# The Truth About The Railroads/Chapter 2

II
THE INDIVIDUAL, THE CORPORATION, AND THE GOVERNMENT
The welfare of the people of this country, of the manufacturers, and of all business, including the railroad business, is interdependent, and in the long run there must be proper relations between them and the Government and fair and reasonable treatment of and by each to permit that progress in this country which its marvelous resources and intelligent population justify.
Railroading is a business, and is conducted under much the same conditions as the manufacturing business and has many of the same problems and difficulties. There are three important differences, however, between the manufacturing business and the railroad business. The first is that manufacturers can ​close their establishments, reduce their expenses to the necessary caretakers and lose the interest on their investment until such time as their inclinations or the demands for their particular articles make it worth while to operate their plants. The railroad, however, cannot stop; once started, it must go on unless the owners choose to abandon it absolutely, and lose not only all chance of interest on their money, but the entire principal as well. The second is that most manufacturers can warehouse their product, hold for rising prices, and sell at some future time. The railroad cannot do this. It must have ample transportation ready at any given time and place, and if it is not used then and there it is lost, not only to the railroad, but to the consumer. The manufacturer of transportation must always be ready to furnish the maximum amount of transportation for the use of the American people. In other words, he must be ready for the “peak load” at any time. This “readiness to serve” means a great investment and a great expense which is given far too little ​consideration by those who now make the numerous laws, rates, rules, and regulations affecting the railroads. There should be enough margin of profit in the business so that at all times and places there will be this “readiness to serve.” The third difference is that manufacturers have some control over their prices. In times of a great demand for any article they can and do increase their unit prices, and in poor times they are at liberty to reduce them to encourage trade, with no fear that later on they will be forbidden by the Government to advance them. They can meet competition and take on extra business without cutting their entire scale of prices. In the railroad business an excessive demand not only brings no increase in the unit price, but legislatures and commissions, which have practically taken charge of the management of the railroads (except the responsibility of their finances), more and more take the view that an increasing demand justifies lower prices, thus reversing the old-fashioned law of supply and demand.
The so-called railroad question has been ​magnified and much distorted by politicians and doctrinaires. The people have been led to believe that the railroad business is very different from other forms of business and that it can be successfully conducted under many severe legislative handicaps and according to rigid mathematical formulas. That it has sustained itself to the present time is due to the great growth of the country and to the patient, able, and courageous work of men who have devoted their lives to the business. It has achieved moderate success, not because of legislative interference and tinkering, but in spite of them.
What is business? Professor James Mark Baldwin, in his volume “The Individual and Society,” says that “business has to do with the production and distribution of valuable things; money, utensils, anything for which there is a demand in society, or on which society or some individuals of it set value”; and again, “to produce such things in response to the demand and to distribute them to those from whom the demand comes, is the ​undertaking of business.” Here is set forth very clearly the idea that the distribution of things is business just as much as is the production of them. One of our troubles in this country is the result of the fact that we have wandered away from the common-sense view that railroading is business. Naturally there always has been, and always will be, a difference of opinion between the buyers and the sellers as to quality and price of articles traded in, and only when there are reasonable and fair men in business and reasonable and fair rules governing business will men continue in business.
There are four great primary forms of business: agriculture, transportation, manufacturing, and mining. As these grow, prosper, and interweave, conditions are created that produce the many other forms of business that have been so successful in this country, — merchandising, banking, insurance, etc., — all essential to progress, but none of which can prosper unless the four great primary occupations prosper, and this they cannot do unless ​they are fairly treated by the Government and the people.
