CHAPTER VIII. 



MONOPOLY OF TRANSPORTATION RAILROAD RATES 

 EXTORTION. 



WE HAVE remarked in another chapter, that the rate 

 on the railroad traffic of the United States might be 

 reduced 18 per cent, and the companies still pay a fair 

 dividend on the capital actually invested. We will now 

 proceed to further test the truth of the statement, in the 

 light of the facts at hand. Relative to the cost of the con- 

 struction of roads and the amount of capital actually 

 invested therein, one of our most distinguished bankers 

 and financiers says: 



"The mischief, financially, socially, and politically, 

 has not yet been reached. In a large number of cases 

 nearly all there has been financial reconstruction. Of 

 our 125,000 miles, with stock and debt of $7,500,000,000, 

 at least 60 per cent, has gone through the debt scaling 

 process. ' ' 



Here is the plan pursued: Bonds are issued and sold 

 for proceeds with which to build and equip the road; the 

 stockholders permit it to become hopelessly involved in 

 debt; the mortgage is foreclosed, the road sold for what it 

 will bring under the hammer, and the debt wiped out. 



The stockholders purchase the road at a nominal 

 price; reconstruct and reorganize it under a new name. 

 The bondholders who furnished the money to build the 

 road get nothing; while the stockholders, whose stock 





