PSLCts Figures wit^h reTerence "fe U.5. "Railroads Return this book on or before the Latest Date stamped below. University of Illinois Library SEC 161355 1 9 ;384 s w 1 , 161—114 1 svuppu cy u\A -y-t/ ^ ‘>^ 52 5 .1 3 G B4^G ^ Opening of Railroads. Railroads were opened in the United States between 1830 and 1835.1 They were regarded as ex[)eriinental till about 1840. In 1835 the four leading engineers of New York, in a report to the Legislature, said : — Railroads admit of advantageous use in districts where canals, for want of water, wot’ ’ ’ They would probably be preferred vfla^^E jU^liyejJicities are required, and for the transportation of passengers. and under some circumstances for the conveyance of light goods.” In 1839 Boston had only 167 miles of railroad leading from it. In 1840 there were only 2,818 miles in the United k5tates, of which but 517 w^ere in New England. The average cost per mile of these railroads and their equipment vvas about $20,000. The average speed of pas- senger trains was from twelve to fifteen miles an hour. The average passenger fare was five cents a mile, and the average charge on freight about one dollar per ton per mile.^ As late as 1842, the inhabitants of Dorchester, Mass., strenuously opposed the construction of a railroad through that town, saying in their Town Meeting resolutions against it that it “ will be of incalculable evil to the town generally in addition to the manifest sacrifice of private property which will be involved.” 1 A railroad was opened in South Carolina in 1830, in New Jersey and Mary- land in 1831, in New York in 1833, and in Massachusetts in March, 1834, At first they were operated by horse power, although the cars on the first South Carolina road were propelled by sails. 2 Poor’s Manual, 1890; Tanner on Railroads, p. 22. 2:75 2 Other communities made similar opposition to railroad construction. In 1851, upon the opening of railroad communication between Boston and Montreal, the railroad connections of Boston had increased to nearly 3,500 miles, of which 2,830 miles were in New England, and about one half in Massa- chusetts. Boston railroad investments were then estimated to exceed $50,000,000, much of which was in railroads out- side of New England.^ In 1893 the Atchison Railroad alone reported gross earn- ings of more than fifty millions of dollars f $50,733,705) . . » f.*‘ * Railroad Mileage. During the year ending June 30, 1892, there were 1,822 railroad corporations in the United States, and of these only 712 were independent operating companies, which practi- cally operated the entire mileage upon which all statistics of operations are based. This mileage amounted at the close of the year to 171,564 miles of railroad, which was only 3,161 miles more than at the close of the previous year, and was nearly one half of the railroad mileage of the world. The distribution of the railroad mileage of the United States according to population and territoiy is very sugges- tive, especially when compared with a similar distribution in other countries. The United States as a whole has 5.67 miles of railroad as against 3.62 miles in Europe for each one hundred square miles of territory. There are in the United States 26.29 miles of railroad as ' Report City Engineer, Sept. 17, 1851. 2 In 1890 there were 385,191 miles of railroad in the world. The total length of single track in the United States was something [over 200,000 miles. 276 »> »> against 3.84 miles in Europe, for each ten thousand inhabi- tants.^ No country in Europe has ten miles of railroad for each ten thousand inhabitants except Sweden. The only European countries which have ten miles of line for each one hundred square miles of territory are Germany with 12.44 miles, Great Britain with 16.42, France with 11.06, Belgium with 28.23, Holland with 13.73, and Switzer- land with 12.10 miles, being an average for these six coun- tries of 15..66i miles for each one hundred square miles. It is, of course, to be expected that as compared with Germany, France, Great Britain, Austria-Hungary and Italy, that is, with the more thickly settled portions of Europe, the mileage of the United States as a whole will be much the greater according to territory ; and we find that Germany has 12.87 miles, France 11.27, Great Britain and Ireland 16.57 miles, Austria-Hungary 6.60 miles, and Italy 7.40 miles per hundred square miles of territory, as against 5.67 miles in the United States as a whole. But even the Eastern portions of the United States have a greater mileage according to territory than any European country. In Massachusetts there are twenty- six miles, in Connecticut 20.77 miles, in New Jersey 27.71 miles, in New York 16.19 miles, in Pennsylvania 22.27, in Rhode Island 20.39 miles, and in Illinois 18.25 miles per one hundred square miles of territory. It thus appears that the United Slates, either with refer- ence to population or territory, is much better provided with railroad facilities than Europe, and that its railroads, even in the most populous States, depend for their business These figures include in area only the land surface, and exclude Alaska, and are on a basis of 64,051,571 population, which covers an estimated increase for 1891 of 1,250,000 over the census of 1890, and excludes Alaska. 