ARE RAILROADS PUBLIC ENEMIES? 153 



cent lower than at the dates at which their recapitalizations occurred. 

 Mr. Hudson's platitudes against " stock-watering," so long as he con- 

 fines himself to platitudes and truisms merely, are perfectly safe. But 

 when, in 1887, he prints the newspaper-clippings of 1872-74, and 

 moralizes therefrom, he can hardly complain if his public demur, not 

 only to his antique instances, but to his general safety as a guide in 

 the complicated questions with which he assumes to deal. I mention 

 these two examples (which are now ancient history) not to suggest an 

 excuse for them, but as showing how entirely superfluous Mr. Hudson's 

 employment of them is ; and how as a matter of fact the wrong, so far 

 as the public is concerned, has been entirely neutralized by application 

 of the pooling system. Other things being equal, there is no reason 

 why a railroad should not capitalize its earnings by employing them 

 for betterments, any more than that an individual should capitalize 

 his by putting back his earnings into his business. Nor is it quite ap- 

 parent that any moral dishonesty enters into the act of even capitalizing 

 those betterments which Nature and the march of civilization bring, 

 which I understand are called (just now) "the unearned increment." 

 I do not remember that any company has so far been guilty of this 

 particular sort of watering ; but, had the early Dutch settlers of Man- 

 hattan Island built the present elevated railway, it is interesting to 

 speculate what sin would have been committed against natural or 

 moral law had their assigns in 1887 capitalized that structure, not at an 

 approximate to its earning power at the date of its construction (in, 

 say, 1666), but at a sum representative of its actual earning power in 

 the later year. Neither am I aware by what mental processes one 

 can insist on " unearned " increments at all^ if by that popular term 

 we mean the increase to one's property by the efforts or investments 

 of one's neighbors. It is fashionable, I am aware, to say that if A's 

 corner lot increases fifty per cent by reason of the purchase and im- 

 provement of adjoining lots by B, C, D, E, and F, that fifty percentage 

 is A's unearned increment ; but is A's foresight and shrewdness in in- 

 vesting in the corner lot aforesaid, when he might have placed his 

 money elsewhere, to count for nothing? Are not brains a part of 

 one's capital, and may not A's foresight and shrewdness have been 

 and continued a considerable part of his capital or stock in trade or 

 earning power? Assuming that Mr. Hudson does not contemplate the 

 removal of cerebral inequality between man and man by due process of 

 law, it might occur that whereas the rest of the alphabet had no confi- 

 dence in the future of let us say, a certain B and C Railroad A might 

 foresee a Pacific Railway, or a commercial development, or the bank- 

 ruptcy of a competing line which would make it valuable, and so 

 might without sin buy up its stock at five cents on a dollar and in due 

 time reap substantial rewards. And supposing even that A, by the 

 transaction (or even by recapitalizing this same B and C Railroad), 

 was ultimately enabled to accumulate one of those enormous fortunes 