The United States is a big nation, and I use the word “is” purposely because the growth of the country and the development of business has been so great that more and more must we think and act “continentally.” We can no longer conduct our affairs on the basis that the United States “are” a big nation. This very fact of size is important in its bearing on the industrial, railroad, and economic questions of the day. Being a big nation, we need big tools to do our work. We must have big railroads; we must have big banks; we must have big lumber operations; we must have big insurance companies; we must have big manufacturing establishments. In working out the problem of providing food shelter, clothing, heat, light, and transportation for the American people we have developed great systems of railroads, great industrial corporations, great financial institutions. They are necessary and should not be condemned simply because of their bigness. Yet some critics of ​the American railroad and business situation are using the words “system” and “big business” as if they were in and of themselves a crime against society and inimical to the forward march of the country to a higher and better order of things.
To bring out some points it will be necessary to burden you with some figures showing the growth of the country. The continental area of the United States has increased from 820,377 square miles in 1800 to 2,974,159 in 1910. In 1800, 305,708 square miles had at least two persons to the mile and in 1900, 1,925,590 square miles had that number or more per square mile. In 1800 the population of the country was 5,308,483, of which only 4 per cent lived in places having 8000 or more people, while in 1910 the population was 91,972,266, and probably 40 per cent lived in places of 8000 or over. In 1910 in 228 cities of 25,000 population or over there were 28,508,007 of people or 31 per cent of our population. 1840, 77.5 per cent of the people at work were employed in agriculture, and in in 1900, 35.7 per ​cent. In 1840 only 1,013,663 people, or 21.1 per cent of all at work, were employed in commerce, manufacturing, mining, and transportation, and in 1900, 11,852,273, or 40.8 per cent, were so employed, and the proportion was no doubt even greater in 1910. These figures show clearly how our people have drifted to towns and cities and how important it is that the great primary occupations of agriculture and transportation be successful and adequate if we are to have food and if we are to avoid those difficulties that are incident to densely crowded cities. The great railroads and the great industrial corporations are all doing work in the direction of encouraging wise conservation of resources. The country-life movement is a good sign, and every patriotic American should do what he can to help such movements, and to create a public opinion that gives as much credit, if not more, to the wholesome farmer and his wife and children, as to the dweller in the town and city.
Manufacturing in this country has increased from 140,433 plants in 1860, with ​$1,009,855,715 of capital and 1,311,246 employees receiving $378,878,966 in wages to 533,769 plants in 1905 with $13,872,035,371 of capital and 6,723,926 employees receiving $3,625,911,957 in wages. In 1860 the value of the products of the manufacturing plants was $1,885,861,676, and in 1905 it was $16,866,706,985. In 1850 there were only 8,571.48 miles of railroad in the United States, or 3.71 miles for each 10,000 people, and in 1909 there were 236,868.53 miles of railroad and 342,351 miles of track, or 37.2 per 10,000 people. In 1880 the gross earnings of the railroads were $615,401,931. In 1909 they were $2,418,677,538. In 1888 American railroads transported 61,329,000,000 tons one mile, and in 1910 they transported 250,418,000,000 tons one mile, an increase of 324 per cent in volume of service, and the rate per ton-mile the railroads received declined 24.5 per cent. In 1888 they carried 10,101,000,000 passengers one mile, and in 1910, 33,270,000,000, an increase of 229 per cent, though the average receipts per passenger per mile declined 26.9 per cent in ​that period. Mileage of freight-trains increased 80 per cent and of passenger-trains 112 per cent, showing how much improved is the service of to-day to thousands of scattered communities. In 1880 the par value of all railroad securities outstanding was $5,004,521,666.08, and in 1909, $13,914,302,363 at par in the hands of the public represented the railroad property of the United States, including the great terminals, large equipment, lands, cash, and miscellaneous investments of all kinds, or a capitalization of less than $60,000 a mile of railroad and less than $41,000 a mile of tracks. But the real capital in the railroad business is all the property owned and not the cost of the property or the amount of securities issued. In fact, the securities issued against American railroads as a whole to-day, in my judgment, are much less than their fair value as “going concerns.”
