The news and herald. (Winnsboro, S.C.) 1877-1900, 1881-01-08
: : ~. { = = =
TEN PER CENT.
What General Alexander Regards as Re
sonablc Railroad Earninxs

"H"t Sonora AIexander Regards as Rea-
sonablc Railroad Earnings,
LOUISVILLE, December 17.-Goy,
Jaincs M. Smith, Chairmnn Georgia
itaiiroad Commission, Atlanta, Ga
AIeat governor: III, looking over the
official report OF the Commission to the
|. iegisiaturc, sec myself recorded as
having expressed the opinion that six
per cent. dividends would be q rca.
sonablc return for stockholders in
!. railroads t" bo allowed to receive for
their investments. cannot recall
ever having given expression to such
views, or ever before having been
called upon even to frame or cxprcss
an opinion upon the subject, and am
sure your honorable body has either
Deen mislntormed as to my viows, or
have misunderstood some statement
or expression which may have used
IN some other connection, but certain
ly not Intended to convey tho opinion
which las been accredited to mo. IF
l were called upon for such an opinion
| certainly would not fix the dividend.
which any railroad corporation should
be allowed to receive, at less than ten
per cent; and think tho following
considerations should justify even q
larger dividend than that, to wit: In
tho first place, as property invested in
railroads benefits all the community I'm
a far greater degree than property in
vested in mercantile business, and
even far more than that invested in
manufacturing, community, l am
sure, receiving all the benefits of cheap
transportation and increased values of
lands, might look with cquinanimity
upon dividends at least as great as tho
ordinary profits derived from mercan-
tile and manufacturing investments,
even those that are exceptionally profit
able.
In tho second place, the enormous
amount Of money required to build
railroads places their construction gen
orally beyond the power of single in
dividuals, who must combine in cor
porations, and Withdraw their money
from other Investments and put it in
railroads. Ofcoursc there would bc
no encouragement 10 capitalists to
make this use of their surplus means,
unless they are allowed tho privilege
Of increased earnings from their in
vcstmcnts. TO limit the dividends to
lower rates would he simply to put a
penalty upon investing in railroad,
which surely should not be the policy
Of the State.
In the next place. the building of n
railroad is usually Il matter Of some
years. Money invested in railroad
stock is usually unproductivc of any
dividends for much longer period
than money invested in mercantile
pursuits or any manufacturing enter
priscs, and should upon that ground
alone be entitled to yield better re-
turns after it has run through the un-
productive period. think, therefore,
that no reasonable man cnn complain
if the stockholders of n railroad re-
ccivc for their investment larger re-
turn than the average of good invest
mcnts in either mercantile or manu-
featuring enterprises.
Now, what are the average returns
of such investments? The legal rate
of interest allowed in Georgia, TO men
who take no risks, but lend money
upon ample security and without n
single day Of unproductivcness, is
eight per cent. per annum. Successful
manufacturing enterprises pay all the
way from ten to twenty per cent, and
the average successful merchant clears
on his capital embarked from fifteen to
twenty-five per cent. per annum. At
least those are the figures given mo by
friends III trade. In this connection
there should also be considered tho
contingencies to which railroad capital
is ubIcctcd-which are certainly as
great us tho contingencies affecting
either mercantile or manufacturing ell
tcrpriscs. Money once invested in 4
railroad canUot be moved. The build
ing OF a competing line may destroy
its value, and there is no help for it.
But steamboats, may go to another
river, or n merchant may remove his
, stock OF goods to another market, or q
manufactures his machinery to another
site which may offer better opportuni-
tics-all with comparatively little ex-
pcnse.
Again, the principal calamity which
can 6etall merchant or a manufactur-
cr is fire against which he can insure.
But every railroad company has daily
at risk the lives and limbs of thousands
OF travellers, whose safety depends
upon the sobricty and skill and faith
ful performance of duty Of hundreds
Of employees. and upon the strength
and efficiency OF thousands of wheels
and axlcs, couplings, rails, ties, spikes
and all the myriad appurtcnces of q
complete railroad. The only insur-
ancc against an accident which may
involve n years earnings is in care
ful attention and watchful supervision
Of all of these matters. under all cir
cumstanccs, rain or shine, storm or
calm, heat or cold. No human care or
foresight is adequate to insure safety
of all these risks.
In addition to the ordinary dividends
to its stockholders, every railroad
should be allowed to earn surplus
fund, to take care Of dividends when
these accidents come, as well rs when
short crops and financial crashes over
take them, in common with all other
investors, except those who lend their
money at eight per cent. amply sccur.
ed.
Perhaps 7 may say in addition, also,
that, as building railroad does MT
force anybody to use it. but still
leaves the community in possession of
all the transportation facilities which
it had before the road was built, un-
} less they voluntarily abandon them it
, should really be no matter Of concern
: to the community at large whether the