277 4 and earnings upon a much smaller population and territory proportionately than the railroads of Europe. The distribution of the railroad mileage of the United among the different States, throws some light upon the com- parative earning capacity and value of railroads in the dif- ferent States. Rhode Island has 6.28 miles of line as against 102.82 in Colorado, 110.28 in Idaho, and 199.} in Nevada, for each ten thousand inhabitants ; Massachusetts has only 9.15 miles of railroad as against 38 in Texas, 42 in Minnesota, 43 in Iowa, 45 in Oregon, 58 in Utah, 59 in Washington, 60 in the Indian Territory, and 61 miles in Kansas, for each ten thousand inhabitants. Indiana and Illinois have each more miles of railroad per one hundred square miles of territory than New York, and Ohio a greater mileage in proportion to its area than Penn- sylvania. Iowa has nearly as great a mileage per one hun- dred square miles as Delaware, while Kansas and Wisconsin have each substantially as many miles in proportion to their area as either Vermont or Maryland. Capital and Debt. In 1892 the capital and debt (exclusive of current accounts, or floating liabilities not bearing interest, which amounted to nearly $250,000,000) of the railroads of the United States was $10,669,998,317, or $368,958,940, more than the total assessed value of all the real and personal property in 1890 in the States of Massachusetts, New York, Ohio and Pennsyl- vania, and $554,568,540 more than the total assessed valua- tion of the real and personal property of the States of Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, Kansas and Pennsylvania in that year. 27S This capital and debt was represented by $4,920,555,225 of stock, $5,463,611,204 of bonds, and $285,831,888, of other forms of interest bearing indebtedness J The indebtedness alone was substantially as much as the entire valuation of the States of New York and Pennsylvania. During the year 1890 the railroad capital was increased $538,069,281, at least $250,000,000 of which was due to the increase of capital on existing railroad lines. ^ In 1891 it w'as increased $392,131,595, a considerable por- tion of which was issued by lines already in operation.^ This stock increase on existing lines is doubtless to be largely accounted for by necessary expenditures upon ter- minal roads for the accommodation of increasing business, but a portion of it probably represents stock issued to pay debt and for other purposes than railroad construction. The average rate of interest paid upon the bonded indebt- edness of railroads in the United States is 4.25 per cent ; the average rate paid upon all indebtedness is 4.05 per cent ; the average rate of dividend paid upon stock is 1.68 percent, while the average rate of interest and dividends is 2.96 per cent. If it be assumed that one half of the stock represents no actual value, or money paid, and therefore the dividends should be averaged upon only one half of the stock, then the average dividend paid would be 3.36 per cent. The value of rights to subscribe at par for stock, which was worth more, should, perhaps, be added to the dividends, but such rights really add nothing to the value of the shareholders’ property, and besides they were given in comparatively so few cases that if their value could be fairly ascertained it would not appreciably increase the average rate of dividend. ^ Poor’s Manual, 1893, page 13. 2 luter-State Commerce Commission Statistics, 1890, page 45. 3 Inter-State Commerce Commission Statistics, 1891, p. 57. 