Year: 1873

The Report of the Cheap Transportation AS


sociation, which we published yesterday, is an
able and important document We may take


it as the Introductory chapter of a discussion
which will occupy a great deal of the public
attention this Winter, and it probably gives
the KEY note of the proceedings at the Con-


vention next month in Washington. The
Committee seems to have studied the freight
and railway question carefully and If 1t has
not reached probable solution of the great
question Of the day, it has pointed out very
clearly the most important conditions of the
problem, and perhaps indicated the direction
toward which our efforts ought to be bent.
The grievance needs no explanation. 1t Is
admitted on all hands to be one of the most
serious and alarming character. The remedy,
according to the Committees Report, is to be
found first in a system of restrictive legisla
ton, and secondly iii competition by means Of
the aid of the National Government.


The first of the evils for which it is pro-
posed to ask a cure from Congress lies at the
very root of the railway disorder. 1t is the
system of building railways without capital.
We have repeatedly explained this plan. a
small share capital is authorized, and an in
considerable fraction of 1t paid in-just enough
to defray preliminary expenses of organization
and influencing the Legislature. Then land
grant is procured, or towns and counties along
the line are induced to issue bonds for the
road, and upon these securities the directors
proceed to realize whatever they can. An in
side Ring, or construction company, is next
formed to build the road, and as the directors
themselves constitute this company their OBJ
ject, of course is to make the work cost az
much as possible. The result is road with
bonded debt greatly in excess Of its real value.
To pay interest on this debt the rates of
transportation are raised to an enormous fig
ure the farmers and merchants are taxed for
the fraud of tho original projectors of the
road. Sometimes the evil is aggravated by
the issue of stock dividends and other de-
vices for watering, until it becomes absolutely
impossible to tell how much of the income of
q road represents legitimate return for the
money invested in it, and how much is o
clear swindle 1t is doubtless true that only
q small number of the Western roads are now
able to pay even a moderate dividend on
their stock; but whether they are not earning
much more than a reasonable profit on their
legitimate cost is another question.


The Committee recommends .he creation of
a Board of Railway Commissioners in this
State, with full power to establish rates, and
proposes that no company shall be allowed to
pay more, in the way Of interest OF dividends,
than ga fair and just return on the actual
"cost of their property. With regard to some
of the roads, as we have said, it will be i'm
possible to ascertain what the actual cost was
and with regard to others it may be grave
question how fictitious capital can be extin-
guished without injustice to innocent purchas-
ers; but legislation may undoubtedly do some-
thing to place the art of building railroads
and floating companies upon much hOnester
basis hereafter. Some of the proposed
restrictions-those, for instance, upon dis
eliminating = tolls, upon !" fast =. freight"
lines. 2, and other - inside corpora
tions, upon the consolidation of compet-
ing lines, upon holding moro real estate than
is necessary for the operation Of the road, and
upon "engagng in mining or any business
"other than that of transportation will
prove difficult and perhaps undesirable in
practice. The pro rata principle has not
worked well in Illinois land as for mining,
there is no reason why q railroad company
should not dig its own coal as well as build
and repair its own cars. But there is one
prohibition of which we most heartily ap-
proye--that of free passes to public officers
and many Of tho others suggested would be