Sacramento daily record-union., 1882-01-14

sales under foreclosure for the past six
years, however, which shows how very
uncertain railway investments really have
been, notwithstanding the popular idea that
they are invariably extremely profitable
1t appears that during the period mentioned
no less than 257 roads, with a mileage of
nearly % 900 miles, and nominal capital
investment of about 81, 364, 600, 600, have
passed from the hands of the original
owners by bankruptcy foreclosures. That
is to say, that nearly one-fourth, or con
siderably more than 20 per cent, of the
total railway capital Of the United States,
has been sunk unproftably.
No doubt in many of these eases the
ostensible capital was greatly in excess OF
that actually invested, but even after full
allowance has been made for g watering"
1t seems evident that there must have been
an enormous amount Of less to bona fde
investors. The Raii,gay Age observes upon
its own figures While it is true
that the nominal capital stock does not
q always represent an actual investment OF
sthat amount of money, and that in many
cases bonds were also sold at less than
their par value, still after every proper
reduction is made the aggregate of loss
"and ruin which the bankruptcy of these
properties means, is truly startling. An
examination of these figures ought to
g induce legislators and fair.lainded men
generally to advocate the just treat
ment of railways, and to deprecate
''tbat popular prejudice which seeks to
"cripple these corporations by legislation
- IL should never be forgotten that while
''theowners of theseproperties havesutfered
:" enormously, the country has all the time
had the vast benefit arising from the
''existence and operation of the roads,
''and many of these roads have been kept
in operation at the expense of the credit
ors when they were not yet earning
their expenses. Certainly the capital
already invested in railways in this coun-
try has not averaged fair interest, and
"if few companies have been so fortu-
nately situated in prosperous times as to
"pay a handsome return to their own
"ers, it is no more than is due to
g those who take the risk of putting their
"money in such hazardous form of in
ves5ment as that of railways generally is. :"
There is no doubt much force in these
considerations. 1t is evident from the facts
and figures that despite the general pros
perity of the country, investment in rail-
ways has been to a large extent ruinous.
There are several explanations of this. No
doubt many railways are projected prema-
| turely. Too sanguine estimates are made
of the traffic returns. The country through
which the lines run does not settle up SO
quickly as was anticipated. Or perhaps a
rival line is projected under circumstances
which make it impossible for either road to
earn expenses. The facility with which
foreign capital could be obtained for Ameri-
can railway enterprises of late years has
had much to do with the commencement
of non-paying lines. The temptation to
build anywhere has been too strong for
many projectors. Having the money at
command, they have gone to work reck.
lessly, and we see the results of such i'm.
prudence in the long list of failures. Most
of these bankrupt lines have probably been
bought up and incorporated with previously
existing systems. That is the natural
tendency in such cases. The owners of
a great system may not see their way
to utilizing the new lines at once,
but they can operate them more
economically than would be possible
to their original proprietors. and they are
at all events useful to fill gaps and to pre-
vent injurious competition. The more
reckless railroading is done, the more
! quickly must the few great and stable
| systems of the country absorb these fail
ing lines. In fact the great systems are
thus being driven to extend their bounda-
ries far beyond their original intentions,
just as the East India Company was
driven to absorb or mediatize the native
principalities upon which its originally
narrow territory abutted, The advantage
to the public in this tendency lies in the
continued operation of all the roads, but
we are by no means sure that the great
systems which buy up the broken lines are
the better for their expansion. To the
extent that their new acquisitions do not
pay, they retard and weaken the parent
system, and the latter has to bear the cost
OF operating and nursing the sickly lines
until population and traffic come to set
them on their feet.