Western Kansas world. [volume] (WaKeeney, Kan.) 1885-current, 1886-01-09

worth anything, the rates should be
lower. To pay operating expenses
taxes and fixed charges, the Sants
Fe road must earn eS,l35.52 per mile
The Chicago & Alien rate charged upcr
the tonnage of the Santa Fe road, and
earnings from all otter sources in 1884,
would produce revenue of S4,7S5.29, al
amount insufficient to keep the road GU
of bankruptcy.
Ifthis is true of the Atchison road, il
is 30 to agrester degree as to all othe,
roads in Kansas, and it IS a matter OF
the simplest demonstration that if the
Kansas roads were compelled to accep
the freight rates of the leading lines op
Grating in Illinois, the fires in every
locomotive in Kansas would soon bt
quenched. The reason is that the
freight traffic upon the Illinois roads liz
the list cited, is from 100 to 800 per cent
greater than upon the best paying roads
in Kansas.
As The traffic increases the rate de.
clines. Such has been the case in the
past. For instance, the rate per ton pei
mile on the Atchison road in 1874 was
3.O4 cents; in 1854 and 1885, 1.53, re.
duction Of one-half. This has been
brought about gradually by increase OF
traffic.
A wholesale dealer whose annual sales
amount to million dollars, will make
an aggregate profit of $50 000 upon mar
gin OF five per cent, while retail dealer
whose sales amount to $100, 1000, will net
upon the same margin but $4,000. And
if rents, interests or other fixed charges
npon the business should be the same as
to eecb and form considerable item, as is
the case with all railroads, the retail
dealer would soon find his margin disap-
pear, and himself swept into bank
ruptcy.
In discussing the rights of stockhold-
ers, Mr.. Collins observes: "Phere are
several propositions whose truth I be-
lieve to be self-evident, which ought to
be applied to this discussion. First. A
railroad company ought to receive a net
profit equal to fair rate of interest on
the cash judiciously Invested by the
company. Second. A railroad company
is no, entitled to an income on the in.
vestment of other people. Third. The
stock of railroad company taken at the
price received by the company for it
should represent the cash investment of
the company. Fourth. The bonds of the
company represent the money borrow
ed by the company, and for such the
company is in debt"
These propositions are followed by an
elaborate discussion of the waste, reck.
lessness and frauds connected with the
construction Of the Pacific railroads; ali
of which is true enough, and has become
a familiar and melancholy part of the
history of the country; but in thepresent
aspect of things it does not materially
affect the producer or shipper. If the
Pacific road was in situation where it
could levy arbitrary rates upon the bust
ness it did, the amount of its stock is
sues would possess material concern for
the shipper or producer. But it is not.
1t is psralleled by other railroads on
both sides of if, built subsequently, and
upon a cheaper scale, and the Pacific
road is compelled to acce pit the rates
which will suffice to maintain these, and
this it must do whether in the struggle It
shall survive or perish. Besides, if q
railroad company is unable to earn
enough money from it's business to pay
dividends upon its stock, which seems
to be the case withthe Pacific road at
the present time, it can make no differ
ence to the producer or shipper whether
it's stock is one or fifty millions of dol.
lars
Recurring to the four propositions
above, it may be remarked that their
character can best be seen
upon paper, but would presently vanish
Il an attempt were made to build rail-
roads upon the faith of them. They are
rue only as to those forms ofinvestment
n which there is absolutely no uncer-
ainty and no risk; investments in pu bic
securities for example; the interest and
principal being assured to the investor
trouble or concern on his part
n all active business enterprises some
hing more than "a profit equal to fair
ate of interest on the cash judiciously
invested" is expected, to COM
for risks, uncertainties
nd vicissitudes of the business
his is especially true of railroad invest
hents, since these are recognized as the
most uncertain and hazardous of all
orms of investment offered to the public.
1t is quite impossible to foresee what
vill be the outcome of any projected
abroad enterprise whether it will
rt We profitable or the reverse, or wheth
r those who embark their capital in it
viii get it back or the interest on it. If
should turn out Improbable, the
money invested in the enterprise cannot
70 withdrawn and turned to more profit
bic account in some other form of in
estment; it ia planted permanently in
he railroad. Even if it should succeed
nd the investment become q paying
ne, the road may be psralleled by other
ines, its business be divided, and the
alue of the investment become impaired
: destroyed by rendering the operation
f the road Improbable. Within the
ast five years great many millions of
ollars of railroad securities have been
endered worthless from this last source
lone in the United States.
The legitimate cost of q railroad is not
represented by the amount of actual cash
ut into it, but the amount of securities
has been necessary to part with to
btain the cash with which to build it.
he only resources open to q railroad
ompany to raise money with which to
uild its road is the sale of its stock or
onds, or both. Those who advance
heir money upon the faith of this class ,
f securities know that they incur
II the uncertainties and hazards ,,
AIMED above, and others which
snnot be foreseen. The less prom I
ing the project appears to be
le less will the securities command
/ the market, and the cost of the road
ill be enhanced in proportion to the
epreciation of the securities. These are
,e conditions upon which railroads
ave been built in the past and the only
,nditions upon which they can be built