62 SHOULD THE NATION OWN THE RAILWAYS? 



Assuming that J!30 000 per mile is the maximum cost of existing raiI^^•ays— as is 

 shown in "The Arena" ior February— and that tliere are 160,000 miles, it would give 

 a total valuation of $4,800,000,000, but that there may be uo compluint that the nation ia 

 dealing unfairly with the owners of much water, it will be well to add 25 per cent, to 

 what will be found to be the outside value of the railways when condemned under the 

 law of eminent domain, and assuming that $6,000,000,000 of three per ceut. bonds are is- 

 sued in order to make payment therefor, and it involves an interest charge of 1180,000,000, 

 to which add $670,000,000, as the cost of maintenance and operation, and $50,000,000 as a 

 sinking fund, and we have a total annual cost for railway service, of 4900,000,000 as against 

 a present cost of $1,050,000,000 ($950,000,000 from traffic earnings, and |85, 000,000 from 

 other sources of railway revenue), resulting in a net annual saving to the public of J150, 

 000.000, to which must be added the various savings which it has been estimated would 

 result from government control, and which, for the convenience of the reader, are here 

 recapitulated, namely: 



Saving from consolidation of depots and stafTs S 20,000.000 



Saving from exclusive use of shortest routes 25,000,000 



Saving in attorneys' salaries and legal expenses 12,000,000 



Saving from the abrogation of the pass evil .30,000,000 



Saving from the abrogation of the commission system 20 000,000 



Saving by dispensing with high priced managers and staffs ■1.000 000 



Saving by disbanding traffic associations 4.000,000 



Saving l;)y dispensing with presidents, etc 25,000,000 



Saving by abolisliing (all but local) offices, solicitors, etc 15,000.000 



Saving of five-sevenths of the advertising account 5,000,000 



Total savings by reason of better administration $160,000,000 



It would appear that after yearly setting aside $50,000,000 as a sinking fund, that 

 there are the best of reasons for believing that the cost of the railway service would be 

 $310,000,000 less than under corporate management. 



That 16,000,000,000 is much more than it would cost to duplicate existing railways, 

 will not be questioned by the disinterested familiar with late reductions in the cost of 

 construction, and that such a valuation is excessive is manifest from the fact that it is 

 much more than the market value of all the railway bonds and shares in existence. 



Mr. John P. Meany, in the RaUtvay Review of February 7th, 1891, says: "It ia 

 safe tc assume tlwt the market valuation of the entire $4, .500,000,000 of railroad stock in 

 existence would not average more than $30 per share, or say $1,350,000,000 in all." And 

 in his Sun article he states that fully $.500,000,000 of this stock is duplicated, so that the 

 "live" capital stock outstanding is really but $4,000,000,000. which, at .^.'iO pershare, would 

 have an aggregate value of $1,200,000,000. Mr. ISIeanj' states that there are also duplica- 

 tions of bond issues amounting to some $300,000,000, leaving the live outstanding bonds 

 at $4,500,000,000, and many corporations failing to pay interest, some issues are selling as 

 low as 12 per cent, of par, making it safe to call the average market value of bonds 90 per 

 cent, of their face value, and their aggregate value $4,050,000,000. to which adil value of 

 "live" capital stock, $1,200,000,000, and the total market value of bonds and stock is $5,. 

 250,000,000, being at the rate of $32,800 per mile for the 160,000 miles in operation. 



After many years of familiarity with the turgid and obscure statements issued by 

 American railway corporations, and which are usually of such a character that the more 

 they are studied the less the shareholder knows of the affairs of the corporation, it is 

 very refreshing to read the report of the Railway Commissioners of any one of the Austra- 

 lian colonies, where every item of expenditure is made clear, and where words are not 

 used for the purpose of misleading. 



The last Victorian report shows this new and sparsely settled country as able to 

 borrow money, with which to build national railways, at 3J per cent, per annum. How 

 many American corporations are able to borrow money at such a rate? 'I'li is saving in 

 fche interest charge di»etly benefits the public, and is due to national ownciship, and a 

 like saving will be made by the nationalization of American railways. 



This report also shows that while the country is so rugged that in many cases the 

 gradients are as great as 130 feet per mile, and the cost of labor and supplies more than 



