SOME SPECIAL PROBLEMS OF VALUATION 75

construction of the road had no justification in the ability
of the district it served to afford remunerative work for it.
In general, the aggregate of surpluses previously referred
to must cover expenses of class (y) as well as those of class
(B). Should they fail to yield an amount adequate to this,
the proof thus given of the unremunerative character of
railway enterprise in the district served would operate as
a check to subscriptions of capital for other lines, or for
extensions in that district, which difficulty could only be
removed by such development of the district as would
afford remunerative traffic to the road which served it, and
an adequate amount of such traffic.
If the surpluses aggregate enough to yield an unusually
large return to capital, either or both of two changes may
follow. Competing lines may be built to share in so remunerative
 a traffic, and may divert enough traffic to reduce
the amount available for dividends to a less attractive level.
Anticipating such a movement, and as a means to avoid
the competition otherwise likely, or under the pressure of
public opinion or of legal enactment, rates may be reduced,
on important classes of traffic or sections of the line, to a
level below that at which they respectively yield the largest
aet return securable from that traffic, thus dividing between
users and owners of the line the advantages which it is in a
position to afford.
It is not proposed in this place to give any complete
treatment of railway problems, but merely to indicate the
general principles on which the supply-prices of members of
complex groups of joint products are determined. Another
case of the problem is the division of the general expenses
of a large retail establishment among the different lines of
goods dealt in. Here again the principle of “what the
traffic can bear” must be applied. Each line of goods will
bear, not a share of establishment charges which it must
bear, in the sense that its own existence would be threatened
if the profit required to cover that share of charges could
not be made, but what it can, subject to the condition that
all these, larger or smaller, contributions to profits shall
together suffice to yield a satisfactory dividend. It would