amendment of the Congressional Act. It is quite as impossible to treat separately the interstate and the intrastate business of a single carrier in respect to certificates of convenience and necessity and authorization for abandonments, as it is to separate their activities in respect to car distribution or the application of safety devices. An attempt to draw such a distinction cannot long persist. In summary of the activities of public regulation as disclosed in this chapter, it may be said that there can be no doubt of the right of the public to prevent new railroad construction in the absence of specific authorization. This right is generally exercised through the control of certificates of convenience and necessity. It is true also that the public may require the continuance of operation of railroad property once impressed with a public use up to the point where confiscation of private property would result. But the right of the public to require new undertakings by private capital in respect to the construction of new lines of railroad is thus far without judicial approval. Its assertion in the Interstate Commerce Act is a distinct novelty. CHAPTER XXI THE FUNCTION OF RAILROAD MANAGEMENT Section 1. The Obligation to Earn, 307-Sec. 2. The Director System of Management, 308-Sec. 3. Railroad Credit, 310-Sec. 4. Permanent Improvements and Traffic Congestion, 313-Sec. 5. Unproductive Improvements, 314-Sec. 6. Financing Equipment Needs, 315-Sec. 7. State Regulation, 317-Sec. 8. The Dual Problem of Railroad Management, 318. § 1. If the public obligation of railroad management is to provide adequate and non-discriminatory service at reasonable and non-discriminatory rates, its private obligation is to earn profits. Railroad regulation cannot ignore this basic relationship so long as private ownership is depended upon to furnish railroad. service. In those of its purely business relations which are maintained with owners and creditors, a railroad corporation is a private enterprise. It is owned, controlled and managed in the interest of investors. Exclusively individual ownership and personal management have seldom been possible because of the large sums necessary to provide the permanent way and the carrier equipment.1 The corporate form of organization, therefore, found early use in bringing together the aggregate capital needed in railroad The Florida East Coast had its beginnings in the Jacksonville, St. Augustine & Indian River Ry., a narrow gauge line, laid with 30 pound rails, completed to St. Augustine in 1883. Mr. H. M. Flagler became President of this road in 1886, and his energy guided the subsequent history of the line, including the extension to Key West. The original line was standard gauged in 1889. The name of the company was changed to Florida East Coast in 1896, by which time end-to-end consolidation and construction had carried the road to Palm Beach. In 1896 the extension to Miami was completed. In 1894, the Secretary of the company wrote: "As no one but Mr. Flagler is interested in the J., S. A. and I. Ry. Co., he does not desire to give publicity to the affairs of the road till its completion." (Poor's Manual, 1895, p. 194.) The entire issue of first mortgage bonds was in 1907 available as security for note issues floated to finance the building of the Key West line. These notes were also personally guaranteed by Mr. Flagler. Against the property there was in 1921 a $12,000,000 first mortgage issue in the hands of the public, a $25,000,000 issue of income bonds, owned by the Flagler estate, |