ed to consolidation by a constant law of self-interest which the public have regarded with hostility and distrust. The result must and should be an appreciation of the fact that the true interest of the public, as well as of the corporations, lies in the direction of better organized and less discordant expenditure of energy and capital, and in the adoption of more comprehensive principles of legislation to that end. The facts ought to be realized not only that discriminations by exorbitant charges upon one locality at the expense of another, is an evil to be discouraged, but also tat legislation discouraging investment by encouraging ruinous competition is equally to be deplored.

UNDUE COST OF CONSTRUCTION.

Prominent among these evils is the primary one of unwarrantable cost. A road having been built as economically as possible, no one can reasonably make complaint of charges that yield only a moderate per cent. of profit on the investment. Indeed, the public are willing that they who put their money into railways should have a very liberal profit; since, while such use of money is of great importance to the public-is indispensable to the growth and prosperity of a country-it is attended with more risk than is the investment of money in many other ways. But if a road has cost thousands of dollars per mile more than it ought, owing to want of skill and judgment on the part of the company, or if there is reason to believe that the assumed cost is not the real cost—the difference having gone into the hands of officers or their friends acting in the capacity of contractors or "promoters "-then it is natural that there should be an unwillingness to allow even a moderate per cent. on the declared cost.

Unfortunately, these mere hints of dishonest management find warrant in actual facts in all countries.

The impression widely prevails, that the railway companies of the United States have pre-eminently distinguished themselves in the practice of such frauds. Upon the justice of this sweeping charge the comparative statistics, showing the mileage and cost of the railways of the world (see page 229) will throw at least a shadow of doubt.

Still, it is no complete acquittal of the railway companies of this country to show that their roads have cost far less than the roads of another country; since the conditions of road-building are never

the same in the different cases. To point out that the roads of England, e. g., cost three-and-a-half times as much as the average for the United States, and five-and-a-half times as much as the average cost in this state, would prove nothing certainly, for there is, in this case very great difference in the necessary cost of construction.

English railway engineers commenced their works in a most expensive way; and they have not even yet learned the art of cheap building as it is everywhere understood in this country. They do not now build roads, as at first, wholly of iron and stone, with granite sills and cross-ties firmly established upon macadamized road-beds, deep enough to be secure from the action of frost, for the reason, that they were altogether too costly even for English capitalists, and yet not so good for use as those built of a more elastic material. They do, nevertheless, even now build much more substantially than we do-with double track of the heaviest iron and steel; with broad road-beds of the best material; with stable bridges of iron and stone; with expensive crossings above or below the track. They equip them, moreover, with the best engines and rolling stock that can be built, and they supply their more numerous stations with permanent, and often elegant depots, freight and passenger houses affording ample facilities for every department of the business, and every needed comfort for travelers. And there, also, the right of way requires an enormous expenditure— sometimes more than it costs to construct and equip one of our roads.

There is still another reason why such comparisons are not alone conclusive, namely, that the English roads may also have cost more than was legitimate, as they probably did. It is only when one fairly considers all the conditions and circumstances of construction in any two or more cases compared, that a fair conclusion can be reached. If the circumstances are very nearly the same with two roads, and one is found to have cost $60,000 per mile and the other $35,000, the inference is legitimate that one has been more economically, perhaps more honestly built, than the other. Or, again, if one built through an old and hilly country, where expensive right of way, deep cuttings, heavy stone work and costly bridging are inevitable, is reported to have cost $30,000 per mile, while another, built over a level, open prairie, with neither cuts nor embankments, and little or nothing for right of way, has cost

$45,000 per mile, the evidence of either ignorance, carelessness or fraud, or all three combined, is sufficient to throw a suspicion over & great number of other roads, whose cost is by such example made unaccountable on ordinary grounds.

CAUSES OF UNDUE COST OF CONSTRUCTION.

If we inquire into the causes of undue cost of railways, they will be found with but little difficulty. Prominent among them are the following:

1. Slight pecuniary interest of managers.

It has been the bane of many of our railroad enterprises in this as well as in other countries, that they have originated with, or early fallen into the hands of, reckless adventurers-men who put nothing in, and hence have had nothing at stake. They were skilled in the use of blandishments, and in giving a rosy tint to the future of their favorite enterprises. Building not for use, but as a speculation, it has made but comparatively little difference to them what burdens were saddled upon the public in the form of tolls and rates, or how soon the purchasers might fall into bankruptcy.