6 o 7 (.V And if we take into account the fact that, in the case of roads being constructed, interest and dividends are in many cases paid to a greater or less degree from the proceeds of sale of stock and bonds, the average income on railroad investments, reckoning the stock at one half its amount, is less than 3.25 per cent. Eailroai) Earnings. The assessed value of all the property of the United States in 1890 was $24,651,535,465, and yet a tax of one and a half per cent upon this vast sum would have been less than one third of the gross earnings of the railroads for that year. During the year ending June 30, 1892, the railroads of the United States earned from operation $1,171,407,343, of which thirty and thirty-seven one hundredths per cent was from passenger service, and sixty-seven and forty-five one hundredths per cent from freight. This was more than three times the entire revenue of the United States fiom internal revenue taxes and customs, and nine times as much as the total revenue from taxation and other sources of all the States and Territories in 1890. It was $36,196,901 more than the entire State, county, muni- cipal and school district indebtedness of the United States in 1890, and $279,447,239 more than the national debt of the United States at that time. The o-ross earnino:s of the railroads of the United States c cr for the years 1891 and 1892 would have paid the entire Slate, county, munici})al, school district and national indebtedness of the United States in 1»90 and left a surplus of $240,998,192. The companies paid out of their gross earnings, in 1892, $780,997,996 for expenses of maintenance and operation, leaving a net income applicable to fixed charges and to divi- dends of $390,409,347. 280 7 The net income applicable to dividends (including $141,- 960,782 income from other sources than operation) was $115,965,191. The amount paid in dividends was $97,614,- 745, and to sinking funds and in other payments from net income, $4,314,390, leaving a surplus over operations for the year of $14,036,056, or thirteen one hundredths of one per cent on the capital and debt of the companies. The narrow margin of profit upon which these net earnings depend is shown by the fact that an increase of eight one hundredths of a mill per ton per mile on the freight business of 1892 added over $7,000,000 to the income of that year, while a reduction of one tenth of a mill per mile, or one cent on each one hundred miles in the passenger rate of that year, would have reduced the net earnings of the railroads $1,336,289, and a similar reduction on the charge for freight would have reduced the net earnings $8,824,105. A reduction of one hundred and eleven thousandths of a cent per ton per mile on the freight carried would have wiped out all the dividends paid, while a reduction of three hun- dred and sixty-nine thousandths of a cent per ton per mile would have rendered the railroads not only unable to pay dividends but unable to pay any interest upon their indebt- edness, and a reduction of six mills per ton per mile would have reduced their gross earnings from freight and passen- gers below their operating expenses. Passengers and Freight. During the year ending June 30, 1892, the railroads of the United States carried 560,958,211 passengers, and 706,555,471 tons of freight. The average distance travelled by passengers was 23.82 miles, and the average number of passengers per train, for each mile run, was only forty-two. 8 The average haulage per ton of freight was 124.89 miles, while the average number of tons per train for each mile run was 181.79. The passenger train mileage, that is, the number of miles run by passenger trains, was 317,538,883, while the passen- ger mileage, or number of passengers carried one mile was 13,362,898,299. The freight train mileage, or number of miles run by freight trains, was 485,402,369, while the freight mileage, or number of tons carried one mile, was 88,241,050,225. Estimated at $25 a ton, the value of the freight moved by the railroads of the United States in 1892 was more than $17,664,000,000, or over two and a half times the value of the entire exports and imports, in 1889, of France, Ger- many, and Great Britain, and nearly eleven times as much as the value of the entire exports and imports of the United States in that j^ear.’ And yet this vast system of internal railroad transporta- tion brings the products of the West to the sea-board only to transfer all of them, substantially, to ocean transporta- tion controlled by other nations. In 1859 there were but hfty-six American steamships, with a tonnage of 158,000 tons, and represented by a capital of only $15,000,000, engaged in international commerce, while the merchant fleet of England alone comprised 5,196 steamers, with a tonnage of 7,000,500 tons, and was repre- sented by a capital of $1,100,000,000. In the year 1888, the United States paid for freights in foreign vessels $170,00(),000 and only $29,000,000 for freights in vessels sailing under its own flag.^ 1 Mullhall Diet. Statistics, page 138. 2 Since 1873, when the United States abandoned subsidies to shipping, Eng_ land has paid over $225,000,000 in subsidies to its vessels engaged in foreign trade. 