In what is known as the Minnesota Rate Case, just decided by Judge Walter H. Sanborn of the United States Circuit Court, a judicial valuation of the railroad property of ​the Northern Pacific Railway Company was made. This case was tried most thoroughly, the testimony being taken before a master, ex-Judge Charles E. Otis, and lasting nearly four years. Many expert witnesses were called on behalf of the railroad and the State, and elaborate statements of valuations were submitted, analyzed, and dissected. The testimony in the Northern Pacific case filled 4258 pages, and the special statements supplementary thereto filled two volumes. As a result of this searching examination, the master on September 21, 1910, submitted his findings and recommendations. He found that the value of the property of the Northern Pacific Railway Company employed in its transportation business was on June 30, 1908, $452,666,489, as compared with securities in the hands of the public at that time amounting at par to $405,225,575.29. These securities represent not only the railroad property used for transportation purposes, but a large amount of other property, such as land, coal mines, new roads under construction, several important pieces of ​railroad recently acquired and constructed, important terminal property, treasury securities, and cash.
In passing upon the findings of the master, Judge Sanborn used the following language: “The master found the original cost of the acquisition and construction of the entire railroad systems of each of the companies and the proportion thereof assignable on a track mileage basis to Minnesota. The amounts thus found prove to be much less than the values ultimately found by the master, and for this very good reason: These railroads were pioneers; they were built in large part over the prairies of Minnesota before they were settled and before many of the existing towns, villages, and cities along their lines came into existence. A large part of the right of way of the Northern Pacific Company was granted to it by the nation. The cost of rights of way from five to forty years ago through wild lands, and through towns and villages whose population and the value of the property in which have since been multiplied by from two to ten, ​is obviously no criterion of the value of those rights of way in 1908, when they were used under these fares and rates and when agricultural lands in Minnesota were worth from $35 to $100 an acre, and rights of way and lands for yards and sites for stations in cities like St. Paul and Duluth have wonderfully increased in value. It is a fair return upon the reasonable value of their Minnesota property in 1908 to which these companies were entitled, and the cost of that property at times varying from five to forty years ago may be some evidence, but it is certainly no criterion of its value in that year. In view of these facts the master rightly decided that the cost of reproducing this property new was a more rational and reliable measure of its real value than the original cost of its acquisition and construction or the market values of the stocks and bonds of the companies, and upon that basis he made his findings.”
Here is shown conclusively that the fair value of this one railroad is very much in excess of the securities issued, and this judicial ​valuation is the best of evidence that there is no water in the securities of this particular company.
Four Western States have made careful valuations of the railroads within their borders, and the commissions, if they err at all, have not made mistakes in favor of the railroads. The results were as follows:—
| | Cost of reproduction | Capitalization |
| Washington (1905) | $194,057,240 | $161,582,000 |
| South Dakota (1908) | 106,494,503 | 109,444,600 |
| Minnesota (1907) | 360,961,548 | 300,027,676 |
| Wisconsin (1909) | 296,803,322 | 225,000,000 |
| Total | $958,316,613 | $796,054,276 |
In Minnesota and Washington the valuations made by the railroads at the same time were considerably in excess of those made by state authority, and there is good reason to believe that they were made more thoroughly and accurately than those made by the States. Even on the lower valuations made by the States the capitalization is less than the cost of reproduction.
There is every reason to assume that a similar careful calculation and computation ​of the value of American railroads as a whole will prove their value to be greater than their capitalization.
There were in 1900 engaged in manufacturing, mechanical pursuits, trade, and transportation nearly 12,000,000 persons. No very complete figures exist of the exact number of persons belonging to labor unions, but it is thought that the number is not more than 3,000,000, or about 25 per cent of the total number employed in these four lines, which do not include agriculture, in which there are no labor organizations. These figures clearly show the growth of the country, and how, from the rather simple forms of agriculture, transportation, mining, and manufacturing, that growth has made necessary the great instrumentalities of business as they now exist and has created the complex relations between the various forces that affect business to-day. Most of this great development has come since the Civil War, or in only forty-five years, and, as a result of this wonderful forward march, due largely to the unexcelled railroad ​facilities of this country, a very large proportion of the people of the United States enjoy comforts and even luxuries to a greater extent than in the period before and just after that great conflict, and to a much greater extent than the people of other nations. Every patriotic American should be grateful and proud of the daring and directing minds that have helped to make the country as great and prosperous as it is.
