The morning call., 1892-06-05
WHAT CALIFORNIA WOULD SAVE.

The Salt Lake Tribune, assuming that the
new tranScontinental railroad will cross
Beckwith Pass, and viii follow a line $50
miles in length between San Francisco and
Salt Lake. reckons the whole cost Of the
road and equipment at SIS, 600, coo. It gives
figures in detail and appears to have been
assisted in its calculations by railroad en-
gineers. The main line Of the Central Pa
cifc, with which it Would compete, is SS3
miles long; in its accounts it includes the
business of 81 other miles CT railroad, to
w.t. the Oregon division, 100 miles, the
Nisala division, 146 miles, the San Jose
division. 17k miles, and the local lines in
Oakland and Alameda, L miles, making the
total mileage Of the read now leased TO the
Southern Pacific 1854 miles. This property
is capitalized at SI45, 395, 500 IN stocks and
bonds, and to live the company must earn
interest on that sum. What amount should
he deducted from the capitalization 10 rep
resent the California and Oregon, the
Yisalia branch and the San Jose division it
is not easy to say. The California and
Oregon is bonded tor S10CCo 600; il one
allows $4,000 mile for the 35S miles Of the
Central Pacific system which DO not form
part Of the direct transcOntiuental line, they
would represent SIS, S25, 900, and as the road-
beds are straight and level, they certainly
could be duplicated for much less than that
sum. But IN order to be on the sure side,
let us deduct from the general capitalization
double that figure. or ST.. 500. 900, TO repre-
sent the roads which are not part of the
transcontnental system. We then arrive
at q sum Of S127. So, OG0, which represents
the $50 miles OF road between San Fran
cisco and Salt Lake by the Central Pacific
line. And We find that the Southern Pacific
Of Kentucky, as lessee OF the Central Pacific
in order to live. has to earn interest on S112,-
S95. 600 more money than the new Salt Lake
road.
No wonder the Southern Pacific has to
charge ex0rbitant rates, and has to buy mp
BoHrds Of Railway Commissioners, aud
control Judges. Is is doing business on a
fictitious capital which is swollen over four
fold, and nearly fye-fOld. If. for every
dollar which the new Salt Lake road
spends it can earn FIVE cents net a
year and accommodate the wants Of travel
and traffic it will do well. and its owners
will have fine investment. But to per-
form the same work the Southern Pacific
has TO earn nearly twenty-five cents net; If
il does not it may not only leave its stock
without income, but may default on its
bonds. In order to live. at its present cap
italization, it must charge for its services
between four and five times as much as the
Salt Lake line will probably charge. 1t
cannot help Itself. It must either over
charge or 90 into bankruptcy. There is no
other alternative. The cream Of the enter
prise was skinned long ago and carefully
slowed away in the private dairies Of the
original promoters.
1t would not help it much If IL agreed to
wipe out the stock Of the Central Pacific
entirely. IL would still be liable for
$50, 10, 900 Of bonded debt, exclusive of
what it owes the Government for interest
paid Oh the subsidy bonds. Deduct $40, 0G0,-
GOO for bonds on the California and Oregon
ana the Visalia branch. the portion of the
system which would compete with the Salt
Lake road would still have to earn per
cent on SIC, 119, 000-saY 81, SCI. 0O0-out of q
transcontinental business which the Salt
Lake road could afford to do for per cent
on SIS, o0U. coo, or 81. 250,OOo. The difference
between these two hgures-say So. 81 600
is precisely the SUN which the Southern
Pacific takes every year out of the pockets
of California shippers and travellers by rea-
son Of its oyereapitslizatioD, and is just the
sum which California would save IL the
competing road were built. To the farmer
and fruit-grower this saving would amo unit
10 the difference between profit and loss.