9 Reduction of Rates. The reduction of railroad fares and freights on the rail- roads of the United States has been constant for many years. In 1882 the passenger mileage (u e., the number of pas- sengers carried one mile) was 7,688,468,538. In 1892 it was 13,697,343,804, or an increase of seventy-eight per cent in the ten years. The average rate per mile in 1882 was 2.447 cents. In 1892 it was 2.143 cents, or twelve per cent less. This percentage of reduction applied to the business of 1892 would amount to $35,226,896. While this reduction is, perhaps, no more than could be expected from the great increase in the volume of business and the improvement in labor-saving appliances and in- creased efficiency and economy of management resulting from the union of lines, the reduction which would otherwise have resulted from these causes has been largely prevented by the increased demands which the passenger business continually makes for more expensive roads, terminals and service. The reduction in freight rates, however, has been much greater. In 1882 the freight tonnage (?'. e., the number of tons moved one mile) was 39,202,209,249. In 1892 it was 84,448,197,130, or an increase of 115 per cent. In 1882 the average rate per ton per mile was 1.236 cent-. In 1892 the average rate was .967 of a cent, or 22 per cent less. This percentage of reduction applied to the business of 1892 would amount to $179,677,687. If the same rate had been paid upon the freight business of 1892 that was paid upon the freight business of 1882, the owners of the railroads would have received substantially $180,000,000 more than they did receive. 10 o t; The avernge charge per ton per mile for freight on the leading trunk railroads of the United States decreased from 1.226 cents in 1868 to .527 of a cent, or more than one half, from 1868 to 1883. During that time the rate on the New York Central decreased from 1.371 cents to .45 of a cent, and the rate on the Boston & Albany decreased from 1.405 of a cent to .59 of a cent. The rate on the Chicago & Northwestern decreased from 1.22 cents to .41 of a cent, and the rate on the Lake Shore 8c Michigan Southern decreased from 1.668 cents to .36 of a cent. This large reduction was rendered possible only by the enormous increase in business. The freight of the New York Central increased from 1,846,599 tons in 1868, to 10,892,440 tons in 1883, and the freight carried by the Pennsylvania increased during the same period from 4,722,015 to 21,674,160 tons per annum. The effect of this enormous reduction in freight transpor- tation upon American railroads is thus stated by Mr. Jeans, the highest English authority upon this subject, who, speak- ing of it in 1887, said : — “ This colossal concession to Ihe trade and industiy of America has had both immediate and far-reaching conse- quences. Its more immediate effects have been to enable the remotest cattle-breeder and wheat-grower in the United States to obtain access to other markets than his own, and thereb}’ to enter into the world’s competition for the supply of the world’s markets. Its ultimate results are to be witnessed in the extraordinaiy cheapness of the bread stuffs furnished to England b}^ the United States, and, as a necessary consequence thereof, ly other coun- tries ; in the singularly severe and protracted depression of British agriculture, and in the complete discomfiture of man}' interests that were fairly strong and capable of 11 284 lioUHng their own until this fiscal monster came to the front.” Jeans Railway Problems, page 318. A part of this reduction is doubtless fairly due to the great increase of the volume of business and to improved efficiency and economy of operation ; but much is due to un- wise and ruinous competition, which has reduced the charge for freight carriage in many instances below its fair cost. That this rate of reduction in freight rates will continue, or that the present excessively low average rate can be main- tained, cannot reasonably be expected, with proper regard to a reasonable return upon the actual value of railroad property, and proper compensation to railroad labor. Rates in United States and in Europe. A comparison of railroad rates in the United States with the rates in Europe is instructive. The average passenger rate in Europe, including Great Britain, is 1.93 cents per mile. The average rate in the United States, is 2.143 cents per mile. If the passenger business of the United States in 1892 had been done at the European rates the owners of the rail- roads would have received $29,198,741 less than they did receive. The European rate, however, is subject to the different classifications of travel, the larger portion of the travel being third class who are carried at a very low cost and, as a rule, furnished with quite inferior accommodations. Last year the