Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1883-07-04
BIG SUBSIDIES.
HoSC MecicO Has Encouraged Railroad
Building.


form the foundation on which to con-
struct sound railway system, but it is
no doubt wise policy for Mexico to
make use of them to get roads built
through her territory by foreign capital
for one-third their actual cost In Of
fering subsidies, therefore, at the rate of
from $4,000 to $4,000 a kilometer she
takes no risks; the more miles built at
that rate in her territory the better for
her. The risk is with the capitalist who
places his money where the business
that is to make his investment profta
BILE is yet to be developed; where he is
liable to have competing lines construct
ed faster than they can be needed;
become financially embarrassed, it
would naturally begin its economies by
suspending its subsidies, and in case of
war appropriate the road to its own use
at unremunerative rates. Then it is
always one of the unfortunate conditions
of subsidized enterprises that the money
designed for their encouragement does
not reach the parties for whom the law
designs it, and the impression sooner or
later gets possession of the public mind
that the corporations subsidized enjoy
privileges corruptly obtained. The
practical effect of this is to keep them
ever on the defensive, which, as all ex-
perienced railway managers know, is
apt to be costly.
On the other hand, it is proper here
to observe that in Mexico, as elsewhere,
the companies that do not receive sub
sides encounter more Instructions and
enjoy fewer facilities for getting on har-
moniously with the Government than
those companies that receive subsidies.
In some way which none but the mi
tiated can explain, but which all who
have had any experience in such mat
tiers understand, the subsidies serve in
some way to Intricate the political ma
chinery upon which large railway cor
porations are always more or less de-
pendent, especially if owned by foreign
ers but this method of lubricating once
begun is liable to constitute permanent
charge of ever-increasing costliness. If
suspended, difficulties of administration.
originating in unimaginable ways and
in the most unexpected quarters, are
pretty sure to multiply, for the devil is
the most memorable of all creditors.
We have spoken of the subsidies as
amounting on an average to about one
third the cost per mile of the roads. It
must not be understood, however, that
all this money is paid in cash, and as
fast as the road is built It is PAYABLE
il. revenue bonds; that is, out of the
proceeds of from 4 to 6 per cent. of
the maritime and frontier duties. and
without interest. The company's re-
ceipts, therefore, from these bonds must
depend always more or less upon the
activity of its foreign commerce. In
addition to the uncertainties of this
charge upon the public revenue,
it IS feared by many that the Mexican
Government has already incurred more
obligations of this sort than she has any
fair prospect Of being able to make
good. If we do not share this opinion
entirely, it is because We expect that
the greater portion Of the grants al
ready issued will be forfeited.
Since 1867 the republic has issued
charters for over $4,000 miles of rail-
road, with subsidies attached amount
ing to over $170,0O0OOO. Some of
these grants have already expired by
limitation, and been declared forfeited.
Deducting the amounts that have al
ready been paid by the Government
upon portions of the roads already con-
structed and accepted, there remains to
be paid as subsidies under existing and
still valid charters about 100000, 900.
This is large liability for a Govern.
ment whose annual revenues are es-
teemed eminently prosperous when they
reach $2O,O0O,00O a year.
For the purpose of floating bonds in
the markets of country where rail.
road building has been so eminently
successful and remunerative as in ours,
subsidy of from $4,000 to $4,000 per
mile Is a gratuity not to be despised;
but, when all the conditions which &C
company this subsidy are carefully con-
sidered by those who are ultimately to
depend upon the earnings of the road
for their income, it may well be doubted
whether the subsidy will not in every
case prove to the stockholders a mort
gage rather than bounty.
CAPTURE OF 4 RHTN0CEPOc