FARMERS' INSTITUTES. " 319 



struction of needed roads, but it constitutes such a stimulus for railroad build- 

 ing that it is likely to lead to the construction of four or five roads, when there 

 is not business sutticient for one. The trouble is that railroads have not been 

 built as an end, but as a means of enriching some region or township. Even 

 cities themselves have entered into the arena as railroad builders, — thus, Cin- 

 cinnati, failing to get what her business men considered low transportation rates 

 from the south on any of the three lines already existing, has issued bonds and 

 has now almost finished a road to the south 330 miles in length. This road 

 has been built not with the expectation that it will earn dividends, but simply 

 to benefit Cincinnati. 



The opinion universally held in the past and now believed by most of the 

 business men, is that the more numerous the roads, the greater the competition, 

 and the less the rates. It is hard to see the logic by means of which such 

 conclusions were deduced. It is true that the past has to a certain extent 

 confirmed this theory, but that might have been expected from the way iu 

 which the capital of roads was raised. Thus take the five competing lines 

 which have been built one after another under this same stimulus into Chicago. 

 AVhen first built, competition for business to fill their empty cars was sharp, 

 and it grew sharper. Kates were lowered regardless of cost, cattle being taken to 

 New York (it is stated) as low as $1 per car. As long as the railroad companies 

 could borrow or were donated money, this was continued. It is a fact that busi- 

 ness on a losing scale cannot long be continued, and the result was what any 

 thinking man must have foreseen : First one of the trunk lines became 

 bankrupt. The bondholders placed the road in the charge of the United 

 States court. It was still run but with less regard than before for paying rates. 

 The U. S. courts, we may remark here, have not as yet in a single case been suc- 

 cessful railroad managers, although in connection with receivers they have run 

 and are running miles upon miles of road. Take the case of the C. & L. H. R., 

 a road that sends its trains very close to us, and we find that in 1877, although 

 that road carried an immense amount of freight, still it did not earn enough 

 to pay running expenses. This constant drain incurred by the loss in the 

 freight traffic may be carried on one or two years or even longer; it can be 

 carried on until the road can run in debt no longer, then the road must be sold 

 to pay its debts, and when it is sold it brings an amount many times less than 

 its first cost or even its value. This was the case with the D,, L. & N. The 

 C. &. L. H. has as yet not been sold, but its credit is well nigh exhausted, and 

 it soon must be sold. The effect of eveiy such sale is to consolidate and unite 

 the management of different railroads — for a competing line can afford and will 

 give more for a bankrupt road, than any other line. They can afford to pay a 

 good deal in order to stop competition. As an exercise in pure reasoning we can 

 see tliat if seven roads are built and compete for the business which one road 

 could do, these roads, if run at all, must at least receive sufficient pay to cover 

 repairs and running expenses ; for seven roads these are at least four times as 

 much as for a single road, and this extra cost must be met by increased freight 

 charges. This much is always true : that the effect of the construction of a 

 greater number of roads than are necessary to accommodate the traffic is to 

 increase to a great extent the cost of transportation. Tlie price may for a 

 time-being be lowered, but in time the result will reach its normal position, 

 and the owners of railroads will by combination or by uniting into one 

 management receive such rates as to make their investment i)ay. 



The railroad owners have, during the last four years to a great extent, com- 

 bined and united into single managements, and if another mania of railroad 



