PREFACE. 
 
 Tlie object of the following pamphlet is to induce inquiry 
 and investigation in order to ascertain what policy is best 
 adapted to make our railroads what they should be, the great 
 arteries of circulation for the commerce and industry of the 
 country. The system, under its present variously conducted 
 and divided plans of management and mismanagement, has 
 attained to a degree of development which renders its proper 
 maintenance a national necessity, and recent events show that 
 in various quarters, and especially in some of the Southern 
 States, it is now in danger of collapsing, if it may not be said 
 to have already done so. The views which I now publish are 
 designed to open up a solution to the question, and to suggest 
 one method at least by which our system of railroads may be 
 effectually maintained with increased convenience to the public 
 and profit to the nation. To what extent the scheme proposed 
 is applicable to individual States depends much, of course, 
 upon their geographical position ; but that many of them 
 should adopt some decisive measures upon the subject is a 
 matter too obvious to be discussed. 
 
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The Railway Economy of the Future. 
 
 / 
 
 The construction and maintenance of railroads, to facilitate 
 internal communication, form one of the principal requirements 
 of commercial enterprise in any country ; and in a country 
 where commerce and industry is every day developing itself 
 with such rapid strides, and upon a scale of such magnitude as 
 in this, the necessity of a properly systematized means of inter- 
 course between the centres of trade, and a suitable distribution 
 of its tributary channels, together with a well organized and 
 harmonious system of management, is no less important than 
 the existence of the means of intercourse itself, and cannot be 
 over-estimated. 
 
 Within little more than a quarter of a century, our system of 
 inter-communication has undergone a complete revolution ; rail- 
 ways have taken the place of common roads, and the cramped 
 and dragging old stage-coach has given place to the commodious 
 “ palace car.” It is not too much to say, that thousands travel 
 now where twenty travelled in the days of stage coaching. 
 This is indeed a great gain, but what I propose to consider in 
 this paper is, whether the convenience of the public is provided 
 for to anything like the extent that existing circumstances 
 would permit, and also whether the present travel and traffic 
 would not be largely increased, and the value of these modern 
 appliances be enhanced by making the convenience and interest 
 of the public the first consideration in their management. 
 
 According to the present system, the railroads are the private 
 property of different companies, who made them as commercial 
 speculations, and over which the Government and the public 
 exercise but very limited control. The special powers granted 
 to railroad companies are, the right to become corporate bodies. 
 
4 
 
 the power to acquire such lands as are requisite for the purpose 
 of constructing and working their lines, and to charge such 
 rates for the conveyance of freight and passengers as they may 
 think proper, and in this respect leaving it entirely at the dis- 
 cretion of those who control them to discriminate in favor of or 
 against any locality. 
 
 The plea upon which these powers are granted is always a 
 prominent feature in the preamble and lobbying arguments 
 used in support of a railroad bill. Public utility is represented 
 as the chief object of the enterprise ; but, as a general result, 
 the very public that founds, fosters and sustains it, is that 
 which is least served by it in its operative capacity. In State 
 legislation, under which j urisdiction these projects obtain exist- 
 ence, little or no investigation is made into the merits and 
 truthfulness of this plea. Its simple assertion is too often taken 
 as its demonstration, and a charter issues which is often but a 
 bait to catch the unwary, and encumber the industry of the 
 State with liability from which no adequate benefit is derived. 
 The idea seems never to occur that there should be some legis- 
 lation Avhich would lead upon the projection of a line of rail- 
 road to an examination of the project by a competent commis- 
 sion, to determine upon its necessity before powers are granted 
 to carry it into execution ; and also to provide for an intelligent 
 inspection of the work of its construction and proper mainte- 
 nance upon completion. Such a commission it seems to me is 
 indispcnsible, but its usefulness depends upon its efficiency, and 
 therefore care should be taken that it is composed, not of a set 
 of political “ bummers ” as form many similar commissions at 
 the present time, and who have no conception of the duties 
 which they affect to perform, but, of men who make the con- 
 struction of railroads their lifetime study and occupation, and 
 whose reputation as such would be a guaranty of the'reliability 
 of their opinions. 
 
 It has often been a matter of Surprise to me, and especially 
 latterly, that some of our Southern States^ which are carrying 
 so heavy a burthen of railroad obligations, do not find some 
 method of exercising a more efficient surveillance in this matter 
 
5 
 
 by imitating the policy of other States in their constitution of 
 boards of public works. The State of Alabama for an instance 
 has endorsed bonds to aid in the construction of railroads since 
 the late war to the amount of thirteen or fourteen millions of 
 dollars, and is committed to the endorsement of at least as 
 much more, but I do not find that her interest is guarded in 
 any degree commensurate with her liability, by representation 
 or direction in the operations of the boards controlling them. 
 Being powerless to avert the disaster of bankruptcy which is 
 now imminent to half a dozen of her newly projected lines, she 
 must accept the evil and seek to remedy it when it comes. 
 
 At the present time there are in operation about fifty thous- 
 and miles of railroad in the United States, which cost over 
 $2,000,000,000, or over $40,000 per mile, nearly double what 
 it might have been built and equipped for upon a cash or 
 healthy financial basis. The returns for this investment have 
 not by any means been such as might have been expected from 
 capital so laid out, and the low prices at which all railroad 
 stock is now quoted shows that investment in such under- 
 takings is not regarded with favor ; in fact a glance at the 
 stock lists would justify the conclusion that the entire railroads 
 of the country might be purchased at a very large discount 
 upon the aggregate outlay for their construction. 
 
