Cost of a Single-track Road—Financing—Securing a Charter—Survey-work and its Dangers—Grades—Construction—Track-laying.
The railroad has its beginning in the inspiration and in the imagination of men. Perchance a great tract of country, rich in possibilities, stands undeveloped for lack of transportation facilities. The living arm of the railroad will bring to it both strength and growth. It will bring to it the materials, the men, and the machinery needed for its development. It will take from it its products seeking markets in communities already established.
In that way the first railroads began, reaching their arms carefully in from the Atlantic and the navigable rivers and bays that emptied into it. In the beginning there was hardly any inland country. All the important towns were spread along the sea-coast or along those same navigable tributaries, and it was sorry shrift for any community that did not possess a wharf to which vessels of considerable tonnage might attain. Where such communities did not possess natural water-ways, they sought to obtain artificial ones; and the result was the extraordinary impetus that was given to the building of canals during the first half of the nineteenth century—a page of American industrial history that has been told in another chapter.
It was found quite impossible to handle bulky freight economically by wagon, no matter how romantic the turnpike might be for passenger traffic in the old-time coaches. The canal was so much better as a carrier that it was hailed with acclaim, and waxed powerful. In the height of its power it laughed at the puny efforts of the railroad, and then, as you have seen, sought by every possible means to throttle the growth of the steel highway. Within eighty years it was powerless, and the railroad was conqueror. There were hundreds of miles of abandoned canal within the country, many of them being converted into roadbeds of railroads; and the water-highway, with its slow transit and its utter helplessness during the frozen months of the year, was not able to exist except where quantities of the coarsest sort of freight were to be moved.
Without railroads, the United States to-day would, in all probability, not be radically different from the United States of a hundred years ago. All the large towns and cities would still be clustered upon the coast and waterways, and back of them would still rest many, many square miles of undeveloped country; the nation would have remained a sprawling, helpless thing, weakened by its very size, and subject both to internal conflict and to attacks of foreign invaders. It has been repeatedly said that if there had been a through railroad development in the South during the fifties, there would have been no Civil War. France for five hundred years before the signing of our Declaration, was a civilized and progressive nation. Yet century after century passed without her inland towns showing material change; and her seaports, lacking the impetus of interior growth, remained quiescent. Such a metropolis as Marseilles is to-day, became possible only when the railroad made this seaport the south gate of a mightily developing nation.
Let us assume that we are about to build a railroad. If we are going to strike our road in from some existing line or some accessible port into virgin country, we may hope for land or money grants from the State, county, town, or city Government. That is a faint hope, however, in these piping days of the twentieth century. So much scandal once attached itself to these grants that they have become all but obsolete. We shall have to fall back upon the individual enterprise and help of the persons who are to benefit by the coming of the railroad. They may be folk who simply regard our project as a good investment, and place their money in it with hopes of a fair return.
Even if we are not going into virgin territory to give whole townships and counties their first sight of the locomotive, but are going to strike into a community already provided with railroad facilities but seemingly offering fair opportunity for profit in a competitive traffic, we shall find capital ready to stand back of us. A railroad will cost much money, the mere cost of single-track construction generally running far in excess of $35,000 a mile; and it should have resources, particularly in a highly competitive territory, to enable it to carry on a losing fight at the first.
For the money it receives it will issue securities, upon incorporation and legal organization, almost invariably in the form of capital stock and of mortgage-bonds. The stock will probably be held by the men who wish to control the construction and the operation of the line; the bonds will be issued to those persons who invest their money in it, either for profit or as an aid to the community it seeks to enter. The bonds are, in almost all cases, the preferable security. They pay a guaranteed interest at a certain rate, and at the end of a designated term of years they are redeemable at face value, in cash or in the capital stock of the company. There are other forms of loan obligations which the railroad issues—debenture bonds, second-mortgage bonds, short-term notes, and the like. To enter upon a description of these would mean a detour into the devious highways and byways of railroad finance—an excursion which we have no desire to make in this book.
In building our line we will issue as few bonds in proportion to our stock as will make our company fairly stable in organization, and its proposition attractive to investors. For we shall have to pay our interest coupons upon the bonds from the beginning. We can begin even moderate dividends upon our stock after our enterprise has entered upon fair sailing. The all-important initial problem of financing having been at least partly settled, we will go before the Legislature and secure a charter for our road. In these modern days we shall probably have also to make application to some State railroad or public utility commission. It will consider our case with great care, granting hearings so that we may state our plans, and that folk living in the territory which we are about to tap may urge the necessity of our coming, and that rival railroads or other opponents may state their objections. After the entire evidence has been sifted down and weighed in truly judicial fashion, we may hope for word to “go ahead,” from the official commission, which, though it assumes none of our risk of loss in projecting the line, will gratuitously assume many of the details of its management.