These big things could not have been done, and the people of this country could not have been fed, sheltered, kept warm, and transported, had each been forced to depend upon his own efforts in obtaining what he needed and wanted. Individuals have, therefore, gradually banded themselves together into partnerships, corporations, banks, trusts, insurance companies, labor unions, and other forms of collectivism, because only through coöperation could they do the big work of this country.
In the last few years, however, there has grown up in this country a set of political economists and reformers who “see ghosts” ​and who are inclined to think that these great instruments of commerce are all wrong because of their size and that they should be regulated, controlled, and managed in detail by the Government. The exploitation of the natural resources of the United States and the really marvelous growth of the country have resulted in some large fortunes which catch the public attention, but they have also resulted in countless small accumulations of property all over the country, as shown by the deposits in the banks and by the amount of life insurance carried. In 1850 there were 251,354 depositors in the savings banks of the country, with $43,431,130 to their credit, an average of $172.79; and in 1909, 8,831,863 depositors, with $3,713,405,710, an average of $420.46. In 1880 the individual deposits in all banks were $2,134,234,861, and in 1909, $14,108,039,477. In 1850 there were 29,407 life-insurance policies for $68,614,189, and in 1908, 25,852,405 policies for $14,518,952,277. Every one of these depositors and every holder of a life-insurance policy has a personal interest ​in seeing that justice is done to the railroads; and the railroads ask for nothing more than simple justice, based on accurate knowledge of the real facts. Because a very few individuals have, by superior brains, industry, and even luck, made large fortunes, is it wise to condemn the splendid work of the American business man, destroy it, and fly to socialistic evils that lead no one knows where?
The great force of collectivism has created manufacturing institutions, railroads, banks, insurance companies, labor unions, the Government itself, through the voluntary acts of individual citizens. These institutions, upon which modern society so largely rests, cannot be eliminated from our system of life. Unless the chemist working with the great forces of nature uses them properly, he fails to get the result desired and perhaps has an explosion or conflagration. The engineer building a water-power or a great engine will have failure, friction, and disruption of his whole scheme, unless he handles intelligently the forces with which he is dealing. The great industrial and social ​forces must be treated wisely or there will be friction, explosion, and perhaps disruption. The census of 1900 reported 21,329,819 male persons of voting age in the United States, and to-day there are, without doubt, 25,000,000. Most of them are busy with their daily work, taking care of their families and leading quiet and orderly lives and paying little attention to the great forces that are at work in this country. Suppose, however, that even one per cent, or 250,000 men, go about the country and preach on the platform and in the magazines and in the press that everything is wrong; that the rich are growing richer, and the poor are growing poorer, and that unless something is done the corporations are going to ruin the country, — the last thing they want to do. Such people can and do make a great deal of noise. If nobody shows that they are wrong, they make a big impression, and the people begin to think that, instead of living in the best country in the world and under the best conditions, they suffer from continually increasing evils.
​The old nursery rhyme reads:—
“Multiplication is vexation, Division is as bad, The rule of three doth puzzle me, And practice drives me mad.”
Many of the people who are trying to tell others how to manage their business seem to think that “multiplication is vexation,” and that the great big things accomplished by the hard-working men of the United States are wrong. They think that “division is as bad,” and that, when after earnest efforts business pays a return or a dividend, the ability to make a profit must be checked. They have lost all sense of proportion and the “rule of three” puzzles them badly, for they are unable to see how great this country is and what great instruments of commerce there must be. “Practice” would drive them mad, for very few of them have ever done any actual work in conducting affairs about which they so readily instruct others.
