PUBLIC CONSEQUENCES. 3 7 



judicious legislation should prohibit nothing more. The world over, 

 capital prefers moderate returns on reliable security, rather than 

 excessive returns upon unreliable security. The price of railway 

 stock and bonds in any market depends less upon the rate of inter 

 est promised than upon the character of the enterprises upon which 

 they are based. Most of all, they depend upon the legitimate man 

 agement of the property in which the purchase-money is invested. 



The history of all railway management furnishes an instructive 

 lesson upon this topic. It is an almost unbroken history of broken 

 faith and depreciated credit. Stacks originally sold under sanguine 

 assurances of large returns, have become worthless paper. Bonds 

 doubly assured on their face, and by every apparent source of secu 

 rity, in many cases, possess but a speculative and uncertain value. 



The insecurity of railway investments at the present time, is such, 

 that popular confidence in railway stocks has practically departed. 

 No farmer, no merchant, no retired capitalist seeks to invest his 

 surplus funds or labor in any railway company in which he does not 

 himself possess control. And this want of confidence and refusal 

 to contribute to public enterprisse of this class, are in no manner 

 measured by the real merits of the enterprise itself. On the con 

 trary, they are the fruit of the common judgment, that railway 

 capital is the sport of speculative management. 



Nor does this want of confidence extend to stock subscriptions 

 alone. The bonded debts of railway companies are also rapidly be 

 coming the object of suspicion. And this on precisely the same 

 ground that originally deteriorated the market value of capital stock. 

 The stock is no longer regarded as the representative of legitimate 

 capital. Sold at a discount, inflated, unlimited by law, and often 

 misappropriated, its actual amount and value ultimately become sub 

 ject to the discretion of the managing board. The bonded debt, 

 subject to the same conditions and influence, is liable to the same 

 possible dilution and depreciation. 



Let us look at the public consequences of insecurity for capital. 



The tendency to financial demoralization, wholly prejudicial to 

 regular investment, is of startling import in all its history and pos 

 sible consequences. One of the immediate results is the fact that 

 the public is held responsible for the payment of interest on a vast 

 capital, nominal and not actual, and rendered nominal, at least in 

 great part, by means which no intelligent judgment can sanction or 

 approve . 



5. That the necessity for control is a growing one. 



That the demand for a judicious control is a growing one, is ap 

 parent from the rapid development of our country, and the conse 

 quent need of increased facilities, duly guaranteed and protected. 

 It is especially apparent in the case of the northwestern States, 

 whose resources are so incalculable, and whose growth in population 

 has been so unprecedented during the recent years. Here are mill 

 ions of an industrious, energetic, and progressible people, gathered 

 from all parts of the new and old world, for the very purpose of 

 availing themselves of the extraordinary opportunities afforded by 

 our fertile soils, our forests of timber, and our rich and varied min 

 eral resources. They came as to the garden spot of the whole world, 



