Morris tribune., 1894-09-26


It will DO observed that one OF the
authorities quoted above says that 1884,
900 per mile should be assumed as the
cost of constructing these railroads.
That is apurely arbitrary assumption:
1t ID less than one-half the actual
cost; and there is no more reason Iof
deducting so por cent in this case tnan
there is why man who desires his
neighbours horse or farm should not
coolly appropriate it, paying only one.
half the price asked by the owner, ana
defending his action on the ground that
this is all that the chattel was worth.
The average cost per mile of the rail
ways of the United Kingdom Is put at
$219, no.
If it is ass srted that these figures are
Unfortunately large, by reason OF the
high price to be paid for real estate APP
propriated, reference may be made to
New South Wales, where the conditions
very nearly approach to those in our
own country.
The average cost of construction there
is given officially in the report made be-
fore the worlds congress at $76, $50.
There is no country in the world,
even where labor is cheapest, where a
system of railroads was ever constructed
for $50, 900 per mile or anything like it.
There is no court which would ever
afiix any such price as that to our rail-
roads if condemnation proceedings were
had before it, 1t may as well be under
stood first as last by those who have
been filed with wild vagaries upon this
subject, that the railroad property can
be taken for public use under the con-
stitution only by due process of law.
That due process Of law means con-
domination proceedings before a court
of competent jurisdiction under the law
of eminent domain.
And that such condemnation can be
made only upon the payment to the
owners of such property the compensa-
ton agreed upon and approved by the
court.
United States Railways Would Cost the
Government Ten Billion Dollars.
No court exists or can exist in any
civilized country that would assign to
the railroad properties of the United
States, whose aggregate liabilities rep
resent nearly 81, 900, O00,0 900, pur-
chase price of scarcely half that
amount.
While there is some watered stock in
the aggregate liabilities, great deal of
it represents an actual increase in the
cost value and earning capacity of rail
road property which was apportioned
among the owners of stock in this way,
instead of by largely increased divi-
dends
In the light of our own experience
and that of others, 100000 mile is a
reasonable average estimate of value.
There are nearly 100000 miles of rail
way in the United States.
Making every allowance possible, it
is evident that the government would
have to pay in some shape or other,
| at least ten billion dollars for the rail.
roads.
How the Purchase of Railroads Might Be
Brought About.
This purchase could be effected only
in one of two ways:
Either by the issue, and sale for cash,
of bonds, the proceeds to be paid to the
owners of railroad property.
Or by the exchange of such bonds for
the stocks, bonds and other obligations
of the railroad companies now held by
individuals and corporations.
The first may be dismissed at once as
impracticable.
The government of the United States,
| magnificent as its credit and resources
are, could not float loan of this size in
any of the markets of the world, on
any terms it might offer.
The transaction is at once too large
and too dangerous.
The process of an exchange of bonds
for railroad securities would have to be
adopted.
This would necessitate government
guaranty of satisfactory rate of inter-
est on the new bonds before transfer
could be effected.
What that rate must be would re-
main to be determined.
According to the report of the inter
state commerce commission 61.24 per
cent of the capital stock of our railways
paid no dividends during the year 1898;
5. 80 per cent paid 7 per cent dividend;
{. "a per cent paid FROM to per cent;
11.62 paid from to per cent, and the
remainder paid all the way from per
cent down to nothing at all.
OF the bonded debt 1873 per cent paid
no interest and the remaining 66.7 per
cent paid the rates nominated in the
bond
All these varying rates of profit
would have to be met by increasing or
decreasing the quantity Of bonds given
in exchange.
As there are nuuureds and hundredJ
Of railroad corporations in the country
the business Of negotiating such pur-
chase would be the most colossal ever
undertaken and would offer opportuni-
ties for peculasion aud private profit
that might well be considered irresist-
ible.
Interest on Purchase Bonds Would Amount
to More Than Net Earnings,
The lowest rate at which the govern.
ment has ever been able to issue its
bonds is 4 per cent.
Some of those already issued were
continued at as low rate as 2 per cent,
but the lowest issue made during the
current year bears 5 per cent.
1t is not probable that the ten billion
dollars of bonds TO be exchanged for
railroad properties would be accepted
at less than 4 per cent.
This would amount, on capital of
SIC, 600, 900, 600, to an annual interest
charge Of $500, 600, 900.
If the rate were higher than this, and
there is every probability that it would
nave TO De raised 10 at leasg b per cenG,
the interest charged would be increased
to $500, 000, 900.
Accnrdi1,cr To pnoa.,s Manuel tl,c tc4n1