The individual citizen, having created the railroad, the corporation, the trust, the labor ​union, and our form of government, has been too much inclined to fold his hands and leave the management of his affairs to a few without much check upon them. The member of the labor union too often, by credulously following an unwise leader and neglecting to express his own views, has caused great trouble to himself and to society. The voter has left the representatives in the Government too much alone, and the boss, graft, extravagance, foolish legislation, inefficiency, and waste have resulted.
The great mass of the American people are honest and fair, and when they really understand the great questions of the day, they will solve them correctly, just as they did the slavery and silver questions. But the individual must exert himself to obtain correct information and to form a sane public opinion. The printing of newspapers and periodicals in this country has grown from 11,314 publications in 1880, issuing 2,067,848,209 copies a year, to 22,603 in 1909, issuing 10,600,000,000 copies a year. It is a sad fact that some of these publications print statements that are not ​entirely correct and that mislead and prejudice the unthinking. Every individual can do some good by encouraging decent newspapers and by frowning upon yellow journalism and muck-raking magazines. The schools of the country are teaching daily eighteen and one half million boys and girls, and every individual interested in the welfare of his country should exercise some influence in seeing that common sense, industry, and self-denial are taught as well as some other things.
For a long time it has been very fashionable to attack the railroads. They are a big target. The men engaged in other forms of business have looked on and to some extent have sympathized with such attacks, not realizing that sooner or later their turn will surely come, if the crusade against large forms of business continues. The railroad business represents more than 1,500,000 employees, receiving more than $1,000,000,000 a year in wages; and about 1,000,000 security-holders. The employees and the numerous small owners of the railroad as a whole are hard-working, ​conscientious people, whose principal capital is their brains and industry and a limited amount of money that they may have saved from their wages and income. The daily lives of the employees and security-holders of the railroads are affected by the success or failure of the railroads, and they are entitled to protection and encouragement from the people and the Government equal to that accorded other citizens. The owners of the railroads hold securities worth at par nearly $14,000,000,000. The average net return from railroad operation for the year ending June 30, 1909, was 4.07 per cent. In 1905 the net income from manufacturing institutions was 13.06 per cent.
At times the impression is given in the press that great fortunes have been made and are being made in the railroad business. A very few have been made, but not nearly so many as in manufacturing, mining, merchandising, banking, lumbering. Go into any community, and except in rare instances it is not the man building railroads or working for them who is the rich man, or even the well-to-do. ​The increase in the cost of living in the last five years has been reflected in many increases in the wages of the great majority of the 1,500,000 employees; but the returns to the security-holders, who also must meet in their daily life the increased cost of living, not only are not increased, but in many cases have been decreased. Many of these security-holders are persons of moderate means to whom any loss of income is important.
Judge Sanborn, in his very exhaustive opinion in the Minnesota Rate Case, says about the return on railroad property: “Complaint is made that the master finds that the companies are entitled to a net return of 7 per cent per annum upon the respective values of their properties devoted to this public use. The character of the business in which an investment is made, the locality in which it is placed, the returns secured in that locality from other investments of a similar nature, the uniformity and certainty of the return, and the risks to which the principal and the income from it are subjected, condition the measure of a fair ​return upon capital invested. An investment in a bank, in a factory, in a mercantile, manufacturing, or agricultural business is substantially free from regulation by the Government and exempt from any duty to the public except that of paying taxes. If the business in which such an investment is made is unprofitable, its owners may promptly discontinue its operation until more prosperous days come and then return to their undertaking. An investment in a railroad which operates in many States is subject to the regulation of its business by many governments. Its owners owe the duty to the governments and to the public to operate their railroad continually in days when its operation is unprofitable as well as when it is remunerative, a duty they must discharge under the penalty of the forfeiture of their property, if they fail. In view of these facts, they ought to be permitted to receive a return large enough to enable them to accumulate in prosperous days a surplus sufficient to enable them to protect their property in days of disaster and to make their average return ​through days of prosperity and of