first-class passengers on all the railways of the United Kingdom paid 3.12 millions of pounds sterling, the second-class 2.37 millions, and the third-class 22.21 millions of pounds sterling. In other words, of the receipts for 12 ordinary passenger fares, 80.3 per cent came from passengers travelling third class, 8.5 per cent from those by second class, and 11.2 per cent from first class. But when we come to the difierence between freight rates in the United States and freight rates in Europe we find that the average rate in the United States is .967 of a cent as against 2.02 cents, or more than twice as much, in Europe. If the railroads of the United States had been paid the same rate for freight in 1892 which was paid in Europe, they would have received $889,136,823, or a sum suflficient to pay the whole present national debt, more than they did receive. In considering this difference in freight rates, how- ever, it should be remembered that Europe has great facilities for water transportation, not only on natural but on artificial water ways, and a smaller proportion of the low class freight is probably moved by rail there than in the United States. The rates on British railways have not fallen to any ap- preciable extent for many years. In 1844 Parliament required that at least one train a day should be run at a fare of one penny (equal substantially to two cents) per mile for passengers. A penny is still the standard fare for a third class passenger. The passenger undoubtedly has better accommodations than in 1845. In- stead of being limited to one train a day he can travel by nearly every train. He is carried at a higher rate of speed and has better station and railway accommodations, but he must still pay the same rate that was paid more than forty years ago. It is impossible, owing to the lack of statistics, to make an exact comparison between the rates for freight on British railways thirty or forty years ago and the present rates, but the best English authorities state unqualifiedly that it is cer- 286 13 . tain that on the whole no material redaction has taken place in those rates since 1868, and probably none for a still longer period.^ Kailroad Labor. In 1891, the railroads of the United States employed directly 784,285 persons, mostly men, and it was estimated that independently of stock and debt holders they provided a living for at least three million persons, or about one in twenty-two of the total population of the country.^ It is doubtless safe to say that to-day one person in twenty of the entire population of the United States is dependent for his living upon the labor of those employed in the main- tenance and operation of its railroads.^ This labor is so efficient and so well organized and di- rected that only four hundred and seventy-nine persons are required per one hundred miles of line operated, while in England 1,748 persons per hundred miles are required. In considering this, however, regard should doubtless be had to the density of population, and larger volume of busi- ness per mile on the English roads and it should be observed that on the New England roads the number of enqiloyees per hundred miles is eight hundred and nine, and on those of the middle States 1,141.^ Something is also doubtless due to superior labor-saving appliances, but in any aspect of the case it must certainly be said that the laborers who operate the railroads of the United States are most faithful and efficient. Railroad labor is, however, much better paid in the United ^ Hunter on Railway Rates, p. 4. 2 Interstate Com. Statistics, 1889, p. 16. 3 This does not include employees of express and parlor car companies. The express companies alone employ 47,014 persons. ^ Interstate Com. Com. Report, 1891, p. 52. 14 States than in Europe. In England, railway companies are regarded as the best employers of labor, and there is a grow- ing tendency of railway employees there to bring up their children in the same employment. ^ The average working time on the English railways is eleven hours a day, although in some departments twelve, fourteen and fifteen are required. The following table shows the daily wages paid by the three largest and best paying English railway companies : — ^ Great Western' London & N.W, Midland. Lowest rate. Highest rate. Lowest rate. Highest rate. Lowest rate. Highest rate. Drivers (engineers’) and firemen $0 75 $2 00 $0 75 $2 00 $0 83 $1 88 Passenger guards (conductors) 75 1 25 75 1 38 83 1 16 Goods guards (freight conductors) 79 1 33 91 1 35 83 1 1 25 Shunters (switchmen) 66 1 25 75 1 25 57 1 29 Signalmen 63 1 16 83 1 25 79 i 1 16 Passenger porters 50 8S 50 97 35 83 Goods porters 57 1 20 63 1 13 57 1 00 Plate-layers 58 1 25 66 1 10 66 1 08 Draymen or carmen 83 91 75 1 04 70 1 00 The hiijhest and lowest wages are here given each class. A fair average, however, would include many more in the lower than the higher classes. On the Continent, wages of railroad employees are on the whole, lower than in England. The following table shows the average daily wages paid by the New York, New Haven & Hartford Railroad, and the Pennsylvania Railroad, on which the wages are probably as high as those paid on any other United States roads : — 1 The English railway companies employ about 350,000 men, of whom some 30,000 are members of the Amalgamated Society of Railway Servants. 