REGULATION  OF  PUBLIC  UTILITIES  143

benefit  either  in  lower  fares  or  in  franchise  taxes.
It  may  be  assumed  that  the  gross  amount  of  the
benefit  is  the  same  whichever  way  it  is  distributed.
If  the  franchise  is  taxed,  the  benefit  is  distributed
immediately  among  all  the  people.  If  rates  are  reduced, ­
  would  not  the  benefit,  while  going  immediately
to  the  patrons  of  the  road,  likewise  be  ultimately  diffused ­
  among  all  the  people?
If  the  above  analysis  be  correct,  it  follows  that
the  question  of  method  is  one,  not  of  justice,  but  of
expediency,  and  it  is  submitted  that,  on  the  ground  of
expediency,  the  taxation  method  is  preferable  by
reason  of  its  greater  simplicity.
A  too  frequent  change  in  schedule  rates  is  at
least  inconvenient.  This  disadvantage  finds  illustration
in  the  contrasted  conditions  of  1907  and  1908.  By
hard  times  and  greatly  reduced  business,  the  railroads
now  seek  to  justify  either  a  reduction  of  wages  or  a
paradoxical  advance  of  rates,  in  place  of  the  reduction
usually  resulting  from  dull  business.
It  is  at  this  point  that  taxation  offers  itself,  like  the
“ratchet”  or  the  “follower”  in  the  machine,  to  “take
up  the  slack”  be  it  more  or  less  from  year  to  year.
Under  the  system  here  considered,  in  which  regulation ­
  is  supplemented  by  taxation,  instead  of  a  legislative ­
  reduction  of  rates  once  in  every  five,  ten,  or  twentyfive
  years,  in  the  face  of  a  formidable  lobby,  there  would
be  a  periodical  but  not  too  frequent  general  readjustment ­
  of  rates,  which  presumably  must  be  high  enough
to  include  dividends  on  capital  actually  employed;
there  would  be  an  annual  flexible  regulation  of  the  tax
based  upon  the  net  earnings  of  the  previous  year,  in
the  light  of  an  honest,  expert,  and  inquisitorial  public