The Black Hills union. [volume] (Rapid City, Pennington County, Dakota [S.D.]) 1889-1904, 1891-10-23
OUR RAILRoAp1..,
Figures Prove Beyond Doubt That
Railroads are 9Ovsr-Capttalixed.

ASaAArOou uE0 sSrt4s
"A pamphlet with the title, .sOur
Railroads" by Harry p. Robinson Of
81 Paul, Mimi, lies before US. II IL
an interesting plea for the railroad In
terests of the United States and ii
more remarkable for what It does not
state concerning our railroads, their
value and earnings, than for whatsit
does proclaim.
The purpose OF the author Of this
pamphlet is to show how much capital
is invested in railroads and to ascer-.
tain whether the capital thus invested
earns too large revenues.
MI. Robinson gives the total capt.
t~alization of the railroads Of this coun-
try at 90. 673, O46, 742, including in
these figures the total funded debt,
making an average OF stock and bond
ed debt of $55, 1913 per mile, since
there r 1877, 1853 miles OF road.
He states that the dividends paid on
the total stock for 1889 was $780,
1913, and the total interest on the
bonded debt was $213, 173, 672. The
dividends were on IN average of 1.91
per cent. on all common stock, or an
average of 1.93 per cent. on the total
stock of all kinds. The interest was
an average Of 40 per cent on all
bonds. The average returns on all
securities was 3.43 per cent. Having
given these figures he asks whether It
shows an unreasonable rate of profit
In his summary of conclusions the
author states that the railroads of the
United States cost less than the rail-
roads OF any country and are capital
lied for less; that the rates of returns
earned upon the capital is less than in
any other country; that western roads
have cost less and earned less than the
roads of other sections; that the aver
age rate of returns in the year 1889
was less than 81 per cent. and that in
1889 over three billions Of American
railroad securities were absolutely un-
productive.
The inference Mr.. Robinson draws
from all this is that railroad invest
ments do not yield even an adequate
return, to say nothing Of excessive
profit.
In regard to overcapitalization, he
attempts to show, in brief, that the
railroads are notovercapitalized, which
Is equivalent to the assertion that the
So, 573, 046, 742 scheduled railroad oap-
italisation represents the actual value
OF these properties, or the actual in
vestment Of money used in their con-
struotion and equipment.
On the whole Mr.. Robinson's state
ments and facts all go to show that
the railroads of this country are prac-
tically bankrupt-doing business at a
loss, and carrying on their vast enter
prises as a sort of gigantic philanthro-
Ply.
1t occurs to the Atchison Champion,
however, to inquire whether, for ex-
ample, in Kansas, which has twenty
eight lines Of railroad in operation,
representing a total mileage of 8, S7O.O OIL
miles, and whose average capitalize
ton and debt is about $40, 500 per mile,
there is not, as in all the other states
OF this union, an over capitalization.
The actual cost of the construction
of every mile of railroad in Kansas did
did not on an average exceed $40, 900
per mile. The equipment including
rolling stock, stations and shops, etc.,
certainly did not cost to exceed $780,
600 per mile more, making a total of
$S1, 600 per mile. This, then, and we
have made a liberal estimate for. the
actual cost of construction and equip
ment, leaves $18, 500 per mile of over
capitalization, or a total of over $780,
600, 900 of over-capitalization for the
total mileage of the state.
When to this is added the fact that
the five leading railway companies of
the state received in the form OF land
grants from the general government
and local aid in the form of subsidy
bonds, more than enough to construct
their lines and nearly If not quite to
equip them; and one leading company,
the Rock Island, after receiving this
aid, turned around and swindled It's
Kansas creditors out of nearly. $780,
900, 900 of its bonds held by them;
whom these facts are taken into con-
s%ideration, 1t would seem that Mr..
Robinson's claim that railroads are not
over-capitalized is a deliberate as
sumption with absolutely no ground to