The great West. [volume] (St. Paul, Minn.) 1889-18??, 1891-09-04
A REPLY.
Concerning the Government Ownership
of Railroads


! Concerning the Government Ownership
Of Railroads.
Noticing an editorial in relation to
Government Ownership of Rail-
roads," in the Kansas City Times, I
trust that you will admit to your col
umns few thoughts upon the ques-
ton at ISSUE writes George G. Ward
to the Topeka Advocate.
At the close of the fiscal year ending
June 80, 1889, the cost of the railroads
proper (not including ''real estate and
other investments") and deducting the
amount of railroad stocks and bonds
held by the railroad corporations, was
something less than eight billions of
dollars. When say "cost'' I mean
capitalization, represented by stocks
and bonds held by so-called ''innocent
purchasers. ="
While many of the roads paid no
stock dividends or interests upon mort
| cages, the average rate of dividends
paid upon total stock ISSUE amounting
to just about one-half of the eight bill
lion dollars, was 2 per cent. while the
average rate of interest paid upon the
| bonded Indebtedness was Al per cent
It may safely be assumed that the
United States could purchase outright
the railroads of the country for eight
billion dollars in per cent. bonds,
payable in five equal instalments, ten,
twenty, thirty, forty and fifty years.
This would call for, during the first
| lnoolo <,f G1cO
900, 900 in interest and the provision
of an annual sinking fund, amounting
to $3.50, 900, 900.
The gross receipts from operation
for the year named were in round num-
bers $500, 900, 900 and the net receipts,
after paying all operating expenses,
were in round numbers, $500, 600, 900.
l shall now assume that our present
railroad facilities are amply sufficient
for all purposes for the next twenty
years, and that for that period of time
the present force of employees would be
large enough so that operating ex-
penses would be no heavier than now.
Now what do we find? The net an
nual receipts are exactly large enough
to pay the $3.50, 600, 900 in interest
and provide a sinking fund of $780,
OOO 600 each year, amounting at the
end of the first decade to 81, 600. OOO,-
600, being the amount of the first in
stallment of bonds. Now note this
fact: While there has been no appar-
ent reduction of rates, there has been
a very material actual reduction in
rates. Upon a basis of $4,000, 600
population for the fiscal year ending
June 80, 1889, the per capita cost of
railroad facilities for the nation was
just SIG. For the year ending June
80, 1899. the population would be. say
so, 600, 900, and the per capita cost of
railroad facilities $12-a reduction of
20 per cent. At the end of the second
decade, or twenty years, another one
fifth of the cost of the railroads would
be paid, and as the population would
be increased probably 100, 900, 900,
while the gross cost of railroad facili-
ties remained at 5000, 5000, OOO-the
same as for the year 1S88-or the net
per capita rates would be $9.6 re-
duction of 20 per cent, or a gross per
capita reduction for the twenty years
of 40 per cent.
In explanation of above it may be
stated that it will be readily seen that
the increase of population and conse-
quent density of settlement would be
accompanied by corresponding in
crease of freight transportation and
railroad travel; so that, while the
gross amount collected from the peo-
pie annually would remain the same,
there would nevertheless be steady
reduction, year after year, in freight
rates per hundred or bushel, etc., and
a corresponding reduction in passen-
ger rates. trust that have made it
plain, even to the Kansas City Times,
that the people could buy the rail-
roads, even at the price of the ficti-
tious capitalization, represented by
stocks and bonds which, as the Times
says, '.have gone into the hands of so
many innocent purchasers that even
those who advocate any other method
would, On consideration, admit it to be
impossible of adoptior;' and yet not
be more than one-ffth of 154 years in
paying for them, rates would be re-
duced lat least one-fourth," the first
ten years.
| Directly tn M