118 



COMMERCE AND FINANCE, AMERICAN, IN 1882. 



by twice that amount of new securities, were 

 most of them competitive lines of doubtful 

 prospects themselves and calculated to injure 

 the prospects of existing lines. The intrinsic 

 worth and promise of the railroads were never- 

 theless as strong in the latter part of 1882 as at 

 any time in the past. But the frequent recent 

 experiences of the misdirection of corporate 

 business and concealment of corporate affairs 

 for stock-jobbing purposes had destroyed pub- 

 lic confidence in share property. There was 

 a purchasing movement when the crop pros- 

 pects became known in July and August, but 

 the market drooped during the remainder of 

 the year. The prices of many stocks sank to 

 the lowest figures known for years. Specula- 

 tive operations were pretty much confined to 

 the few gigantic operators, and the habitues of 

 Wall Street, who base their ventures on conjec- 

 tures as to the intentions of the "railroad 

 kings." There was no speculation for a rise 

 among these, for the notion prevailed that 

 Gould was opposed to higher range of prices. 

 Some of the speculative stocks, such as Denver 

 and Rio Grande, Richmond and Danville, Louis- 

 ville and Nashville, and Hannibal and St. Joseph, 

 passed rapidly through a long decline. Persons 

 of speculative proclivities who had learned to 

 shun the Stock Exchange resorted to the more 

 harmful speculations in produce, which reached 

 a stage in 1882 in which the Legislatures and 

 even the Produce Exchanges debated about the 

 means of suppressing speculations in future con- 

 tracts on margins. Government securities were 

 higher than ever before in 1882, and the more 

 stable classes of railroad bonds rose somewhat 

 in price. This was not owing to a decline in 

 the average rate of interest, but to the accumu- 

 lation of capital held in trust which is limited 

 to such investments, and partly to foreign 

 competition for the stronger class of invest- 

 ments. 



Railroad business suffered more than any 

 other from the national disasters of 1881. The 

 storms of the winter of 1880-'81 added greatly 

 to their running expenses. When the failure 

 of crops and the operations of grain speculators 

 reduced the traffic far below their collective 

 carrying capacities, the trunk-lines engaged in 

 a war of rates in competition for the diminished 

 traffic in order to force from one another more 

 favorable terms in a future pooling arrange- 

 ment. The contest lasted eight months, and its 

 effects were felt for twelve. The stock market 

 more than discounted these adverse influences. 

 Railroad enterprise was suddenly paralyzed. 

 Up to the middle of 1881 railroad shares and 

 securities had risen greatly in market value 

 since the revival of business. From that period 

 to the close of 1882 the values wavered or de- 

 clined. This was owing to the timidity of for- 

 eign investors, and the fact that the probable 

 returns from railroad investments were at the 

 scale of prices already reached for the more 

 approved securities below the normal rate of 

 American profits, while the extension of indus- 



try in many directions was constantly opening 

 more promising fields for home capital. 



Railroad construction in 1882, while falling 

 short of the enormous mileage projected for 

 the season's work, exceeded considerably that 

 of 1881, and was largely in excess of the con- 

 struction of any previous year. The mileage 

 of new track laid in 1882 was over 10,000 miles. 

 While the lines for which capital had been paid 

 in, contracts made, and materials provided 

 were being finished, the buoyant feelings which 

 prompted the formation of many new schemes 

 in the previous year fell to a low ebb, and sev- 

 eral of those projects were abandoned or post- 

 poned. The railroad mileage of the United 

 States doubled between 1870 and 1881, increas- 

 ing from 52,914 to 104,813 miles. If all the 

 portions of the country which are equal to 

 Ohio in natural resources were as well provid- 

 ed with railroads as that State is at present, 

 150,000 miles additional would have to be con- 

 structed ; and if the present mileage of Ohio, 

 which has one mile of railroad to six square 

 miles of territory, represents the average mile- 

 age of the United States when the network is 

 completed, the country will have at least 500,- 

 000 miles of railroad lines. Complete data 

 have been collected for 1881. The length of 

 line constructed was 9,358 miles, the heavi- 

 est construction in any former year having 

 been 7,379 miles in 1871. The cost of the new 

 roads built in 1871, estimating it at $25,000 per 

 mile, aggregated $233,750,000. Including the 

 expenditure upon improvements on existing 

 roads and upon the completion of new lines 

 already laid, the capital outlay for the year 

 was as much as $400,000,000. The number of 

 persons employed in operating the railroads is 

 estimated at twelve per mile, or over 1,200,000, 

 in addition to whom about 4,000 were employed 

 in construction. The tonnage transported in 

 1881 is estimated in Poor's " Manual " at 3,500 

 tons per mile, which, valued at $50 per ton, 

 with one third deducted for duplication, would 

 amount to $12,000,000,000, or more than $200 

 per head of the population. One of the great 

 trunk-lines has a greater tonnage than all the 

 railroads of the country in 1851, when it did 

 not exceed $10 per head of the population. 



The trunk-line war of the autumn and win- 

 ter of 1881-'82 was commenced by Vanderbilt, 

 who considered that the pooling arrangement 

 existing between the through railroads discrim- 

 inated against the Central Railroad and the 

 commercial interests of New York. The rates 

 previously agreed upon were two cents less per 

 hundred pounds from Chicago to Philadelphia, 

 and three cents less to Baltimore than to New 

 York. The managers of the two trunk-lines 

 terminating in New York demanded a new ar- 

 rangement by which the freight should be made 

 the same on all the routes. After eight months 

 of unprofitable underbidding, the managers 

 the railroads referred the dispute to an advisory 

 commission consisting of ex-Senator Thurman, 

 ex-Minister Washburne, and Judge Cooley, of 



