. Railroads, rates and regulation . ate advances in futureis direct. Profitableness results from two separate sources;economical operation such as longer trains and better loading,and also from far heavier capital investment in plant, by whichsuch operation is rendered Both alike, however,attend upon increased volume of business. Heavy capital in-vestment may lessen immediate maintenance charges,—lowergrades and straighter alignment naturally wearing less; but,on the other hand, the burden of interest and other fixed 1 From Railroad Operating Costs, by Suffern & Co., New York, 1911.
. Railroads, rates and regulation . ate advances in futureis direct. Profitableness results from two separate sources;economical operation such as longer trains and better loading,and also from far heavier capital investment in plant, by whichsuch operation is rendered Both alike, however,attend upon increased volume of business. Heavy capital in-vestment may lessen immediate maintenance charges,—lowergrades and straighter alignment naturally wearing less; but,on the other hand, the burden of interest and other fixed 1 From Railroad Operating Costs, by Suffern & Co., New York, Yale Review, 1910, pp. 268-288; with reference to the rateadvances of that year. VOL. I—5 66 RAILROADS expenses steadily grows. How will they stand toward oneanother by 1925 on the eastern trunk lines? Will growth ofbusiness bring lower rates or not? A fine field for furtheranalysis is as yet unworked. RATIO OF mif1TEHAhCE OF PRQPERTT/WD COflDUCT/m rRM6PORmr/ori ro totm oper/it/m aPE/rsc. CQflOUCTinO Yeans One final relation between operating and fixed expenses is leftfor consideration. It is so well put by J. Shirley Eaton in anunpublished paper, that it can best be stated in his own words: It is impossible to have an absolute and universal line of demarca-tion between the direct and the fixed expense, that shall be the sameon all roads. One road chooses to reduce a grade and thereby increasethe capital account in order to save in the current expense of a helperat a hill or the lost margin of efficiency of the loaded train on the level. THEORY OF RAILROAD RATES 67 The relation between a current expense and the annual charge ofthe capitalized cost on a fixed plant that performed the samesendee, was well illustrated in a case arbitrated by Mr. Blanchardin New Orleans. One road which did not have access to the heartof the city undertook to compensate its disadvantage by trucking toand from its depot. The hire of a public truckman to perform theservice
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