146 
THE A B C OF TAXATION 
as a whole, keen, adroit, and sensitive to every change 
in the industrial world, would turn to with their 
magnificent forces and abilities and work with the 
commission instead of against it.” Skill and enter 
prise, and public exigency, instead of selfishness and 
greed, would provide the initiative for legitimate 
extension and development. 
The Public: Its concern is to reap from its own 
business, delegated to private hands, a fair return, 
whether it be by lower rates or higher taxation. The 
public utilities commission, composed of men of good 
judgment and incorruptible honesty, its functions being 
supervisory rather than managerial, will fix upon a fair 
capitalisation, and will determine when and what gross 
reduction in current or accumulated earnings the 
administration should proceed to effect through the 
reduction of specific rates. By the municipalisation 
of the franchise the main motive for “stock watering 
and corporation wrecking” or for “underpaid or over 
worked employees or false economies ” will be 
destroyed. Whatever “rebates,” “stock watering,” 
and “corporation wrecking" survive the assumption 
of the franchise by taxation, the commission will 
prevent under statute. The value of the franchise will 
be gradually absorbed through reduction of rates, 
leaving, however, a substantial margin as the best 
possible index and basis for taxation and regulation. 
This marginal surplus would serve the purpose of 
equalising conditions from year to year, bridging over 
lean financial periods, and thus securing more fully the 
stability of the fair profits to capital invested. 
To sum up, it is my contention that, with railways 
privately owned, publicly regulated, and taxed approxi