REGULATION  OF  PUBLIC  UTILITIES  145

The  problem  of  government  regulation  will  be  to
harmonise  the  three  interests  of  capital,  management,
and  the  public;  a  fair  profit  to  capital;  fair  rewards  for
skill  and  enterprise  in  management;  a  fair  return  to
the  public  for  franchise  privileges.
Capital:  A  fair  rate  of  return  to  capital  invested  in
railways  is  the  market  rate  of  interest  upon  investments ­
  of  equal  security,  as  fixed  in  competitive  industries, ­
  and  this  is  al*l  that  capital  (minus  speculation)
demands.
When  the  public  thus  asserts  its  rights  and  enforces
them,  it  must,  of  course,  first  guarantee  dividends  to
the  stockholders,  whose  property  rights  would  otherwise ­
  be  imperilled.
Capital  does  not  run  the  road,  and  hence  it  is  not
entitled  to  unusual  profits  due  to  the  risks  of  an
established  business.  Reduction  of  rates  and  taxation
of  franchise  will  have  squeezed  the  water  from  the
stock,  and  actual  capital,  as  determined  by  the  commission ­
  valuation,  will  get  its  “fair  profit”  in  dividends,
and  profits  will  go  to  skill  and  enterprise,  where  they
properly  belong.  The  claim  that  a  higher  rate  of
dividend  should  be  paid  to  capital  on  account  of  skill
and  enterprise  in  management  is  a  vicious  one,  arising
from  the  attribution  to  one  factor  of  what  clearly
belongs  to  an  entirely  distinct  one.
Management;  The  administration  of  the  business
of  the  public  service  corporation  would  be,  as  now,  in
the  hands  of  agents,  superintendents,  and  managing
directors,  who  would  profit  by  salaries  in  proportion
to  their  skill  and  brains,  from  |i  ,000  to  $50,000,  a  year.
It  is  these  men  who  run  the  road  now,  and  it  is  their
concern  to  deserve  profits  by  so  doing.  “Traffic  men,