2 Masses and Classes, Tuckley, p. 85. 28S 15 N. Y., N. H. & H. R. R. £'( •nn. R. R. Passenger engineers $4 64 ) $3 77 Freight engineers 4 05 > Passenger firemen 2 CO CO 1 99 Freight firemen . 2 09 > Passenger conductors . 3 66 > 3 28 Freight conductors 3 o o Passenger brakernen 1 90 ) 1 86 Freight brakernen 1 92 > Switchmen . 1 77 . . 1 64 By this comparison, which is probably as fair as any which can be made, it appears that the wages paid on the United States roads are about twice as large as those paid on the English roads. In the United States it is estimated that about fifty-five per cent of the expense of the maintenance and operation of railroads is paid in wages to those who directly maintain and operate the roads. But if we take into account the wages paid to those who build cars and engines, machinery and other appliances, make the rails, mine the coal, prepare the ties, refine the oil, and otherwise labor to produce the materials and supplies used in the maintenance and opera- tion of the railroads, it is safe to say that nearly ninety per cent of the total cost of maintenance and operation is paid for labor. This means a payment of substantially $700,000,000 each year, or about $2,000,000, each twenty- four hours. Value of Railroads. It is obvious that, taken as a whole, the amount of capital and debt of the railroads does not show their actual value. But if the rates received by them are on the whole reason- able, their present value is, perhaps, as well shown by the 16 28 (_> amount of their net earnings at those rates, as it can be in any other way. In applying this method of valuation regard should be had to the fact that net earnings are sometimes increased by the payment of operating expenses from proceeds of stock and bonds and thus the earning power of the roads shown to be greater than it really is. But as it is impossible to esti- mate this with any degree of accuracy, it must be disre- garded in actual computations. If it be assumed that the n6t earnings of all the roads, as shown by their accounts, are from railroad service performed and not in any degree aflected by the application of the pro- ceeds of stock or bonds to expenses, the earnings in 1892 amounted to five per cent upon a capital of $7,808,186,940, or $2,861,811,377 less than the actual capital of the railroad companies at that time.^ ^ Upon this basis, which doubtless gives to the railroads a higher earning power than they actually have, it would be necessary to destroy more than one half of the entire capital stock to secure to owners of the remainder, and to the debt holders, five per cent upon their investments. These figures take no account of the stock and debt which have been destroyed by the failure of railroad companies and the foreclosure of mortgages upon their property, nor of the unpaid interest account upon money actually invested in such stock debts before they were actually destroyed, or since. This would decrease the net earnings of the roads and the return upon their cost to a much lower figure. In any aspect of the case the net return upon railroad capital as a whole has been very small. Fictitious capital has been created, but actual capital has been lost. In considering the question of railroad rates and of return Interstate Com. Statistics, 1890, p. 58. 290 17 upon railroad investments, the public naturally consider the first more than the latter, but in any fair consideration of the subject both should be taken into account. Those who have gained by the one, are in the main those who nave lost by the other. The man who has received a high rate of interest and has doubled his shares without corresponding payment in the stock of one road, may have wholly lost his investment in another. If his profit in the one is to be taken into account, should not his loss in the other also be considered? Railroad Consolidation. With a few recent exceptions, the uniform course of gen- eral legislation in the United States has been to stimulate the construction of competing lines and prevent the union of railroads, especially of those