The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-05-24
TO PENALlzE ENTERPRISE.

To PENAElZE EN- EXP RISE
Mr.. Prouty of the interstate COM
nerce commission in his address before
the National Manufacturers associa-
ton outlined what is evidently to be
the next step of the administration in
it's campaign against the railroads of
the country. Mr. Prouty said the gov
eminent should exercise direct control
over the capital accounts Of the rail-
roads, and that interstate roads prob
ably should be valued by the govern
ment. The same idea has been cred
tied TO the president in Washington
dispatches bearing evidence of anthem
ITCHY.
1t may seem a simple, easy matter to
Mr.. Prouty, as we'll as to the president,
TO control capital accounts and make
valuations of interstate roads: and if
no element of value entered into rail-
road values but the actual cost of con-
struction, purchase of right of way and
terminals, and the acquisition of equip
ment for operation. the problem would
be as simple as they assume. But the
physical features of railroad cost are
only a part of the values, in some in
stances the least important factor in
value
Take, for instance, the early trans
continental lines, and particularly the
Great Northern, which was built with
out government aid. The original cost
could not be estimated with any degree
of accuracy, and the possible revenue
was even harder to calculate With
any man but the genius who undertook
it, the line would have been doomed to
failure, and even with James ]. Hill
as the originator, many thought the
plan was chimerical Under the condi-
tons the risk TO capital invested was
enormous, and by the strictest rules of
commercial investment the men who
put their money into the project were
and are entitled to cap large returns.
Take another instance, the Salt Lake
Route road from Salt Lake to Los An
geles. Numerous attempts extending
over many years had been made to nut
the line through and every one had
failed because capital could not see any
likelihood of an adequate return on the
country difficult for construction and
operation. Much. of the territory is un-
productive Until within two or three
years the tonnage from the mining
camps along the line has been compar-
atively small When Senator Clark
announced his determination to build
the road. conservative railroad men
thought ii a venturesome undertaking.
UnquestiOnably the risk attending
such an immense investment was large
and the difficulties of operation through
the mountains and the desert have
added much to the original cost of con-
struction and maintenance
1t happens that the development of
Nevada mining camps has contributed
materially to the revenues of the road,
and through traffic has been heavy.
with every prospect of a large and
constantly growing business. But even
with these factors i'm its favor it is I'M
likely the line can bring any extrava-
CANT reward to it's stockholders for
some time to come
Now, under the program of the pres
ident and the interstate commission. a
valuation of these interstate lines
would probably include only the actual
outlay, and capitalization would be linn
tied in future projects to the actual in
yestment as in Nhe case of national
banks. There would be no allowance
for great risk, no reward for courage
or initiative or commanding ability. no
incentive to build lines with the ex-
pectation of developing a region and
relying upon that development for ulti-
mate dividends.
In thiekly settled territory, such as
the middle or seaboard states, such a |
rule of valuation might be proper and |
It might work out well in practice, but |
In the west and south, wherever enter |
prise would have to look to the future /
for reward, there could only be one re-
suit If the plan outlined by Mr.. Prouty /
and the president should be adopted. |
There would be an end to empire build
ing, railroad construction would be linn