CHAPTER III

THE THEORY OF RAILROAD RATES (_Continued_)

The law of increasing returns, 71.--Applied to declining traffic, 73.--Illustrated by the panic of 1907, 75.--Peculiarly intensified on railroads, 76.

Growth of mileage and traffic in the United States since 1889, 77.--Increase of earnings, 79.--Operating expenses, gross and net income, 80.--Comparison with earlier decades, 85.--Density of traffic, 86.--Increase of train loads, 88.--Limitations upon their economy, 92.--Heavier rails, 93.--Larger locomotives, 94.--Bigger cars, 95.--Net result of improvements upon efficiency and earning power, 97.

The law of increasing returns due to financial rather than operating factors, 99.