Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1904-12-22

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The railway facilities in the United
States have been built almost wholly
by private enterprise. They have been
built by enterprising people with the
hope of a good return on the invest.
ment. In fact, the greatest period OF
railway building and activity has al
ways followed the period Of greatest
profit In the undertaking. There was
period in the life Of the state of Iowa
OF almost ten years when there was
practically no railroad building. That
period Immediately followed period
of hostile legislation and consequent
hard times in the railroad business
need not appeal to practical men
that no great business undertaking
would ever grow If there was no profit
IN it. Men would not raise corn or
stock in the state of Iowa If there was
no profit in the undertaking, and you
cannot expect men to invest in rail
roads II there Is no profit or return for
their capital. Indeed what surprises
foreign students of our railroads more
than any other one thing Is the fact
that our railroads have developed so
rapidly with very small return for the
capital, the actual return at the pres
ent time being only about 4 per cent
on the total capital invested. It Is
true that some of the most prosperous
railroad companies in the county have
paid as high as and 10 per cent divi-
dends. the latter chiefly In New Eng
land. In the state of Iowa there are
several trunk lines which have re-
turned to investors 6, Z and even per
cent on the money actually invested,
but some of the railroad mileage in the
state is paying no dividend.
dare say that some unkind critic
may say that / am not allowing for
what is frequently spoken of as IVA.
tered stock" but this is not SO. There
has been some stock watering, and
some of it has been bad. The investing
public has suffered by it more than
anyone else. But If the watering OF
stock Is to be considered, 1t is only
fair to remember that the reverse pro
cess has frequently taken place. In
other words, the capital Of many rail
way corporations represents less than
the actual money invested. Take, fol-
example, the Burlington company
Many miles of what now forms the
Burlington railway were originally
built, proved Improbable to the own
ers, went through receivership and
We're finally bought at greatly depre
ciated value, and put into the Burling
ton system at this greatly reduced
price.
What Is true Of the Burlington 1,
also true of many other lines. TIL,
great Pennsylvania system and man,
other great systems Of the countr,
have rebuilt and improved their line
without equivalent. addition to thei
capital account, so that their road
represent In value more than the caI
ital shown on the books, and so largel
is this SO that our railroads In TIL
United States show an average CAPT
talization Of something like SCI, 500
per mile although this represents II
many cases. double track, three track
and four track railroads, and this car
italization is equal to about one-fourtl
of the capitalization of most European
roads.
It may be safely said that the few
instances of stock watering which
do not pretend to defend. are signif
cant as compared with the revers
condition. about which the demagogu
does not speak, and which as yet |
not recognized by any particular nam
or process. AS against the railway
j which may be earning covetously hig
rates of dividends, many railways ca
be cited which pay no dividend or ar
ready to default upon their bonded II
/ debtedness.
i Railway managers recognize ths
they are in the public eye The court
have repeatedly stated that while raj
ways as capitalized in the Unite
States are private undertakings the
have public obligations which max
them quasi-public to use the lego
phrase Railway managers must e,
pect criticism. but the hardest crit
cism is IL at which comes from thos
who know the least We are all Of u
looking for criticism and suggestion
from those who have really studied tn
i question and who know It, The diff
i Guilty Is that we have to take 1t yer
4 often from those who jump at concll
sions with very insufficient knowledg
or data.
4 There is one feature Of railway tran.
portation which Is of interest. and the
lis the effort that is being made 1
cheapen it, an effort which follow
along precisely the same lines whic
have been found necessary in ocea
transportation, river transportation
canal transportation, wagon transpo
tation, namely, increasing the units {