40 THE FARMER, THE INVESTOR AND THE RAILWAY. 



such bonds hail, in corvipliance with the requirements of the statutes of Ohio, been issued 

 for the express purpose of equipuifUls, double tracks and other betternients.* 



Many auxiliary lines have been built at costs ranging from $S.O0O to $15,000 per 

 mile, and capitalized at two, three, four, and even five limes their cost, as in the case of 

 the 107 miles of the Kansas IMidland, costing, iucluding a small equipment, but $10,200 

 per mile, of which 30 per cent, was furnished by the municipalities along its line; yet 

 with construction profits and other devices this road shows a capitalization of $33,000 per 



mile. 



Or take the 1,055 miles in Kansas of the Chicago, Kansas & Nebraska, built by the 

 Chicago Rock Island & Pacific in much the same way and capitalized for ?.33,000 per 

 mile. Kansas municipalities aided to the extent of $2,500 per mile in building this road, 

 receiving the stock of the company in exchange for municipal bonds. Now, however, 

 foreclosure proceedings are pending in the interest and at the procurement of the parent 

 company (which owns, practically, all the bonds and stock of the auxiliary line except 

 the stock issued to the municipalities) whereby the municipalities are to be despoiled of 

 this $2,500,0U0.i 



This is no uncommon device for plundering the farmer and other tax-payers; and 

 railway presidents, directors and managers, who would scorn to put their hands into the 

 pocket of the farmer and abstract a (single) silver dollar, rarely hesitate when, by the 

 devices described, they can take from the same farmer and his congeners a lump sum of 

 $2,500,000, and the successful workers of such schemes, by one and the same act, acquire 

 vast sums and a reputation for great financial abilitj'. 



Another type is found iu the Marion & McPherson line of the Atchison, Topeka & 

 Santa Fe,t built largely from old and much worn material, and originally capitalized for 

 $28,000 per mile, being more than three times its cost. Under the recent re-organization 

 of the Santa Fe each mile represents a much larger sum; but how much larger I am un- 

 able to ascertain from the accounting officers of that company, to whom application was 

 made for definite information. 



Other Santa Fe lines show peculiar phasesof railway administration. Forinstance, 

 the Santa Fe, .jointly with the St. Louis & San Francisco, built the Wichita & Western, 

 extending 125 miles through a sparsely settled district and not paying operatingespenses; 

 yet the Santa Fe, although having another and parallel line — the Southern Kansas — less 

 than twenty-four miles south of the Wichita & Western, doubly paralleled itself by 

 building a third line between the two, this third line, for one hundred miles, being eight 

 to fourteen miles from the Wichita & Western on the north, and, for seventy miles, but 

 ten to sixteen from the Southern Kansas on the south. 



In this way has money been wasted in construction, the farmer unneccs'^arily bur- 

 dened, the parent company loaded with an immense unproductive mileage, and rendered 

 unable to paj' fi.xed charges, and thousands of those investing in its securities reduced to 

 sore straits, the reason for all of which is propably to be found in the profits — private or 

 corporate — growing out of construction. 



Perhaps the Santa Fe affords as fair an illustration as can be found of the ease with 

 which twelve men, sitting in directors' chairs, cau issue an edict for the creation of an 

 hundred million or more of fiat property, the only evidence of the existence of which is 

 found in reams of paper, and afTording additional evidence of the great and growing 

 utility of printer's ink as an instrument of advanced civilization. By this simple pro- 

 cess, and without any addition to the property of the corporation, the liabilities of the 

 Santa Fe have been increased more than $100,000,000, and while rates of interest may 

 have been scaled down, the total of interest and principal have been scaled up. When 

 an individual or firm falls creditors usually accept large reductionsof principal in adjust- 

 ment; but when a railway company like the Santa Fe fails they insist on doubling the 

 principal and increasing the total of interest. 



Although the earnings of the Santa Fe, in 1888, amounted to 12,914 529 less than 



operating expenses and fixed charges, the managers paid an unearned dividend off2,625,- 



»See llic seventli .annual report, of tlio Columbns, Mookhiff V.Tlley A Toledo K.nilway Company, 

 flv hown as 1 In' "Atchison" in New England and as the "Santa Fe" lu the West. 

 jsince tiie publication of this article In the ".Vrcna" the railway has heen sold under decree ot 

 foreclosnre and the municipalities deprived of their slock. 



