The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1906-02-24


Every Place Fixed by One from
Whom There Is Now No Appeal.
W. b. Washburn, Jr., has made con-
siderable study Of the railroad regula-
ton problem and The Journal is
privileged to make extracts from a
paper on that subject read by him re-
Gently before a club Of which he is
member. Mr.. Washburn said:
The railroad rate is today the most
important factor in modern industrial
life. The man who makes it is more
potent than the man who makes the
laws that control the ordinary life of
the several states Of the. nation itself.
Congress makes general laws, which
may or may not be desirable, and may
or may not be enforced. Such laws
apply equally to every :, citizen en-
nulled when the majority SO de-
cides. The ratemaker, however, con
trolls absolutely not only the. destiny
Of whole cities, states and sections, but
tiny of the individual, however modest
or insignificant he may be. The rate
maker makes the price Of every ar
ticle of production and manufac ture.
He may be man of limited ability,
yet from his decision there is gen
orally no effective appeal. Upon his
decision depend the industrial prosper
ity Of sO,O0o,O00 people. This is GER
tainly the great paradox Of modern in
dustrial life. In the present day trans
portation is paramount feature in the
world of production. What it costs to
carry given object from the source
Of production to the market or vice
versa largely controls the price and
transportation must, therefore, control
the price Of all other articles which are
dependent upon the price of the article
transported. In the northwest the basis
of all our wealth is dependent upon
the resources Of the land, whether
agricultural, timber or mineral. The
railroad rate, therefore, not only makes
Of unmakes all real values in the coun-
try districts, but in. the cities and
towns which depend upon the adjacent
country for support. The development
Of the twin cities as great industrial
center is, therefore, entirely a matter
Of railroad rates. =.
. Mr.. Washburn then referred to the
to these centers and to the construction
Of the St. Louis road for the protection
Of the business interests of Mime
apolis.
Affects Every Citizen.
The extent to which the railroad rate
vitality affects the personal fortune OF
every citizen may be roughly measured
by the amount spent for freight charges
during the wear. Mr. Washburn quoted
the financial editor Of the Chicago Trib-
une, who estimates the gross earnings
for 1906 at $2,1OO, 000,0 900, with net
profits to the railroads Of $500, 000,O 900.
These earnings are divided among some
1,5oo, 900 geo 1ds oo while the rates were
about 9 per cent Of the people are In
terested in maintaining a high rate,
while 90 per cent are Interested In Sc
curing fair and reasonable rate. Each
fnhabitant contributes from his earn.
ings nearly 500 for the carriage of
freight Every average. family, there
fore, contributes approximately 800 to
the railroad rate: The freight charges
last year amounted to nearly twice. the
the amount collected by the tariff. This
! is perfectly legitimate, but everyone
should understand to what extent the
freight charge enters into his own per-
sonal expenditure.
The point was made that the railroad
sonable profit. but nothing: beyond that.
ehises. Mr.. Washburn stated clearly the
light to regulate railroad rates.
Under the head Of equity in railroad
management. he proceeded to discuss
whether railroad powers. have been
properly and Justly utilized, taking into
account the circumstances under which
evils of which the citizen has right
to demand positive complaint. These
last, briefly stated were: First, over.
| capitalization; second. rebates, discrim
mating and unfair rates; third, minor
abuses, such as demurrage, switching
| charges and private car lines. He
/ would not deny to the railroads gen
erous profits on, their Investment and
enterprise, but he would not have i,
| of building there WASH It any real risk
in legitimate railroad building. Few
Of the railroad builders really ever hat
any great cash investment in their line
Most roads have been built largely
from the sale of bonds and the profit!
Of the enterprise have been secured By
the issuance Of stock to it's promoters
!
the railroads to assist in railroad build
ing 155, 100000 Of acres-a territory fv,
times the size Of Pennsylvania Add
to time.
t otime. 49,.
! over-capitalization.
Over-capitalization he regarded O.
the greatest evil Of the railroad system
In 1901 the capitalization of the rail
roads of the United States amounted t,
$ll,688,177,991 and has since been ma
terially increased. In Minnesota tn,
capitalization has increased from 1878,
100000 in 1901 to $343, OOO,OOO in 1904
This is an increase Of $4,000, 900 j,
three years with an increased mileap
| In the state of only ATS miles. At
maximum figure Of $4,000 mile sucl
mileage should not have cost over $40,
100000. This leaves an apparent valu
alton Of $50,O00000 added to the indebt
edness Of the railroads in this stat
without a corresponding increase in rea
value Of assets in Minnesota. To pa,
interest on this fictitious stock woul,
require an increase Of $2O00,000 il
| freight rates in the state Of Minnesota
/ Over-capitalization is apt to be consid
cred as one of the funny Jokes by whicl
the innocents are skinned In Wal
street. AS a matter of fact, it is on
Of the most threatening dangers over
shadowing the economic life Of the ma
/ tion. Watered stock may not pay inter
| est today or tomorrow, but it remain
constantly in existence as means b,
4 IN al rod las l. -. e