48 THE FARMER, THE INVESTOR AND THE RAILWAY. 



tion, unreasonable rate wars, speculativeor ineonipeteutmanagementor an extraordinary 

 excess of water in capitalization. 



Possibly a flood of lijrht may be thrown on tbis subject by the experience of th« 

 writer when general freight and passenger agent of a new railway. Imbued with the 

 idea that the prosperity of the road would be sub.served by encouraging immigration and 

 fostering business, the writer formulated tarifTs calculated to further such ends. Imagine, 

 bis astonishment when told by the general manager they would not answer, and to be 

 informed that the road was not being built to malve money out of its operation, but out of 

 its construction, and what was re(iuired of the traffic deiiartment wasthe greatest present 

 revenue possible and to make the j.assenger rates just low enough to take the traffic from 

 'the stages and the freight rat* s no lower than necessary to drive the ox teams out of the 

 freight business. 



The policy then outlined was pursued until the railway passed through the reor- 

 jganization thereby made inevitable, and this cheaply-built prairie line, with free right of 

 way and land grant and subsidy equal to its entire cost, is now capitalized for .$105,000 

 jper mile. 



On most railways the b.isic principle underlying tariff and schedule is "All the 

 traffic will bear," and it is to hold in check these "Chevaliers of the road" that granger 

 laws are formulated. 



It may be safely assumed that J30, 000 per mile is tlie outside cusl of existing rail- 

 ways, and the aggregate, at the close of 1S88, on which tolls should be based, was $4,682,- 

 246,000; but here the question arises: How much of this sum has the railway builder 

 furnished, and what part has been extorted from the railway user in the form of excessive 



tolls? 



Available data does not admit of going back of 1874, when 69,27.3 miles were in 

 operation, the cost of which, at |30,000 per mile, being credited to the builders; and 

 adopting the net (traffic) earnings as shown by Poor we find that, in 1874, creditiijg each 

 $30,000 with its proportion of such earnings, pro rata — and adopting the capitalists' 

 theory that; the water in the capital is en titled to the same revenue as the money part thereof 

 — the earnings of the water in the capitalization of that year amounted to $91,9.57,829, 

 being equal to the cost of 3,065 miles of railway. Continuing such computations for 

 fourteen years and crediting the railway users with the income of so much of the railway 

 mileage as was, from year to year, built from the tolls collected on the capitalization In 

 exce.«s of $30,000 per mile, it appears that the users have, within fifteen years, been 

 mulcted, in the shape of tolls based wholly on water, in the sum of *$2,422,.5S8,4>5, from 

 which those in possession have constructed 80,7-52 miles of new railway, leaving but 2,901 

 miles, costing !r87,030,000, to have been built, in the same period, from funds supplied by 

 those claiming to own all the railways. For details of these computations see Table I. 



Should it be claimed that instead of dividing the earnings joro rata between tl\e 

 re.al and fictitious capital, that the real is entil led to full compensation before anything i,e 

 assigned to the fictitious, we will, without admitting that the preceding computations 

 are not correctly based, proceed to first give compensation, at the rate of six per cent, per 

 aimum, for all the capital actually employed (except that furnished by the users in the 

 form of tolls in excess of such six per cent.), and again assuming that the capital lobuild 

 all the roads existing in 1874 had been furnished by the putative owners, and we find the 

 results as set forth in table II. 



Table II shows that from traffic earnings alone the holders of shares and bonds 

 have received six per cent, per annum for every dollar invested and have, within fifteen 

 yi'ars, been enabled, by the watery fiction, to extort from railway users the enormous sum 

 ol" $1,592,280,471 (to which should be added about half as much more from miscellaneous 

 earnings), with which has been built 5:5,076 miles of railway, for the use of which it is 

 proposed to forever tax those who have furnished all the money employed in its con- 

 struction. 



Is it possible that no remedy can be found for such evils? In the National Bank 

 the law has created another form of public trust, but one whose relations to the people 

 •This Is from trafBc earniugs alone, to wbicli should be added a vast sum from mlsoellanoons sources. 



