Graham guardian., 1908-12-04
RELATIONS OF RAILROADS TO
TRANs-MIssIssIPPI TERRITORY

Ihe construction OF railroad
anywhere requires vast expendi-
lures of money. In our country,
bordered by two great oceans
which are separated by more than
three thousand miles of the most
varying physical conditions of land
and climate to be found on any
continent, this capital expenditure
with respect to the trans conti-
mental roads in particular was not
only necessarily large in the first
instance, but the rapid growth of
population and industry since the
first rail was laid called for renew
ais aud changes and extensions ap-
proximating the original capltali
zatlon. The cost of maintenance
has naturally increased, but the
cost of operation has not been re-
duced 10 proportion to the ex-
penditures made for the purpose
of reducing it. More than one of
the corporations owning trans
continental lire have experienced
bankruptcy and been re.organized
some of them more than once.
All have at times faced great finan
cial distress. Dividends equal to
the going rale Of interest for long
loans on gilt-edged securities have
been recent experience to them.
Thanks to the won nderful growth
in population, the vastness of the
hidden wealth of forest and stream.
of mountain and plain, which
needed only the magic touch o.
labor and capital to manifest itself,
/ think we are out of our troubles.
TIE treasure is there. Our prob
lem is to gather it without waste.
But as you all know, or may in
fer from what l have said, while
the problems Of the pas, have been
measurahly solved, we are facing a
NV one that is jus, as lnspstrn'
in the minds of the tur-sig tea
men as was the building of the first
trans.continentaI line in the minds
of Benton and his co-adjutors
three generations ago. 1t is for
more and better railroad facilities
IN this Western country. The
answer to this demand waits on
the necessary money, which in vol
ume will run into the hundreds of
millions of dollars. For reas ns
which you all understand, many of
you better than l do, capital has
become chary Of railroad invest
ment. Perhaps the reason most
effective in restraining the investor
is fear of unreasonable Limitation
by the public upon the returns
from the investm ment.
The history of our railroads
shows that the stockholders usual
ly have been disappointed by the
returns they have received. Sta
'lstics of the DEPARTMENT of Agri
culture, of the Bureau of the Cen
sns and of the Interstate Commerce
Commission show that in 1900 the
farmers of this country received a
return of 9 per cent. upon the value
of their farms in that year, that
manufacturers enjoyed in the same
year net return of l94%, while
the average net returns upon rail
roads was only AZ. The same
statistics show that in 1905 the
average net return of the farmers
was 9.8%, and of the manufacturers
l5%, while average returns upon
railroad capital was but AN.
These were years of prosperity,
Investors in railroads west of the
Mississippi usually have not done
so well. In tina, year, 1905 the
Atchison, Topeka & Santa Fe Ry.
paid in dividends at the rate of
Az; the Northern Pacific TX, the
Southern Pacific, 0; the Great
Northern 7l2%. The average
dividend of the Atch,son, Topeka
and Santa Fe in the years from
1882 to 1906 was 2.9&6 The aver
age dividend of the Northern Pa
cific in the ears from 1883 to 1905
was 2.3%. The average dividend
of the Southern Pacific in the years
from 1885 to 1905 was l96. The
average dividend of the Great
Northern in the years from 1890
o 1907 was 69S. The highest aver
age dividend paid by any of these
roads in the period referred to was
only little more than one-balf as
much AS the American farmer
made in 1905. and the lowest av er-
age dividend paid was only one
tenth as much.
We want. we need, the contin-
uous growth and improvement of
this wonderfully promising terri
tory demands more railroads and
enlarged and improved facilities
in the existing roads. The ex-
penditures necessary to those ends
are capital expenditures. The
peeded money will be obtainable
when confidence in the produc i've
ness of railroad investments is re-
storedi when cooperation and good
will are manifest IN the relations
of the people and the carrier; when
it is promoted by the individual!