134

THE  A  B  C  OF  TAXATION

fore  should  have  the  right  of  way,  so  to  speak,  in  public
consideration,  then  the  next  question  is:
Shall  it  be  regulation  by  Legislature  or  regulation  by
Commission?
The  Legislature
Considerable  effort  has  been  recently  directed,
notably  in  the  mooted  question  of  the  New  Haven  and
Boston  &  Maine  merger,  along  the  line  of  regulation  by
legislation,  but  it  must  be  admitted  that  at  best
legislative  regulation,  being  uninformed  and  uninspired,
cannot  be  otherwise  than  arbitrary,  unaccommodating,
undiscriminating.
Perhaps  no  better  preparation  can  be  made  for  treating ­
  the  problem  than  to  endeavour  to  define  to  ourselves
as  clearly  as  possible  the  nature  of  the  task  proposed.
What  are  some  of  the  matters  for  which  regulation,
wisely  or  unwisely,  is  invoked?  First  and  indispensable ­
  are  public  audit  and  public  inspection;  the
questions  of  the  capitalisation  of  franchises,  and  the
capitalisation  of  earnings,  which  may  or  may  not  be
made  subject  to  a  general  law:  then  follow  the  problems
of  mergers,  absorptions,  extensions,  connections,  common ­
  use  of  tracks,  and  pooling;  the  question  of  rates
and  rebates,  standard  of  equipment,  strikes  and  wages;
exploitation  of  every  kind,  including  the  pocketing  or
sequestration  of  valuable  franchises  or  patents;  the
vicious  insurance  plan  of  control  of  stock  to  secure
control  of  salaries;  the  just  attribution  of  dividends  to
capital  and  profits  to  skill;  valuation  of  property;
valuation  of  franchises;  and  lastly,  like  the  speed
governor  on  the  engine,  taxation  of  the  franchise.
To  frame  a  creditable  statute  to  cover  all  these  par ­