Omaha daily bee., 1888-10-13
The American Railway Debt.

hiHNcdpOtiS tribune.
The railway finances Of the United
States form the subject for a very inter-
esting paper by Adelbert Hamilton in
the current issue OF the Forum. The
author has many serious faults to find
with the federal and state governments,
with railroad managers and the people
at large; but even if his criticism were
unjust and suggestions unwise, the mag
nitude and Importance of the interests
involved should secure for any i~ntelli-
gent essay upon this branch of the ma
tional" finances a liberal share Of pub
lie attention.
The fact that since 1879 over four
hundred American companies, operat-
ing more han thirty-tive thousand miles
OF railroad, have been insolvent and the
relations of two billions of capital stock
and Indebtedness have been readjusted
under foreclosure certainly seems to
suggest that something is wrong. Out
of 5000 companies only about fifty have
provided for sinking funds. Out Of 237
representative railroad stocks, 1854 are
below par, while only eighteen are
worth so per cent and upwards. In
view of these and kindred facts
the author concludes that the
dominant American railway policy
is to "cumulate Indebtedness to the ut
termost limit, without setting bounds
to borrowing, without providing means
of payment, and with the most
complaisant view of insolvency as af-
fording opportunities to wipe out unse-
cured debts, to scale down stock and
bond values, and to reorganize with an
enlargement of capital stock and a fur
Their expansion of credit" This Is a
sweeping statement perhaps; yet, in
few Of the facts presented, it is not
wholly unwarranted.
The magnitude of the railway indebt-
edness is certainly appalling. Two
years ago it amounted to S 4,377 200, 900
and is constantly increasing. 1t is
larger than the national debt ever was
and equals $67 per capita. The annual
interest charge upon this enormous sum
is $lS7 900 900. or about 81. 80 per capita.
The people pay this charge in the form
of freights and fares. The railway debt
is therefore Il national burden, and
should, in the opinion Of the
author, be regarded as a matter
Of national concern. The bonds have
been placed on the market with
out any we'll considered plans as to their
maturity; but the greater amount ma
lures in from twenty-five to t~hirty-five
ySdiS' al NV ~ iuiIuilS oItIuIlouS
or payment Of this enormous debt when
due disturb the financial equilibrium
and beget either stringency or unwhole-
some speculation? The author antici-
pates dangers of this character, and
thinks that they should and could be
prevented. He advocates n central
federal supervision with the railway
finances of the country, which he consid-
ers less Objectionable than government
Interference with the making OF rail
road rates. The federal and state gov
ernments should refuse charters to com
panies intending to build unnecessary
or hurtful railways. Railroad bonds
should be made OF smaller denOmina-
tions so that they could be taken by the
common people in the districts Travelled
by the railways which would create a
common interest between the people
and the roads. The power of the direc-
tors to borrow money should be matcri-
ally restricted. Sinking funds should
be created and placed in charge
of the general government which
would guarantee that they we're applied
to pay OIL the indebtedness and not OK
hausted by being drawn upon in emer-
gencics as is now the case. In this way
we can hope TO pay the vast debt while
the creation of new indebtedness will be
restricted or cease; the annual interest
charge, paid by the people, could be
gradually distressed; American rail
way credit would be enhanced; justice
would be done to creditors, and harmony
in the relations of the railway compan-
les and the people would be promoted.
Such are IN brief the conclusions of
the author. His paper is suggestive in
many respects, although in the eyes OF
experienced railroad men many Of
them are, perhaps, neither practical
nor feasible. The problem is certainly
a vast and complicated one, if not the
most difficult the people are called upon
to deal with. And it would seem that
the time has come for its discussion
from a broad, national point OF view.
To Test Chinese Exclusion.