A still greater expense is involved in the maintenance of freight and passenger offices off the respective lines, for the purpose of securing a portion of the competitive traffic. In this way vast sums are expended in the payment of rents, and the salaries of hordes of agents, solicitors, clerks, etc., etc. Taking the known expenditures, for this purpose, of a given mileage, it is estimated that the aggregate is not less than $15,000,000 yearly, all of which is a tax upon the public, that would be saved did the government operate the railways.
Under government control, discriminations against localities would cease, whereas now localities are discriminated against because managers are interested in real estate elsewhere, or are interested in diverting traffic in certain directions; again, under corporate management, it is for the interest of the company to haul a commodity as far as possible over its own lines (with the government owning all the lines this motive will lose its force), and thus traffic is forced into unnatural channels. For instance: much of the grain from Kansas should find its way to foreign markets via the short route to the Gulf, the distance to tide water by this route being less than half what it is to the Atlantic, yet so opposed to this natural route are the interests of the majority of the corporations controlling the traffic associations, which now dictate to the people what routes their traffic shall take, that the rates to the Gulf are kept so high as to force the traffic to the Lakes and to the Atlantic; and as all the railways leading to the Gulf have lines running eastward, the much lauded corporate competition fails to help out the citizens of Kansas, who are subjected to the domination of the new tyrant denominated a “traffic association.” With the nation operating the railways, all this would be changed, and localities favorably located would be able to reap the benefits which such location should give, and should such a condition ever obtain, the farmers of western Iowa will not then ship corn to the drouth-stricken portion of Kansas for fifteen cents per one hundred pounds, while the Kansas corn grower, living within seventy-five miles of the same market, is charged ten cents per one hundred pounds for a haul one eighth as long. By such rates the railways force the hauling of corn from Iowa to western Kansas, and then force the corn grower of central Kansas to send his corn eastward, the result being two long hauls, where one short one would suffice; but then the corporations would have absorbed less of the substance of the people.
Another, and an incalculable benefit, which would result from national ownership, would be the relief of State and national legislation from the pressure and corrupting practices of railway corporations which constitute one of the greatest dangers to which Republicaninstitutions can be subjected. This alone renders the nationalization of the railways most desirable, and at the same time such nationalization would have the effect of emancipating a large part of the press from a galling thraldom to the corporations.
With the nation operating the railways, we may have some hope that rates will be reduced by some system resembling the Hungarian zone which has had the effect of diminishing local passenger rates about forty per cent., resulting in such an increase of traffic as to greatly increase the revenues of the roads; the average of rates by ordinary third-class trains being about three fourths of a cent per mile, and one and a half cents per mile for first-class express trains.
In Victoria, the parcel or express business is done by the government railways, and the rates are not one half what they are with us when farmed out to a second lot of corporations. Space does not permit the discussion or even the statement of the many salutary phases of government control, as developed in the various countries of Europe, and it is not necessary, as there are abundant reasons to be found in conditions existing at home, for making the proposed change. By far the most menacing feature of continued corporate ownership is the power over the money markets which it places in the hands of unscrupulous men, any half dozen of whom can, at such a time as that following the failure of the Barings, destroy the welfare of millions, and plunge the country into all the horrors of a money panic. Whether it be true or not, there are many who believe that a small coterie, who had information before the public of the condition of Baring Brothers and that a block of many millions of American railway securities held by that house were being (or soon would be) pressed upon the market, entered into a conspiracy for the purpose of locking up money and thereby depressing prices in order to secure, at low cost, the control of certain coveted railways. The railways were secured, and there is not much doubt that they had been lying in wait for such a critical condition of the money markets to accomplish this purpose, which still further enhances their power for evil. With the railways nationalized, not only would there be no temptation for such nefarious operations, but the power of such men over values would be greatly lessened, if not wholly destroyed, as there would be no railway shares for them to play fast and loose with, and as money, instead of being tied up in loans on chromos representing little but water, would seek investment in bona fide enterprises, their operations would have little influence, and would certainly have no such baleful power over the industries of the country, as their ability to affect the value of railway shares—on which such immense sums are now loaned on call—gives them, they being able by locking up a few millions when the money market is in the condition, which obtained at the time of the Baring collapse, to force the calling of loans and the slaughtering of vast numbers of the shares, carrying the control of the railways they covet. If only for the purpose of divesting “The dangerous wealthy classes” of this frightful power, national ownership would be worth many times its cost, and without such ownership a score of manipulators are soon likely to be complete masters of the republic and all its industrial interests; hence, the question reverts to the form stated in the opening of this paper: Shall the nation accept as a master a political party that may be dislodged by the use of the ballot, or shall the republic be dominated by a master in the form of a score of unscrupulous Goulds, Vanderbilts, and Huntingtons, who cannot be dislodged, and who never die?