 Had the system of railroads been laid out originally on a 
 comprehensive national plan, we might ere now have had an 
 organization in operation, extending railroad communication 
 and its influence into every part of the land, without having 
 expended one-half the amount already invested in the existing 
 lines. Much of which has been and is still being wasted in the 
 establishment of rivalries and competitions from which the 
 public have reaped but a doubtful and at most a short-lived 
 benefit, while the absorption of capital to sustain them has 
 crippled the remunerative capacity of the whole. 
 
 A system of railroads, judiciously planned, provides for a 
 complete inter-communication and spread of population, thereby 
 establishing new centres of commerce and industry for the 
 thorough development of the resources of a country, and when- 
 
6 
 
 ever this is done, the entire object of the organization is attained, 
 the full capacity of the capital employed is utilized, and financial 
 success the more thoroughly insured. 
 
 Upon referring to the returns of the two previous years, I 
 find that the nett earnings of one-half of the railroads in the 
 country amount to about 8 per cent., and the other half will 
 average about 3 per cent, on their aggregate outlay ; but with 
 the exception of a comparatively few cases this is absorbed by 
 the interest upon their bonded debt, and therefore seldom finds 
 its way, in the form of dividends, in the pockets of the stock- 
 holders. 
 
 It is obvious that this enormous outlay has not proved bene- 
 ficial to the stockholders : let us now see if the public in gen- 
 eral have gained such advantages as may be considered suffici- 
 ent to convert the pecuniary loss, that has been sustained by 
 individual subscribers, into a national gain. 
 
 There is no doubt that we can travel with a speed, comfort 
 and security, and I might add a cheapness, formerly unknown ; 
 but it is equally clear that what has been accomplished in this 
 respect falls very far short of what might be done were the 
 system of railroad management carried out in harmony. The 
 same may be said in regard to the transmission of merchan- 
 dise. How often is it the case that where companies cannot 
 agree to work together for the public good in the arrangement 
 of their schedules, the traveling community is made the victim 
 of their disagreements ; and witness also the studied and com- 
 bined system to extort local tariffs of freight and passenger 
 rates, a system of imposition as inconsistent as it is antagonistic 
 to the broad development of industry and trade. 
 
 These are only a few of the evils the public have to bear in 
 consequence of the mistaken notions of divided interests in the 
 proprietorships of railroads and the false idea that the interests 
 of the stockholders and of the public are at variance. 
 
 The desiderata involved, it appears to me, can only be ac- 
 complished by uniting all the railroads of the country under 
 one general management, to form either a separate branch of 
 the public service or to be administered by an independent 
 
commission or directory. The interests being national, the 
 management, to be effective, must be national also. 
 
 It would then be the duty of the Government to see that the 
 railroad system, which is ostensibly formed as a plan for the 
 advancement of the general industry and commerce of the 
 country, is fitly arranged and efficiently maintained. 
 
 For the Government to assume the control of the railroads 
 no money would be needed. It has already been shown that 
 the average nett earnings would form a dividend of 5J per 
 cent, upon the aggregate cost, and the Government might issue 
 railroad stock bearing guaranteed interest at 5 per cent, in ex- 
 change for that held by stockholders, and which would doubt- 
 less be acceptable also in lieu of railroad bonds now in the 
 market. The amount of this stock to be given in exchange 
 for either should be fixed by a competent tribunal, who should 
 base their calculations upon the price of the various stocks 
 through a period which would enable it to arrive at an equita- 
 ble value. The new stock would be proportionately equal in 
 value to any other Government stock, and railroad stock and 
 bondholders would receive, in return for their fluctuating 
 shares, securities whose value would vary no more than any 
 other form of Government securities. 
 
 I think I might safely venture to assume that the amount 
 of this issue, requisite to acquire possession of all the railroads, 
 could not exceed three-fourths of their aggregate cost, and if 
 the returns which are now made are no more than sustained 
 they would be ample to provide for the payment of the interest, 
 as well as to form a surplus fund for the extension of lines 
 throughout the country. But I apprehend that the returns 
 would be largely increased. Indeed, it is quite impossible to 
 foresee to what extent the facilities that could be afforded, and 
 the more efficient organization which could be instituted, would 
 increase the revenue of the Government. 
 
 A considerable diminution of the average passenger and 
 freight tariff per mile might, I think, be applied advantageously. 
 A minimum rate could thus be attained and universally charged. 
 Speed classes could be organized in freight as well as in pas- 
 
8 
 
 genger trains, and made to operate in connection with each 
 other with far greater precision than is possible under the 
 present system. A slow, fast and express freight system could 
 be arranged, and express monopolies suppressed to the very great 
 convenience of the public and benefit to the general business 
 of the roads. The public would speedily reap the advantages 
 of a complete and harmonious system of management in the 
 augmented facility, comfort and economy of transportation 
 which would ensue, while the general cost of operating might 
 be greatly reduced. Thus trade would be benefitted enormously, 
 and the effect upon the money market, of at once converting 
 $1,500,000,000 of sunk capital into convertible securities, 
 would be a stimulus of immense value to the country. 
 
 The only objection which I can see that is likely to be pre- 
 sented to this scheme is that which opposes the extension of 
 the civil service and increase of Government patronage, on the 
 ground of party corruption. But this is obviously a partisan 
 view of it, and does not attack the practicability or merit of 
 the proposition. It must be understood that it is based upon 
 an honest and judicious administration of the Government, for 
 without this the Government is itself a failure. 
 
 ENGINEER. 
 
 Alabama, January 1, 1872.