which are competitors. Most of the States have strinojent laws aofainst the union of competing lines in any form, and nine States have in- cluded similar provisions in their constitutions ; and yet, under special legislation and by evasion of general laws, consolidation has steadily gone on until, in the twelve months ending June 30, 1890, eighty-four companies, representing over eight thousand miles of road, disappeared by consoli- dation or union with other companies. During the year ending June 30, 1891, the number of railroad corporations decreased, notwithstanding the new lines chartered during the year, and the number of inde- pendent operating roads decreased from 747 in 1890 to 709 in 1891. During 1891, ninety-two companies, representing a total mileage of 10,116 miles, consolidated with existing corpora- tions, either by purchase or by some other form of merger. In 1890, less than foity companies, having an average 18 2 91 mileage of over two thousand miles, operated one half the entire mileage of the United States and seventj^-five com- panies received over eighty per cent of the total amount paid by the people of the United States for railroad service, or nearly $900,000,000. In 1891, eighty companies operated sixty-nine and forty- eight hundredths per cent of the total mileage, and received $900,306,967, or more than eighty-two per cent of the entire gross earnings of the railroads of the country. These roads performed about eighty-four per cent of the total passenger service, and eighty-three per cent of the total freight service during the 3 ^ear. Under the coercive effect. of the interstate commerce law, which prohibits pooling contracts to prevent ruinous competi- tion, this process of combination and consolidation is going on with increasing rapidity, and it is safe to say that during the present year not more than fifty compiuiies will together receive for railroad service nearly one billion dollars. Xothing could more conclusively demonstrate the truth of the statement by Mr. Stephenson in 1830, that “ where com- bination is possible competition is impossible,” or show how^ inefl:ective is all legislation against the operation of business laws. Unproductive Kailroads. One of the most significant facts shown by railroad statis- tics in the United States is the amount of railroad property of various classes upon which no income is received. During the year 1890, 63.76 per cent of all the railroad tocks paid no dividend, and for the year 1891, 59.64 per cent paid no dividend. The Interstate Commerce Commission classify the rail- roads into ten different groups. Groups 7, 8, 9, and 10 comprise all the railroads west of 11) the Mississippi and Missouri Rivers, and have a combined mileage of 53,213 miles, and a combined capital of $1,002,- 525,421. Of the $113,507,688 capital of the railroads in Group 7, 62.39 per cent paid no dividend. Of the $332,362,779 capital in Group 8, 69.98 per cent paid no dividend. Of the $413,003,230 capital in Group 10, 78.84 per cent paid no dividend. And of the $143,651,724 capital in Gioup 9, 99.99 per cent paid no dividend. Of the stock of the railroads west of the Mississippi and Missouri Rivers 75.69 per cent pays no income to the owners. During the first six months of the present year seventeen railroads, with a ca[)ital and debt of $36,935,000, were sold under foreclosure. Since Jan. 1, 1893, twenty-seven companies, with a mileage of 22,141 miles, and stock and debt of more than $1,287, - 000,000 have passed into the hands of receivers, counting the Northern Pacific and Union Pacific each as only one com- pany. If the twenty-two subordinate lines of the North- ern Pacific and the thirty-seven branch lines of the Union Pacific be added the total number of companies in receiver- ship during that time is eighty-six ; and the mileage of roads in the hands of receivers is over nineteen per cent of the total mileage of the country. ^ Railroad insolvency and receivership is not confined to times of depression in general business, but occurs with alarming frequency in times of business prosperity. In 1892, thirty-six companies, with 10,508 miles of road and 1 Since this was written the “ Atchison System ” has been put into receiver- ship, which adds 9,344 miles of road with 1102,000,000 of stock and $330,082,000 funded debt to these amounts. 