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 treat 
ing 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 indis 
pensable 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, com 
mon 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