Can there be any doubt that a corporation thus formed and managed will prove a financial success? If not a success, then we have great reason to distrust a private corporation; with far less advantages, and a larger capital, for doing the same business must prove a financial failure.
To demonstrate this point in a more practical manner, we will assume a proposition and verify this proposition by figures.
Judging from the present local business now done on the several roads—forming what is anticipated as the Tunnel line, and the testimony of eminent railroad men of the business that is sure to come to this great through route to the West—it is fair to assume that the whole will do a business that will average six millions a year for the first five years; twenty-five per cent. of the gross earnings of the leased roads, and property are reserved to provide for settlement of the conditions of the said leases; and as they are not guaranteed the payment of any amount beyond what their present business pays, can there be any doubt but what the twenty-five per cent. on the increased business will pay the six per cent. interest on the capital loaned to increase the facilities for extending the business over the line?
The Railroad Commissioners report that the average expenses of all the railroads of the Commonwealth is seventy-five per cent. of their gross earnings; but there is no doubt but what it can be proved that it cost less than seventy per cent. on the great trunk lines, and one of the oldest and most successful railroad managers assured me that this Tunnel line could be run for sixty per cent., but we will call it seventy per cent., which makes with the twenty-five per cent. ninety-five per cent., leaving five per cent. for net profit on the whole business of six millions, which is $300,000. What next? We have for the credit of the corporation or State, twenty-five per cent. of the gross earnings of the business done on the Troy and Greenfield Railroad and through the Tunnel. Calling the Tunnel twenty-three miles in length,—which it is conceded it should be called for what it saves in distance and grades,—and with the Troy and Greenfield Railroad, which is forty-four miles, we have one-third of the whole distance, and it is the judgment of practical railroad men that out of the six millions of business, two millions would pass over this division and through the Tunnel; and twenty-five per cent. on two millions is $500,000 income, which, added to the $300,000, gives a net income of $800,000 to the State, which is nearly six per cent. on thirteen and one-half millions, the cost of the Tunnel and Troy and Greenfield Railroad, with an additional expenditure of one and one-half millions needed to make this division of the route what it should be as a part of the great through line. In proportion as the business increases, in that same proportion will the profits increase, and when the business shall amount to ten millions, which I have no doubt it will in less than ten years, you create a fund over and above the interest on the whole cost that can be used for extinguishing the debt, purchasing the stock of the leased roads, as the value is fixed by the terms of the lease, or for the reduction of rates of fares and freights. If this proposition will not bear investigation, pray tell me how the stockholders of the consolidated corporations are to receive dividends on their watered stock, with increased cost of improvements of the line, and equipment for doing the same business.
THE ALLEGED DANGER OF POLITICAL CORRUPTION.
A chief argument against the system proposed is the danger of political corruption likely to follow the employment of a large number of men in public business.
Second.—It is alleged that the public management of any great public service is less efficient than private management.
The purpose of the minority of the Committee in proposing their plan, was to provide a corporate body removed as far as possible from political influence.
The State Trustees are appointed by the Governor and Council. They are appointed for five years. A single vacancy occurs each year. They hold nearly the same position in regard to the operatives employed ill the operation of the corporation, as directors of corporations, and no one ever heard of directors exerting any great political influence, particularly State directors. I doubt if any director of any railroad corporation in the State ever knew or thought to influence the political vote of an operative.
If they choose, the managers of any private corporation could exert a greater and more injurious political influence than these State trustees.