Savannah morning news. [volume] (Savannah) 1868-1887, 1881-01-06
GENERAL Z. r. ALEXANDER
Disseuts from Some Views At
tributed 90 Him by the Railroad
Commission.
LoUIsvnLE. December II.


G0uernOr James IL. Smith, Chairman
Georgia Railroad Commission, AtLanta,
Ga.
DEAR GovERNoR-In looking over the
official report of the Commission to the
Legislature, see myself recorded as
having expressed the opinion that six
per cent. dividends would be a reason
able return for stockholders in railroads
to be allowed to receive for their invest.
ments. l cannot recall ever having
given expression TO such views, or ever
before having been called upon even to
frame or express an opinion upon the
subject, and | am sure your honorable
body has either been misinformed as to
my views, or have misunderstood some
statement or expression which l may
have used in some other connection,
but certainly not intended to con-
vey the opinion which has been &C
credited to me. If / 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 10 per cent, and
| think the following considerations
should Justify even a larger dividend
that that, to-wit: In the first place, as
property invested in railroads benefits
all the community in far greater de-
gree than property invested in mercan-
tile business, and even far more than
that invested in manufacturing, COM
munity, l am sure, receiving all the
benefits of cheap transportation and in
creased values of lands, might look with
equanimity upon dividends, at least, as
great as the ordinary profits derived
from mercantile and manufacturing in
vestments. even those that are excep-
tionally profitable.
In the second place, the enormous
amount of money required to build rail-
roads places their construction generally
beyond the power of single individuals,
who must combine in corporations, and
withdraw their money from other in
vestments to put it in railroads. Of
course there would be no encouragement
to capitalists to make this use of their
surplus means, unless they are allowed
the privilege of increased earnings from
their investments. To limit the divl-
dends to lower rates would be
simply to put a penalty upon in
vestlng in railroad, which surely should
not be the policy of the State.
In the next place, the building of a
railroad is usually a matter of some
years. Money invested in a railroad
stock is usually unproductive OF any
dividends for much longer period than
money invested in mercantile pursuits or
any manufacturing enterprises, and
should upon that ground alone be en-
titled to yield better returns after it has
passed through the unproductive period.
| think, therefore, that no reasonable
man can complain if the stockholders of
a railroad receive for their investment a
larger return than the average of good
investments in either mercantile or manu-
featuring enterprises
Now, what are the average returns of
such Investments The legal rate of in
terest allowed in Georgia, to men who
take no risks, but lend money upon
ample security, and without single day
OF unproductiveness, is : per cent. per
annum. Successful manufacturing en-
terprises pay all the way from 10 to 20
per cent, and the average successful
merchant clears on his capital embarked
from 10 to % per cent per an.
mum. At least these are the fig
ures given me by friends in trade.
In this connection there should also be
considered the contingencies to which
railroad capital is subjected-which are
certainly as great as the contingencies
affecting either mercantile or manufac-
turing enterprises. Money once invest
/ ed in q railroad cannot be moved. The
building of competing line may destroy
its value, and there is no help for it.
But steamboat may go to another river,
/ or merchant may remove his stock of
goods to another market, or a manufac-
turer his machinery to another site which
may offer better opportunities, all with
comparatively little expense.
Again, the principal calamity which
| can befall a merchant or a manufacturer
| 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
sobriety and skill and faithful perform
| ance of duty of hundreds of employees,
| and upon the strength and efficiency of
| thousands of wheels and axles, COUP
lings, rails, ties, spikes, and all the my
| Rad appurtenances of complete rail-
road. The only insurance against an
| accident which may involve a year.
earnings is in careful attention and
| watchful supervision of all of these
matters, under all circumstances. rain or
shine, storm or calm, heat or cold. No
human care or foresight is adequate to
| absolutely insure safety In all these risks.
In addition to the ordinary dividends
| to its stockholders, every railroad should
/ be allowed to earn a surplus fund, to
take care of dividends when these acct
dents come, as well as when short crops
| and financial crashes overtake them, in
common with all other investors, except
those who lend their money at s per
cent. amply secured.
Perhaps l may say in addition, also,
| that as building railroad does not force
anybody to use it., but still leaves the
community in possession of all the trans.
portation facilities which it had before
the road was built, unless they volun-
tarily abandon them, it should really be
no matter of concern to the community
at large whether the railroad turned out
a very poor one, and paid its stockhold-
ers little or nothing, as some manutac.
| turing and mercantile enterprises do,
or whether it should turn out a small
"bonanza" and make its stockholders
rich, as some other mercantile and manu-
featuring enterprises do.
But, at least, l hope, your honorable
body will understand that l have never
intended TO be understood as saying that
| considered six per cent reasonable
maximum dividend to be allowed to rail
road stockholders. Very respectfully
and sincerely yours,
L ID A,nx,..-v0,,,,