Assuming that $30,000 per mile is the maximum cost of existing railways—as is shown in The Arena for February,—and that there are 160,000 miles, it would give a total valuation of $4,800,000,000; but that there may be no complaint that the nation is dealing unfairly with the owners of much water, it will be well to add twenty-five per cent. to what will be found to be the outside value of the railways when condemned under the law of eminent domain, and assuming that $6,000,000,000 of three per cent. bonds are issued in order to make payment therefor, and it involves an interest charge of $180,000,000, to which add $670,000,000, as the cost of maintenance and operation, and $50,000,000 as a sinking fund, and we have a total annual cost, for railway service, of $900,000,000 as against a present cost of $1,050,000,000 ($950,000,000 from traffic earnings, and $85,000,000 from other sources of railway revenue) resulting in a net annual saving to the public of $150,000,000 to which must be added the other various savings which it has been estimated would result from government control, and which, for the convenience of the reader, are here recapitulated, namely:—
| Saving from consolidation of depots and staffs, | $20,000,000 |
| Saving from exclusive use of shortest routes, | 25,000,000 |
| Saving in attorneys’ salaries and legal expenses, | 12,000,000 |
| Saving from the abrogation of the pass evil, | 30,000,000 |
| Saving from the abrogation of the commission system, | 20,000,000 |
| Saving by dispensing with high priced managers and staffs, | 4,000,000 |
| Saving by disbanding traffic associations, | 4,000,000 |
| Saving by dispensing with presidents, etc., | 25,000,000 |
| Saying by abolishing (all but local) offices, solicitors, etc., | 15,000,000 |
| Saving of five-sevenths of the advertising account, | 5,000,000 |
| —————— | |
| Total savings by reason of better administration, | $160,000,000 |
It would appear that after yearly setting aside $50,000,000 as a sinking fund, that there are the best of reasons for believing that the cost of the railway service would be some $310,000,000 less than under corporate management.
That $6,000,000,000 is much more than it would cost to duplicate existing railways, will not be questioned by the disinterested familiar with late reductions in the cost of construction, and that such a valuation is excessive is manifest from the fact that it is much more than the market value of all the railway bonds and shares in existence.
Mr. John P. Meany, in the Railway Review of February 7, 1891, says: “It is safe to assume that the market valuation of the entire $4,500,000,000 of railroad stock in existence, would not average more than $30 per share, or, say $1,350,000,000 in all,” and in his Sun article he states that fully $500,000,000 of this stock is duplicated, so that the “live” stock outstanding is really but $4,000,000,000, which at $30 per share would have an aggregate value of $1,200,000,000. Mr. Meany also states that there are duplications of bond issues amounting to some $300,000,000 leaving the live outstanding bonds at $4,500,000,000 and many corporations failing to pay interest, some issues are selling as low as 12 per cent. of par, making it safe to call the average market value of bonds 90 per cent. of their face value, and their aggregate value would be $4,050,000,000, to which add value of “live” capital stock, $1,200,000,000, and the total market value of bonds and stock is, $5,250,000,000, being at the rate of $32,800 per mile for the 160,000 miles in operation.