Annual Address by the President. 
13 
outstanding in the United States, against 189,965 miles of road, as 
follows: Capital stock, $5,806,591,107, or $30,566 per mile; bonds 
and other indebtedness, $5,881,580,887, or $30,962 per mile; total, 
•$11,688,177,991, or $61,528 per mile. 
According to Mr. Henry Y. Poor, author of Poor's Manual on Rail- 
roads, the average cost of the railways of the United States was not more 
than $30,000 per mile. Hence, it is easily represented by the bonded 
debt, leaving the stock “as a simple token of proprietary interest.” Mr. 
Poor further says that “if all of the ‘water’ were squeezed out of the 
railway securities now outstanding, no better paying investment could 
be found in the country.” The total income of the railroads of the 
United States for the year ending June 30, 1901, was $737,875,215, 
which was equivalent to 12-J per cent of the total bonded debt, or 6J per 
cent of the total stocks and bonds. 
The report of the Railroad Commission of Texas for the year ending 
June 30, 1902, gives the amount of stocks and bonds outstanding against 
10,616 miles of railroad as follows: Capital stock, $131,521,570, or an 
average of $12,389 per mile; bonded debt, $231,224,397, or an average of 
$21,781; total, $362,755,967, or an average of $34,170 per mile. 
The Commission has valued 9786.3 miles of this property on a physical 
basis at $156,336,763, or an average of $15,975 per mile, which is equiv- 
alent to less than one-half of the total stocks and bonds as noted above. 
The railroads of Texas were assessed for taxation in 1901 at an average 
value of $8,742 per mile. 
The bonded debt of these railroads, therefore, represents more than 
their actual cost, inclusive of liberal discounts to the purchasers, leaving 
the capital stock and all of the immensely valuable donations as profit 
to the constructors and promoters. The Commission’s report for the 
year ending June 30, 1902, further states that the total net income from 
operation for the year was $12,811,900 for 9714.7 miles, which is equiv- 
alent to 3.58 per cent of the stocks and bonds, 8.29 on the Commission’s 
valuation and about 15.3 per cent on the value assessed for taxation. 
The evil effects of fraudulent issues of stocks and bonds does not rest 
with the mere issuance and sale of same. Upon these the people do not 
base their demand that the issuance of railroad securities be regulated 
by the State, but from the fact that the investors in these securities 
-claim the right to charge rates for transportation sufficient to earn a fair 
rate of interest on their face value, in addition to the amounts necessary 
to operate, equip and maintain the properties. Governor Larrabee says : 
“The managers claim a right to earn dividends upon the fictitious capital 
and it is their constant effort to accomplish this object. So far as they 
succeed, they exercise an utterly unjust taxation upon the public by 
•exacting compensation in excess of a fair return on the capital invested.” 