2. Construction on credit.

With nothing visible but a charter, an exaggerated map of the projected route, and a package of handsomely engraved bonds and stock certificates, the schemer sets out to negotiate a loan and push on the construction of his road, knowing that he will be out of the enterprise long ere the bonds will have to be paid, if not before the road is fully equipped for business The amount of discount is a matter of but little consequence. Stock costs nothing but the price of paper and printing, and it is issued without stint to make the bonds go at even a ruinous price. Bye and bye, the road is built and sold for a handsome sum, the purchaser, of course, assuming the burden of debt, the amount of which may be twice what it would cost to build a better road with part cash.

It is not essential that every dollar necessary to build a road should be in bank before the work of construction begins; if it were, few roads in a region of country like ours, where there is but little spare capital, would be built. A reasonable amount of credit is legitimate, indeed often absolutely essential; but since the use of it adds greatly to the cost of building, it should in all cases be employed as sparingly as possible.

3. Injudicious location of lines.

This particular cause of undue cost will be best appreciated by skillful engineers, who cannot have failed to note how very often lines of railway are made to cost much more than was necessary by careless surveys. But one need not be more than an ordinary engineer, or even a professional engineer at all, to detect expensive blunders of this sort on every hand-blunders which not only occasion a large increase in the cost of construction, but also a permanent extra expense of working.

4. Corrupt letting of contructs.

Probably the system of construction by "rings" formed inside to operate outside, for the private gain of individual officers and their friends, is, of all causes of excessive cost, the most prolific. Of course there are many railway officers too honorable to resort to measures for private advantage which involve the robbery of stockholders and creditors; but such practices are nevertheless so common as to make it somewhat doubtful whether they do not constitute the rule rather than the exception. Sometimes they are carried on by directors and officers openly, but oftener, of course, under cover. We would not be understood as branding every construction company composed in whole, or in part, of officers and me.bers of the company contracted with, as guilty of fraudulent dealing with stockholders. A construction company possesses some advantages for conducting the work of construction which a chartered railroad company does not possess--especially if many of the directors of the railway company are non-resident and the undersigned have knowledge of some such who are believed to conduct the business of building in that way solely because of these advantages, and wholly in the interest of the stockholders who compose the railway company. They are forced to believe, however, that the number of those who thus manage is comparatively small.

It is impossible to estimate with any degree of accuracy the amount of the burden upon the industry of this country by fraudulent building contracts, but it is safely assumed to be enormous.

5. Fraudulent purchase of lines.

Kindred to the corrupt letting of contracts is the wrong of purhasing lines, in extension of lines already owned, at prices far

above their real value, the excess being divided secretly between the "ring" managers of the two companies. Transactions of this sort are usually managed with such adroitness that detection is difficult, if not impossible; but the cases are neither few nor far to seek in which the evidence is convincing, that the terms conceded by purchasers must be accounted for either on the ground of dishonesty or lack of judgment.

6. Misappropriation of land grants.

The American government is the only one that has adopted the policy of making donations of the public lands of the country to aid in the construction of internal improvements looking to the industrial progress of the nation.

In view of the newness of the country, the deficiency of cash capital for the construction of expensive works, and the extent and variety of its material resources, which must otherwise long remain undeveloped, this policy may have appeared at the time to be a wise one. Indeed it has promoted the industrial prosperity of the

nation.

In the case of the trans-continental railways-the Union and the Central already in use, and the Northern and Southern now in construction-there was still another motive that influenced the government to bestow the immense grants they have received. The rebellion had taught us the danger of disintegration. The Atlantic and Pacific states were so removed that there was danger of an early political falling apart. There was need, therefore, that these great divisions of our common country be brought into closer relations. This was the argument.

Unhappily, experience has shown that there is another side to this question of government aid in the construction of railwaysthat land-grants, how much soever needed for the encouragement of improvements in the interest of industry and commerce, have by no means been an unmixed good-that, in view of the corruptions engendered, and the public demoralization they have produced, it is quite doubtful whether they have not been a curse rather than a benefit.

A full history of the land-grants to the several states would show a sad record of broken trusts and shameful frauds upon the public. We shall attempt nothing more than a brief reference to some of the grants made to this and neighboring states, by way of illustrating the misappropriations to which reference has been made.