CAUSES OF UNDUE COST. 339 



thousands of dollars per mile more than it ought, owing to want of 

 skill and judgment on the part of the company, or if there is reason 

 to believe that the assumed cost is not the real cost the difference 

 having gone into the hands of the officers, or their friends acting in 

 the capacity of contractors or &quot; promoters,&quot; then it is natural that 

 there should be an unwillingness to allow even a moderate per cent, 

 on the declared cost. 



Unfortunately, these mere hints of dishonest management find 

 warrant in actual facts in all countries. 



If we inquire into the causes of undue cost of railways, they will 

 be found with but little difficulty. Prominent among them are the 

 following: 



1. Slight pecuniary interest of the managers. 



2. Construction on credit. 



It is not essential that every dollar necessary to build a road 

 should be in bank before the work of construction begins; if it were, 

 few roads in a region of country like ours, where there is but little 

 spare capital, would be built. A reasonable amount of credit is 

 legitimate, indeed often absolutely essential; but since the use of it 

 adds greatly to the cost of building, it should in all cases be em 

 ployed as sparingly as possible. 



3. Injudicious location of lines. 



This particular cause of undue cost will be best appreciated by 

 skillful engineers, who cannot have failed to note how very often 

 lines of railway are made to cost much more than was neces 

 sary by careless surveys. But one need not be more than an ordi 

 nary engineer, or even a professional engineer at all, to detect ex 

 pensive blunders of this sort on every hand blunders which not 

 only occasion a large increase in the cost of construction, but also a 

 permanent extra expense of working. 



4. Corrupt letting of contracts. 



Probably the system of construction by &quot;rings&quot; formed inside to 

 operate outside, for the private gain of individual officers and their 

 friends, is, of all causes of excessive cost, the most prolific. Of 

 course there are many railway officers too honorable to resort to 

 measures for private advantage which involve the robbery of stock 

 holders and, creditors; but such practices are nevertheless so com 

 mon as to make it somewhat doubtful whether they do not consti 

 tute the rule rather than the exception. Sometimes they are car 

 ried on by directors and officers openly, but oftener, of course, un 

 der cover. We would not be understood as branding every con 

 struction company, composed in whole or in part of officers and 

 members of the company contracted with, as guilty of fraudulent 

 dealings with stockholders. A construction company possesses some 

 advantages for conducting the work of construction which a char 

 tered railroad company does not possess especially if many of the 

 directors of the railway company are non-resident and the under 

 signed have knowledge of some such who are believed to conduct 

 the business of building in that way solely, because of these advan 

 tages, and wholly in the interest of the stockholders who compose 

 the railway company. They are forced to believe, however, that 

 the number of those who thus manage is comparatively small. 



