The history of the construction of American railroads covers a period of seventy years. The greater part of our mileage has been built since 1870. The following table and diagram illustrate the growth of our railway net during each decade:
It will be noted that the decades of most rapid railway development were the one from 1850 to 1860, following the discovery of gold in California, and the two between 1870 and 1890. We added 70,000 miles to our railway net between 1880 and 1890—a record that no other country has equalled. By 1892 we seem to have met the more urgent demands for new lines, and we are now annually building less than 2000 miles of new roads. The face value of the capital now invested in American railroads is $11,000,000,000. The number of persons employed in the railway service is 850,000.
THE RAILWAY CORPORATION
The agents that do the work of transportation by rail are the railway corporations. These "artificial persons" are created by the several States and intrusted with the performance of services of a public nature. In all the German states and to a large degree in many other European states, the governments themselves provide the means of transportation by rail; but in the United States the ownership and management of the railroads is rightly regarded to be a task of greater magnitude than the administrative department of our government is as yet able to cope with.
The growth of the railway corporations of the United States has been typical of the evolution of industrial organisation in this country. The early railway corporations were small. The Philadelphia, Wilmington and Baltimore Railroad, for instance, comprised the lines of four companies. In 1850 the road connecting Albany and Buffalo included the lines of seven companies. During the last fifty years most of the small companies have united to form the corporations which now operate our large railway systems. Though the last statistical report of the Interstate Commerce Commission—the one for the year ended June 30, 1896—contains financial reports from 1985 companies, there were only 782 "independent operating roads," the remainder of the companies being subsidiary organisations. This report shows that forty-four of these operating companies have an aggregate mileage that equals nearly six tenths of the total railway mileage of the United States. Indeed, the statistician to the Interstate Commerce Commission declared in 1894 that "over 83 per cent. of the business of the railways and 82 per cent. of their earnings fall under the control of less than forty associations of business men."
The Pennsylvania system affords a good concrete illustration of railway consolidation. That corporation, with its 9000 miles of road, was built up by the union of over 200 railroad companies, and it now comprises within its organisation 177 corporations—most, though not all, of which are subsidiary railroad companies. This one railway system does one seventh of the entire freight business performed by all the railroads of the United States and handles one eighth of all the passenger traffic.
THE FREIGHT SERVICE OF RAILROADS
The freight business of the railroads of the United States is much larger than their passenger service, the earnings from freight being nearly three times that from the passenger traffic. It is only in some of the New England States, the most densely populated parts of the United States, that the passenger receipts equal the freight earnings. The industrial conditions of the United States necessitate the movement of great quantities of bulky freight long distances. Our principal grain-fields are from 1000 to 1500 miles from the manufacturing districts and seaboard cities. Our richest iron deposits are in the States adjacent to Lake Superior hundreds of miles from the coal-beds of Illinois, Ohio, and Pennsylvania. Most of the cotton crop is moved long distances to reach the mills of New England and Great Britain. In fact, most of the products of our fields, forests, mines, and factories are marketed over wide areas. The average distance travelled by each ton of freight moved during the year ended June 30, 1896, was 124.47 miles; and, as the railroads carried 765,891,385 tons that year, the number of tons carried one mile was 95,328,360,278.