Average Dividend Paid on Total Capital Stock.
It shows that, comparing the aggregate of all the railroad stocks of the country with the aggregate of all dividends paid, the holders of stock realized an average of 3.03% on their investment in 1876. In 1878 it had fallen to less than 2½%. From that date to 1885 the record makes a curve ending just above 2%. A slight rally is indicated for 1886 and 1887, but 1888 carries it down to 1.81%. The stock of many roads has paid no dividend whatever these later years, and the lines whose stock proves a good investment at par are very few.
Net Earnings and Mileage Built.
Net Earnings per Mile.—Although the studies of the financial question already made undoubtedly point out the true drift of railway business, yet one more comparison is worth making, both for its bearing on the question of profits and the study of the influence of profits on railway building. The upper one of the two charts given herewith is the record of net earnings per mile of road in operation, and is based on the reported net earnings less the interest-charge. It therefore shows the average number of dollars each mile had earned, after paying all expenses and the interest on its debt. This money, then, is the clear amount each mile could apply each year to pay the principal of its debt and the dividends on its capital stock, or to use for improvements, such as rolling stock, stations, better road-bed, new rails, or any other betterments which might seem advisable.
In 1876 this sum was $1,264; in 1880 it was $1,798, since which time it has suffered a serious decline, until in 1888 it was only $650. It is the story of the previous studies repeated, and needs no further reiteration.
Railway Building.—The larger chart given on [page 429], gives the history of railway building from 1831 to 1888. The lower chart of the two given together on [page 444], repeats the annual record from 1876, for the purpose of studying the influence of profits on the progress of building. The net earnings per mile show a reduction in 1877. The following year shows an increase of earnings, and the building responded somewhat feebly the same year. The next two years (1879 and 1880) show great gains in net earnings, and the impetus given thereby to building, carries its increase steadily forward even two years beyond the turning-point of the earnings. The decline is then mutual to 1885. In 1886 the advance in earnings was responded to by such a remarkable increase in building that the stimulus is to be sought for partly outside of the increase of earnings, and is undoubtedly found in the desire to occupy the newly opening fields of western settlement; for the records mark unparalleled activity among the great trunk lines of the West in pushing their advances in Dakota, Kansas, Nebraska, and Colorado, in 1886 and 1887. This is graphically shown in the map of 1889, when compared with that of 1880 (pages 432 and 433).
Ratios of Increase.—It is difficult to obtain a just impression of values when expressed by figures alone. It is easy when these values are expressed in lines or colors. The greater difficulties come in the effort to compare values expressed in differing terms. To read that the increase of population was 23,400,000 from 1870 to 1888; and that of railway mileage was 62,785 miles; and that of freight traffic was nearly 30,000,000,000 tons, in the same period, and then to attempt the comparison of increase without further aid, is a hopeless task.