2 THE POPULAR SCIENCE MONTHLY. 



America, produces rapid construction and low rates, but fosters dis- 

 crimination and extravagance ; thus securing the first and second 

 requirements, at the sacrifice of the third and fourth. The French 

 system of regulated monopoly has just the opposite effect ; it pre- 

 vents waste and discrimination, but development is slow and rates are 

 high. The third and fourth requirements are secured at the expense 

 of the first and second. England enjoys the first and fourth advan- 

 tages, at the sacrifice of the second and third ; Italy has secured the 

 second and third, but failed of the first and fourth. The Granger sys- 

 tem of regulation sacrificed the first in the effort to secure the second. 

 Partial state ownership, as we shall see, secures nothing at all ; exclu- 

 sive state ownership secures the third, at great risk of sacrificing all 

 the others. 



The different requirements are to a certain extent in conflict with 

 one another. This conflict can only be understood by studying the 

 history of railroads, and the principles which underlie railroad business 

 management. These are quite imperfectly known at present. There 

 is probably no subject of equal importance on which public enlighten- 

 ment is so much needed. The capital invested in the railroads of our 

 country is eight times that of its banking institutions ; the tonnage 

 carried by rail is four times that carried by water ; the abuses in inter- 

 nal commerce come home to most of us far more directly than those in 

 foreign commerce. Yet, for every man who has studied the political 

 economy of railroads, there are a dozen who have studied that of ship- 

 ping and foreign trade, and a hundred who have studied that of bank- 

 ing. The complications of the subject are hardly recognized. Railroad 

 reformers are far too ready to blindly pursue one specific object or com- 

 bat one specific abuse, regardless what other objects may be sacrificed, 

 or what other abuses fostered by their policy. 



From 1830 to 1873 the main object of nearly every community was 

 to secure rapid development of railroad facilities the first of the four 

 requirements we have named. The railroad proved so much superior 

 to other modes of transportation, that the country which had railroads 

 prospered ; that which had not railroads fell behind. Legislation was 

 everywhere devised to favor this end. Where capital was ready to 

 invest, every encouragement was offered it. If the removal of obsta- 

 cles was not enough, a subsidy was generally to be had for the asking. 

 If the community could not afford to pay a subsidy outright, it guar- 

 anteed a certain income to the road. If all these inducements were 

 insufficient, the state stepped in and built the road itself. In England, 

 where there was plenty of capital seeking investment, railroads were 

 chartered literally by hundreds. In America they were not only ex- 

 empted from the necessity of securing special charters, but received 

 municipal aid, as well as grants of public land on a scale which was 

 often outrageous. In France the state paid half the cost of building 

 the road, and offered the companies monopoly privileges as an induce- 



