148 IOWA DEPARTMENT OF AGRICULTURE. 



American people have made up their minds they do not propose to 

 pay interest on watered stock. The President himself has ex- 

 pressed that view — that "the public will not tolerate efforts to 

 make them pay dividends on watered stock. ' ' Public interest justi- 

 fies us in demanding to know the authorities for the statements 

 made by these honorable gentlemen, that American railroads are 

 not over-capitalized. Your first question is : are there any author- 

 ities ? Not such an authority as the honorable member of the 

 Supreme Court who sits in his office in Washington, D. C, and 

 makes a valuation of all the railroads in the country at one huge 

 guess. I am informed that at the present time a gentleman is em- 

 ployed in making a valuation of all our railroads. Immediately 

 after his task is finished he is to be given the presidency of a large 

 eastern railroad ; and when that report comes out, it ^vill be heralded 

 all over this country, notwithstanding his unquestioned bias. Are 

 there any investigations actually made, of the valuations of the 

 railroads that are unprejudiced; made by men who have gone out 

 into the fields and obtained the real facts as they are? Yes, there 

 are some already made. A few years ago the Texas Commission 

 made an exhaustive investigation, and they found that the railroads 

 in that state were capitalized at more than double their actual 

 value. 



Last year the legislature of Minnesota appointed a committee to 

 make a similar investigation. Their report shows that the railroads 

 in that state are capitalized from 15 per cent to 400 per cent more 

 than their actual value. One of the railroads was capitalized at 

 five times its value, and the president of that road testified, that in 

 some of their stock there "was what might be called water." Until 

 we find out the actual value of railroads, how are we going to 

 determine reasonable rates'? Even though we show the rates that 

 the Iowa people pay are higher than those paid by the people of 

 Illinois and Missouri how do you know the latter are not too high? 

 Until you find out the valuation of the railroads, you are merely 

 scratching the surface of the railroad problem. 



Great and important as the matter of over-capitalization is, to 

 my mind there is still a greater one. Let us consider the matter 

 of rates for a few minutes. Railroads are built to make money, 

 and the way they make most of the mone.y is out of freight rates. 

 They are sellers of transportation ; you are buyers. I have a 

 simple business proposition I want to make which I think you will 

 accept, no matter which side of the controversy you are on. It is 

 this: It is to the interest of the railroads to charge just as high 

 rates as they can, provided these rates will not interfere seriously 