adversity fair and just. The lands in Minnesota through which these railroads extend are fertile and productive. The cities, villages, and towns they reach are rapidly increasing in population and wealth, and the people they serve are thriving and successful. The evidence satisfies that the railroads are maintained in excellent condition, that they are efficiently and on the whole economically managed and operated, and are rendering commendable service. Justice to the thriving people they serve does not require that the owners of these railroad properties should be deprived of a fair return upon their values. To deprive them of such a return would prevent advances and tend to compel reductions in the wages and salaries of their employees, would tend to prevent the extension of their lines into portions of the State where the development and accommodation that railroad service assures would be welcome and may be needed, to deteriorate the character of the service they render, and to retard the general prosperity. The legal rate ​of interest on a debt in Minnesota, in the absence of contract, is 6 per cent, and by contract it may be 10 per cent per annum. (Rev. Laws Minn. 1905, *2733.) Rational investments in agricultural, manufacturing, mercantile, and other industrial pursuits and even well secured loans yield returns in Minnesota corresponding with these lawful rates. Investments in railroads and the returns thereon are at the risk of failures and partial failures of crops, of the disasters, delays, and expenses of unusual storms, snow, and cold, of the great financial disasters which occasionally prevent or delay the movement of traffic, and of the burden of continuous operation, whether profitable or unremunerative. It is an axiom in economics that the greater the risk the greater must the return be upon invested capital, and the conclusion is irresistible that a net return of 7 per cent per annum upon the respective values of the properties of these companies in Minnesota devoted to transportation is not more than the fair return to which they are entitled under the Constitution of the United States.”
​Manufacturers need a constantly growing market for their products, and there are large areas in the United States capable of supporting a much greater population than they have at present, if agriculture and transportation both succeed.
The Northern Pacific States, for example, have areas and population as follows:—
| | Square miles | Population |
| Wisconsin | 56,040 | 2,333,860 |
| Minnesota | 83,365 | 2,075,708 |
| North Dakota | 70,795 | 577,056 |
| Montana | 146,080 | 376,053 |
| Idaho | 84,800 | 325,594 |
| Washington | 69,180 | 1,141,990 |
| Oregon | 96,030 | 672,765 |
| Total | 606,290 | 7,503,026 |
These seven States are nearly six and one half times as large as New York (49,170) and Pennsylvania (45,215) together, with their 94,385 square miles. They have a population of 7,503,026, as compared with 7,665,111 in Pennsylvania and 9,113,279 in New York. They produced in 1909 a total of 265,712,000 bushels of wheat, or 35 per cent of the crop of the United States, and received $247,617,000, ​a sum which represents very large buying power. In some of these States there are regions which cannot be developed properly without more transportation. In eastern Montana, either Maine (33,040 square miles) or Indiana (36,350 square miles) could be placed where no railroad would touch it. In central Oregon the Northern Pacific, Great Northern, and Union Pacific are building some railroads, opening a part of the State in which, until this recent construction, the great State of Ohio (41,106 square miles) could have been placed where not a railroad would touch it. This area would hold the great State of New York with Rhode Island and the District of Columbia thrown in for good measure.
The cost of transportation in central Oregon has been very high because of the lack of railroads. On a ranch last summer, corn was needed and the freight charge by wagon for 100 miles was $20 per ton, 20 cents per ton per mile, while the average rail rate in the United States in 1909 was 7.63 mills per ton-mile. Corn is taken by railroad from the ​Mississippi River to New York, 1200 miles, for $3.20 per ton.
The value of farm property in Ohio, Illinois, and Wisconsin increased in the last ten years 83 per cent; in Iowa, South Dakota, Nebraska, and Kansas, 165 per cent; in Minnesota, North Dakota, Montana, Idaho, Washington, and Oregon, 197 per cent. The increase in the value of farm property in all the States named has been from $7,640,940,000 in 1900 to $17,762,401,000 in 1910, or more than $10,000,000,000, — at the enormous rate of $1,000,000,000 per year. Without the rail transportation furnished by the American railroad-owner this great increase in national wealth would have been impossible. In 1880 the capital employed in manufacturing in this country was $2,790,272,606, and in 1905 it was $13,872,035,371, — an increase in twenty-five years of $11,000,000,000 or $440,000,000 a year. Without the work of the railroad-owner in creating the transportation machine that has enabled the country to expand its population, with a resulting increase in farm values of $1,000,000,000 ​per year, it would have been utterly impossible to have increased the value of the manufacturing business $440,000,000 a year, and to have found a market for the products, which increased from $5,369,579,191 in 1880 to $16,866,706,985 in 1905.