20 $357,000,000 of capital, went into receivership in addition to the foreclosure sales of that year and during the seven- teen years ending with the year 1892, 526 railroad com- panies with a mileage of 55,670 miles, and $3,122,000,000 of capital, were sold under foreclosure. That was about thirty-two per cent of the present mileage, and thirty-one per cent of the present capital of all the railroads. Interstate Railroad Commerce. The figures which I have given are with relation to the railroads of the United States as a whole. It is impossible to give any satisfactory statistics with reference to them in any other aspect. All the railroads either extend across state line or are parts of connecting lines of railroad extend- ing through ditierent states. It can safely be said, I think, that there is no railroad which is not engaged in interstate commerce to some extent, although its line may be wholly within the limits of a single state. Interstate commerce b}^ rail is transportation from a point in one state to a point in another, while state commerce by rail is transportation from a point in one state to another point in the same state, but both kinds of transportation aie necessarily carried on over the same rails and by the same trains, and it is impossible to separate the one from the other. The interstate commerce is, however, doubtless much the larger in volume. The regulation of the transaction of and the rates upon either kind of transportation by rail neces- sarily affect the regulation of and the rates upon the other. Railroad transportation is a unit and cannot be cut up for regulation or supervision into two separate kinds of trans- portation, — state and interstate. The railroads of the United States are so intimately con- nected, and public accommodation demands that they be operated with such connections as to make them practically one system. The regulation of 'one necessarily affects to a greater or less degree all the others. The railroads of one portion of the country are benefited or injured as the rail- roads of other portions of the country are benefited or injured. Whether it will ever be possible to operate all the railroads of the United States under uniform regulations, it is impossible to say, but the tendency is and should be to uniformity, so far as it is practicable under the differences of local conditions. Where state supervision and regulation of state commerce conflicts with national supervision and reg- ulation of interstate commerce it is ineflective for obvious legal and practical reasons, and the time is probably not far distant when it will be a serious question whether the super- vision and regulation of railroad transportation, to be prac- tical and efficient, must not be exercised wholly by the national government. Conclusion. This necessarily imperfect sketch of the statistics of the railroads of the United States shows that nearly two hun- dred thousand miles of railroad are operated by private corporations, which carry upon them nenrly six hundred million persons, and over seven hundred million tons of freight each twelve months, and in so doing collect and disburse nearly one billion two hundred millions of dollars a year. They audit their own accounts of receipts and disbursements. And yet it is estimated that the cases of default or overcharge in this business are less than one ten-thousandth of one per cent of the entire transactions 22 involved, and the security to persons carried is so great that life on a railroad train is practically as safe as life at home.^ The charge for service rendered is much less than that in , other countries, and the service is better performed. Freight is carried from Boston to Chicago, a thousand miles, in less time and for a less price, on the average, than ordinary freight is carried between London and Paris, three hundred miles. Considering the time within which the American railroad system has been created, and the vast territory over which it extends, the opportunities which have existed for dishonest practice in construction and management, and the magni- tude of the capital which has been involved, the wonder is, not that abuses have existed, but that they have not been greater. Whatever abuses have existed, and whatever evils unwise management may have produced are self-limited, and have brousfht and are brin^in^ their own correction. It is easy to formulate abstract propositions with regard to the management and regulation of this immense system of railroad transportation, and those who know the least about it have, of course, the least difficulty in so doing. But I think that even a slight examination of the facts and the figures relating to this subject will lead thoughtful men to perceive that so complicated a subject, and one upon the , proper treatment of which the prosperity of the business interests of the country so much depends, should be treated with wise conservatism and great caution, so that in the attempt to correct real or fancied evils greater evils be not created. ’ But one passenger out of 1,600,000 is injured. an?;-