St. Paul daily globe., 1891-01-25
RAILROADS AND THE STATE.

of Minnesota did not cost anything like
what their stock and bonded indebted
ness aggregate. Nobody knows what
they did cost, except the men who will
not tell. The representative railroad
builder does not start out with million
dollars to build million-dollar road.
He starts out with nothing. and he pays
for his enterprise with bonds. which are
issued in an amount greater per mile
than all his expenditures. He sells
them for what they will bring, and they
very frequently will not bring much
because they are thrown on the market
when the road is first started, and it is
pure speculation as to whether they are
worth anything or not. The most
favorable authorities estimate that OF
the S4.000,000.0OO which represents ap-
proximately the face of all the railroad
stocks in the country less than 81, ,000,-
000,00O would cover all the money
which is actually in them. The rest is
fictitious. Or the bonded indebtedness
estimates are not so accessible, but
millions Of bonds have been floated at
fifty cents on the dollar, and seventy
five to ninety cents is high value for
very good ones at the initial neg0tia-
tion. Everybody knows this, even Mr..
ROBINSON, and twill not convince peO-
pie that it costs 100000 mile to build a
single track, unballasted railroad across
the prairieS of minnesota and Oak ota,
even if Mr.. ROBINSON should offer a
duly verified affidavit that ten times
that amount isexpended per mile in the
wilds of Australia. The only way of COM
pairing the cost OF railroad with its
capitalization and bonded indebtedness
is by starting with the amount of money
which these represent, not what their
face calls for. To do anything else is
to beg the question. Nor does Mr..
RoBINsoN's preposterous suggestion
that great deal of railroad capital has
been wiped out'' by foreclosures help
matters at all. The GLOBE seriously
wonders if Mr.. ROBINSON really be-
lieves that when railroad is organized
there is any diminution in the amoant
of its stocks and bonds in the market.
If he does, he had better talk to some
lawyer about the elements Of inSolyent
corporation management before ne
rushes into print. If he does not be-
lieye this, and says so nevertheless, it
makes his argument as unreliable On
this point as it is on what else he ad-
yanceS.
If railroad were private enter
prise. it would have a right to earn
what it could, like any other investor.
But it is not. 1t is an arm of the state.
The state delegates to it certain of its
own functions. 1t gives it the right to
condemn land, it arms it with extra
ordinary powers for its organization and
protection, it aids it with contributions
of land, and every town along its route
taxes itself under the states permission
to assist its construction. All that it is
entitled to in the way Of profit is what
amounts to an average return according
to the market quotations on its honestly
constructed plant. To argue otherwise
would be to say that if there were one
source of water supply for a city, the
law should allow some individual to pre-
empt it, lay his pipes through its
streets and then charge what hepleased
for the water without which the
municipality could not exist, nor its i'll
habitants live. If the legislature is not
to interfere with railroad rates. itshould
be shown that the terrible plight of the
railroads, which Mr.. ROBINSON tells
about, is due to the states refusing to
let them earn fair return On their
honest investments. AS long as they
xuhn hoo in
property, they must expect those who
have power over them, hitting in the
dark, to do them harm.