20 THE CREDIT SYSTEM OF CONSTRUCTION. 
A very small amount of stock—say 30, 40, or 50 per cent. of that required—is raised by local 
parties along the route of the line. "These parties (farmers, mechanics, merchants, and land- 
holders) thus form the basis for the schemes and management of the operator, who takes the 
residue of the stock. Both company and operator are now at the mercy of the agents of the 
great capitalists of the country. By holding such amounts of stock, the operator in many 
instances controls the directors’ board, or even changes it at his will, by the votes of proxy. 
When, by capital raised, borrowed, and furnished, the road is partly or wholly graded, it is 
then mortgaged or bonded for iron and equipment. The running of trains now takes place, 
and the road, still in an incomplete state, is turned over tothe company. About this period 
of time the able operator decides whether to dispose of or retain his interest in the line. 
A few years ago, when many of the lines of the country were first opened for travel, this 
plan of building occupied a very high place in publie estimation ; but, since these roads have 
begun to wear, and the costs of renewal, of closing the open construction account, and of running 
trains at non-paying rates have opened the eyes of stockholders, it has, in a measure, fallen into 
disrepute. 
Very few of the roads of the country will now more than pay the interest on their bonds, the 
original stock subscription or basis being in most instances totally absorbed. 
ut it is, nevertheless, undoubtedly true, that the farmers, mechanics, and land-owners, who 
took the initiative and lost their original stock, are actually reimbursed by advantages gained. 
All sections traversed have been augmented in value, and, in the majority of cases, (always ex- 
cepting the crises of monetary liabilities,).the country generally benefited. . 
By the land-grant system of credit construction, after small outlay, the lands donated by gov- 
ernment become the basis of a borrowed capital, which is devoted to the extension of the road; 
the security given to government being the preliminary construction of a portion of the road. 
It is not necessary for me to describe a system so recently within the treatment of legislation. 
As applied toa Pacific railroad, its results would appear in the creation of a greater and 
more powerful monopoly than has ever yet affected the business relations of this nation. The 
placing of the rapid extension of this national road under the necessity of public appreciation, 
affecting and affected by the monetary transactions of the country, would tend to produce 
those crises in the stock-market, to which the pecuniary affairs of this enterprising people have 
always been so peculiarly liable. But, without referring to these disasters, it is plain that if, 
during the progress of this road, public appreciation is once lost, all credit will be withheld, 
and a clear, simple, readily-defined engineering problem will appear in the light of a false, 
visionary, and chimerical speculation. 
The cause of the adoption of the old credit system of construction was from absolute poverty 
of means; the reason of the continuation of the great monopoly of the land-grant system is 
because its evils are not yet sufficiently developed to be perfectly understood; but why either 
plan of building should be applied to retard the construction of a Pacific 1eilednth, I am ata 
loss to learn. 
If there is any power of the constitution by which government can aid this undertaking, on 
the grounds of military defence, neither poverty of means, nor any plea of expediency, conspires 
to place the project in a chimerical point of view, and no such course should be adopted to 
further the needs and desires of speculation, 
Dismissing the idea of the Grand Trunk road, which is an experiment, the subject of inquiry 
is, whether the pioneer or preliminary railroad shall be used for military defence in lieu of the 
wagon-road. To still further divest the project of chimerical features, a surface or route is 
sought where, by proper management, the use of the rail can take place without material cost 
in grading. The selection of such a route reduces deterioration without paying business to the 
minimum, and enables government to procure an approximate estimate of cost. Or, more 
plainly, over either of the plateau routes of the continent a railroad can reach the Pacific in 
seven years. A road in common use needs renewal in superstructure and rolling-stock in seven 
