Knoxville journal. [volume] (Knoxville, Iowa) 1874-1986, 1874-11-26

capital invested. Turning now to
another matter, the neat question Is,
how much work, and at what cost,
ia done to earn this $50 per cent!
| The cost of the Pennsylvania road
has risen In ten years from s3z,Voo,-
Gsy0 10 nearly 52,OOO,oU0, or % per
cent. Here il a large amount OF
what people call water" What
| this Z. water really Is We propose to
show presently. During the same
term OF ten years, thetonnage moved
one mile has increased from 40 mil
lions to 1884 millions, or 230 per
cent, and the passengers moved one
mile from l46 millions to III mil
| liors. or 20 per cent. How was this
vastly increased call for Transports
ton met? 1t could be met only IN
one way-by increase OF capital
more locomotives and cars, addition
al tracks, larger stations. All these
cost money. This money had TO be
invested it was procured from some
quarter, and was invested with the
result that go per cent. Of new capital
brought in 60 per cent. OF increased
earnings TO the company. But this
was the least noticeable part OF the
operation. The real question Tor the
consideration Of those who declaim
against the increase Of railroad capt.
tai is-Who gets the advantage Of
this "water ?p Let us see. What
was the amount Of additional work
done To earn the 60 per cent. in
crease /? The amount Of freight trans
ported increased $50 per cent; the
amount of passengers 20 per cent; III
other words, through carrying an in
creased quantity by means OF an in
creased capital, the amount PAID by
those who used the road WAS reduced
from 2.48 per mile for each ton OIL
merchandise carried TO LII cents 1
and while the cost Of carrying pas
Sengers, owing to the growth Of lux
ury in travel, has actually increased
from I.92 to 2.07 cents per mile, the
net earnings on that business have
decreased from 7 mills to Al mills
per mile. In this case the public has
reaped the lions share of the advan-
tage which has accrued from the
mlIcl-abused increase Of capital. The
one decisive result which has flowed
from IL has been the decrease Of
rates, In other words, the larger
scale, the cheaper the transportation.
10 such a degree has this been the
t.ase, that, although the increase OF
volume in freigffts has enabled the
Pennsylvania Company 10 transport
ut "a reduction OF ~ per cent. from
former rates, yet ut the same time
every dollar Of the increased invest |
ment between 1861 and 1874 returned
q per cent. Of net income IN 1873. |
Here is II very remarkable iIInstra- |
ion Of a principal in railroad ecOno. |
my which has hitherto been very |
partially understood, even by those |
who have made study Of the sub |
iect. A railroad is, on the one hand,
most expensive animal 10 keep. |
Its calls for more capital To develop |
or accommodate new business are |
uuceasng. A veritable daughter Of
the horse eech, it Is necessarily cry
ing More MOre!! On the other
hand, it is equally that where a GER
tain stage Of railroad development il
reached, every dollar Of new capital
judiciOusly invested in il not only |
l0es much larger propOrtinnaie
work Of transportation than any dDl-
hr originally invested, but it also
arms much larger percentage of
proit--in other words, that Increased
capital, SO often and With noisy ig-
n0rance denounced "a poor water
is exactly the motor which at once
secures to the transporter reduced
rates Of carriage, and to the IN weston
enhanced profits. In the case of the
Pennsylvania Company, where the
new capital will probably be applied
With excellent Judgment, 1t is now
estimated that until the business ~
the road shall have been increased II
per cent. over what 1t now Is, every
million Of dollars hereafter invested
will yield $3.50, 0g0 Of net income per
tnDunI.
Upon one other point, the expert
ence OF the Pennsylvania Railroad
has been most instructive. 1t clearly
illustrates the very important iuct
hat, under our present industrial
conditions, the reduction of freight
nh q reals between he interior and
The seaboard in no way permanently
benefits the individual Western far
mer. This Is a proposition which the
Granger MUD seems wholly unable
to grasp. 1T Is none the less true,
and has indeed been to ~ degree dem
opsirated. Every reduction of cost
of carriage to the seaboard does ma
terially extend the area Of production
Of ccre,as, and does also supply them
10 the EasterU CONSUMERS at greatly
reduced rates, but SO far Ms the far
mers are concerned, it in no wise
affects their condition. 1.-THE CHANGERS
vision Of the future could be realized
in letter and in spirit--if Il double
track, steel-clad, exclusively. freight
railway could DO built TO every farm
er's door and carry thence his pro-
duce at Il reduction Of two-thirds Of
the present c0st--the result would
still be what has just been stated. It
is exactly this which, on a smaller
scale, the Pennsylvania and other
roads have been doing during the
last ten years. The facilities for trans
portation have been increased, and
the charges upon 1t reduced, until
btnuIstnHs ut.n NOW hrnntvbf N tha