The morning call., 1893-07-20
A RAILROAD STORY.


Stockton and Bakersfield project is receiv-
ing, THE CALL has brought out little bit
of history which casts food of light on
the Southern Pacific and its financial ways.
If the public grasp the meaning OF that
story they will grasp the reason why the
Southern Pacific. Of all things. desires
least competitive railway built and man
aged on cash basis, with only legitimate
earnings to reward actual capital. The
low rates which an honestly managed rail-
road can afford to take badly comport with
the excessive rates which must be wrung
out Of traffic, not to pay dividends but in
terest charges on issues Of bonds, bor-
r0wed money and various Overcaptallza-
tion drains Railways which on paper
cost three or four times as much as they
actually did. and could be duplicated for.
are not in position to compete with clean
business projects which look to trade and
not the jugglery of contracts and specula-
tion for prosperity. AS 1t were. it is a
race between healthy. muscular, 1.-the and
agile athlete. and fat-loaded. puffy ana
gouty subject no longer in condition to run.
The bit of history referred to is tho
Southern Pacifc's absorption of the line to
Santa Cruz. 1t was begun in hesitating e
way and progressed in sections, but its
very existence operated on the Southern
Pacific like red rag on bull. The line
cost when completed S2.500000. When
Senator Fair got hold of it, and when the
Southern Pacific determined to buy, the
price was S6,OOO.000. OF this amount half
a million was paid in cash and the re-
nainder rested as mortgage, but in addi-
tion $6.000,0 900 of stocks was issued. So
this little road represents S12,000.000, and
Its actual cost is less than one-thrd. 1t is
truly very pretty instance OF financing
tn go before an investing public.
But the proper lesson TO be drawn from
such management is that railroads in
California can be built for third of
the capitalization which is represented to
be necessary. The Stockton and Bakers
field line has everything in its favor.
A road could not be built as cheaply over
the prairies of Iowa as in this ease. There
are no extremes of cold to reckon with.
and the engineer has the simplest work
conceivable in track-layng. No hostility
from residents has to be encountered.
Much Of the right OF way will be pre-
sented. 1t is not railw ay problematical
of traffic. From the commencement there
will be grea, amount of freight and a
large passenger traffic. Being managed
solely for moderate return upon genuine
capital. the rates will be the lowest that
railway can be worked for, and thus the vol
ume of traffic as The country advances in
consequence of this wise policy will be
continually increasing. 1t is just such
railway as an investor should support and
cling to. Holders Of stock will have a
voice in the management. for there will
be nothing to conceal and manipulate in
the interest of a personal management.
Once this road is open an era of advance
ment such as the State has not known for
many years will dawn. Ali other means
of transportation must fall into harmony
with this new order Of things. The Stock
ton and Bakersfield is only the pioneer of
numbers of other local railroads which
will gridron the valleys of California as
straightforward undertakings. keeping
strictly in view the traffic which is bound
to be remuneratve from development of
resources. The unprincipled practice Of
watering stock and rapaciously squeezing
the community to provide interest and
further enrich few greedy millionaires Is
now discredited and doomed.