of imports and exports, or the quantities of iron or textiles produced; these are only means to an end. The real object of all such inquiries is directly or indirectly to ascertain the degree of prosperity enjoyed by the people, and the causes therefor, so that other countries may learn to make use of the same means if they have brought prosperity, or to avoid them if they have proved obstructive. We want to know what effect economic changes have on the welfare of a people. Industrial progress is not always synonymous with economic prosperity. The darkest chapter in the economic history of England covers the period during the first half of the nineteenth century, which we know as the period of the Industrial Revolution, when the wealth of that nation was increasing by leaps and bounds, and the great mass of the people were living in the most appalling degradation o-n the scantiest incomes. ' A chapter out of the author's essay upon The Cause and Extent of the Recent Industrial Progress of Germany, submitted in the Hart, Schaffner, and Marx contest, upon which a first prize was awarded.