It may be urged that a development of waterways would provide needed transportation. The waterways, if very highly developed, would furnish a limited amount of transportation for narrow strips of country adjacent thereto, but trade could not be carried to any extent for more than a few miles away from the water. Climate in many parts of the country would close the waterways for a considerable period of the year. The railroads do not object to intelligent and economical use of waterways under the same conditions as govern the ownership and operation of railroads.
The American railroad-owners and managers have done a great work in creating the great transportation machine as it exists to-day, and they can progress still further and ​do better work if not too much hampered and discouraged. The railroad-owner, by his courage, energy, and intelligence in adopting advanced methods, has been able to improve the railroad system of the United States steadily in the last forty years and still maintain and operate his property in spite of the reduction in rates. If the railroad-user had paid in 1910 the same average freight rate as in 1870, he would have paid $3,092,662,300 more than he did pay; if he had paid the same average rate per passenger-mile in 1910 as in 1888, the additional payment would have been $163,023,000, the two amounts being $837,007,762 greater than the entire earnings of all the railroads in the United States in 1909.
The individual citizen who by his voice and vote makes or permits to be made the drastic laws now applicable to the railroads must remember that the railroads must either earn or borrow the money needed to improve the existing roads and to build new ones, if adequate service is to be given. In the face, however, of constantly increasing wages and taxes ​and of stationary or falling rates, the task of furnishing the efficient transportation the American people must have is becoming more and more difficult.
The individual has invested money in railroads in the past for the same reason that he has invested in other business, — with the hope of profit, — and there have been great losses to thousands of people because their investments turned out badly. Take away the hope of profit and the individual will not take the risk of loss. In five years, 1904–1908, the investor has taken up railroad securities amounting to $4,167,554,569, or an average of $833,510,914 per year. The growth of this country should be so great that a like sum or more will be needed annually for a number of years if transportation is furnished in sufficient quantity. If individuals do not furnish the money, who will? Enlightened self-interest should persuade business men to see to it that investment in railroads is made attractive enough so that money will seek them freely.
“The laborer is worthy of his hire,” and the ​American people must permit the railroad, which is doing such a great work, to receive compensation sufficient to pay good wages, its share of the taxes, a fair return on the value of the property, a reasonable profit, and something to be used each year for necessary improvements and betterments. Publicity of corporation affairs and reasonable regulation of the great business institutions of the country are desirable, but attempting to manage in detail such concerns, and continual and foolish interference with the judgment of the men trained in that management, are unwise and un-American. Such policy tends to cripple the splendid initiative that has accomplished so much up to the present time. With that initiative unimpaired and encouraged to act, far better results will be accomplished for the whole country than under the management of the Government. Putting a government uniform on a railroad employee does not make him energetic or infallible, and it will reduce his feeling of responsibility.
While the attacks on the railroads have not ​ceased, similar action is now being considered and taken against many other forms of business, and unless individuals arouse themselves and take some active part in trying to create a sane, unprejudiced public opinion about business, the troubles that are now confronting the owners and managers of railroads will spread and confront the owners and managers of many other kinds of property.
The railroads can exist without expansion, and under the protection of the Constitution and the courts their property will be allowed to earn some return; but if they do not expand and improve, it will be general business that will suffer in the long run. Business men are neglecting their own interests when they encourage or permit a governmental policy which tends to discourage investment in and improvement of railroads, for without the very best railroads business of all kinds cannot achieve its highest development.