The New York herald., 1877-03-19
American Railroad Securities
London.


continue in more or less mitigated form
for quite period. The causes which have
produced it are still in operation. and will
continue to operate until general business
shall have revived and our currency have
been brought to a sound condition. Alter a
little the distrust will be less undiscrim-
mating than it is just at present, when
sound and rotten roads suffer from it alike.
But even our best located and best managed
railroads are not prosperous. The whole
business of the country having been for
more than three years in a state OF great
depression, it was not in the nature OF
things that the railroads should be prosper
Gus. When production comes to stand
the business of railroads necessarily falls
off, 1t is their chief business to distribute
the productions of our various industries.
The amount of their business depends on
the amount of production and inter-
change. A period Of industrial stagna-
ton dries up the sources OF their
prosperity. This is the broad, general fact
which explains the depressed condition of
our American roads and has we'll nigh
Frustrated foreign confidence in their secu-
rites.
Subordinate to this main cause are several
lesser ones, some Of which have flowed from
it and others been disclosed by it. As an
instance of the former we may mention the
cutthroat competition which has prevailed
amount of business being small each road
has made a desperate grasp for as
much as it could get They have
underbid each other in rates to
mutual destruction of profits. As soon
as one railroad war has been adjusted an
other has almost Immediately broken out
The roads with much less business than
ordinary have been doing that diminished
business at much less than ordinary rates.
thus voluntarily burning the other end OF
the candle when one end is burning by Cir
cumstances which they connot control
General stagnation having left but little
business to be done they have done
this small business at lower rates
than they could we'll afford for n
large business. When enterprise re-
covers confidence and all our industries
revive the cutthroat policy of the great
lines will be abandoned. In any highly
prosperous state of business hereafter the
internal commerce of the country between
the East and the West will fill and overflow
all existing channels, and the roads, having
all they can do, will try to reimburse their
recent losses. The order of the day will
then be, not mutually ruinous competi-
ton, as now, but general combination to
put up and keep up the price of freights
When each is sure of oil the business it can
do common interest in maintaining
high rates will take the place of the
scramble of the last two or three years to
draw away one another's business. 1t is
possible that we may then again see, what
existed previous to the panic, a great politi-
cal party rising in the West to protest
against the extortions of the railroads The
granger agitation, which seemed so formid-
able and was so rapidly spreading three or
four years ago, has quite collapsed since the
panic. Nothing was heard of il after the rail-
roads began their war upon each other. The
grangers have the low freights for which they
nifty to see the effect of such rates on the
prosperity of the roads. When business
revives they will perhaps renew their old
complaints, but, it is to be hoped, with more
moderation.
The long stagnation of business has dis
closed other causes OF. railroad depression of
much older date. The chief of these is
extravagant management. Stockholders
turned blind eye to the profusion of rail-
road officers so long as the roads were
doing o good business and earning large
amounts of money. but when they find the
value of their property wasting away they
become more inquisitive and scrutinizing.
They have accordingly discovered great
recklessness in expenses and deceptive
methods of keeping accounts and making
reports. This is by no means true of all the
roads, but it is true of too many, and in for
eign estimation all our roads suffer by this
bad management and lax morality. 1t grew
up during the war and the period Of inAa-
ton which followed. During the war the
railroads had a great harvest, which turned
the heads Of their managers The shutting
mp of the Mississippi River caused
the whole trade of the West to set
toward the Atlantic coast, and the enor-
nous military transportation made another
great addition to the business and profits of
the railroads. The habits of extravaganza
then engendered were kept up under the
deluslve show of prosperity which led us on
to the panic, and railroad management has
not yet been generally reformed. There is
great work to be done in this respect, and
the present period Of depression and dis
credit supplies coercive occasion. With
the revival of our industries the rail-
roads will begin to recover, and
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