The road was from the very first successful, its traffic and income greatly exceeding the expectations of its managers. It should also be noted here that the cost of construction fell largely below the elaborate estimates made by several distinguished engineers. The company had expected to earn about £10,000 a year from passenger traffic, and the very first year the receipts from that source were £101,829. The gross annual receipts from freight had been estimated at £50,000, but were £80,000 in 1833. From the first the stockholders obtained a dividend of eight per cent., which soon rose to nine and to ten per cent. It has since been demonstrated that the revenues of new roads almost always exceed expectations.
The success of this railway stimulated railway enterprise throughout Europe and America. But while railroad projects created much enthusiasm on one side, they also met with bitter opposition on the other. The prejudice of the short-sighted and the avarice of those whose interests were threatened by a change in the mode of transportation used every weapon in their power against the proposed innovation. The arguments used were often most absurd. It was said that the smoke of the engine was injurious to both man and beast, and that the sparks escaping from it would set fire to the buildings along the line of road, the cows would be scared and would cease to give their milk, that horses would depreciate in value, and that their race would finally become extinct. Nor did many of the European governments favor the new system of transportation. Some openly opposed it as revolutionary and productive of infinitely more evil than good. The Austrian court and statesmen especially looked upon the new contrivance with undisguised distrust; and from their point of view this distrust was perhaps well founded. The rapid movement of the iron horse seemed to savor of dangerous radicalism, not to say revolution. When the Emperor finally, in 1836, concluded to sign a railroad charter, he based his action upon the dubious ground that "the thing cannot maintain itself, anyhow." It may be said that the history of the railroad is a conspicuous illustration of human short-sightedness. The Prussian Postmaster-General Von Nagler opposed the construction of a railroad between Berlin and Potsdam upon the ground that the passenger business between those two cities was not sufficient to keep even the stage-coach always full. It never occurred to the Postmaster-General, as it does not occur to many railroad men of to-day, that new and cheaper means of transportation increase the traffic. Even so wise a statesman as Thiers said when railroad construction was first agitated in France: "I do not see how railroads can compete with our stage-coaches." M. Thiers also opposed for years the building of a railroad between Paris and Versailles, declaring that on account of a railroad not one passenger more would make the journey between these two places.
But railroads came whether monarchical governments liked them or not. The success of the Liverpool and Manchester Railroad stimulated railroad building in England to a marvelous extent. Between 1830 and 1843 no less than seventy-one different companies were organized, representing about 2,100 miles. During the next four years 637 more roads, with an authorized length of 9,400 miles, were chartered. The construction of each new road required a special act of Parliament. These early roads averaged only fifteen to thirty miles in length. The competition which ensued soon led to the consolidation of roads, which continued until now the 14,000 miles of railway in England and Wales are practically owned by only a dozen companies. The total number of miles of railroad in Great Britain and Ireland is at present over 20,000.
The news of the opening of the first steam railway in England spread through Europe comparatively slowly. There were in those days but few newspapers printed on the continent, and these were read very sparingly. Railroad discussions were confined to merchants and manufacturers. Even after the success of the railroad was assured in England, a large number of people would not believe that, except between the largest cities, railroads on the continent could ever be profitable. But few railroads have ever been built which with honest, efficient and economical management would not pay a fair rate of interest on actual cost of construction. But in spite of this we have to this day a large number of otherwise well-informed people who question the financial success of every new railroad that is proposed.
In those days it occurred only to the most sagacious minds that with increased facilities commerce would expand. The missionaries of railroad enterprise found it therefore a difficult matter to interest capital in their projects. Railroad committees were in time formed in all cities of any importance, but, with capital cowardly, as usual, and governments distrustful, their task was often a thankless one. Railroad projects matured very slowly, and, when matured, were often wrecked by jealous and short-sighted governments. After the formation of a company five and even ten years would often pass away before a charter could be secured and the work of construction commenced. It is true, there were some laudable exceptions to this rule. Thus the governments of France and Belgium led the people in railroad construction; but upon the whole it can be said that the railroad forced itself by its intrinsic merit upon monarchical governments. It soon became evident even to the most stupid of autocratic ministries that it was a choice between the new mode of transportation and national atrophy.
The first German line was built between the cities of Nuremberg and Furth in 1835. It was only about four miles long, but the success of the experiment gave an impetus to railroad building in other parts of Germany. The Leipzig and Dresden line followed in 1837, and the Berlin-Potsdam and Brunswick-Wolfenbuttel lines in 1838. At the end of 1840 Germany had 360 miles of railroad. In that year Frederick William IV. succeeded to the throne of Prussia and inaugurated a new and exceedingly liberal railroad policy in his realm. In 1843 the Prussian government concluded to guarantee certain railroad companies a dividend of 3-1/2 per cent. on the capital actually invested. The state also secured considerable influence in the administration of the roads as well as in the right to assume the management of the various lines under certain conditions. The governments of the states of Southern Germany now commenced to build state roads, and their example was, chiefly for strategic reasons, soon imitated by Prussia. The system has since grown to over 26,000 miles, and no less than eighty-seven per cent. of the mileage is under state control. In all the states and provinces of the empire, except Bavaria, the rates for transportation of passengers and freight on all lines are controlled absolutely by the government.
In Austria, as has already been indicated, the building of railways was greatly discouraged by the government until 1836. In that year the Emperor rather reluctantly granted Baron Rothschild a charter for a railway from Vienna into the province of Galicia. Another charter was granted to a Baron Sina for a line from Vienna to Raab and Gloggnitz. The policy then adopted in Austria guaranteed to each railroad company a monopoly in its own district during the period for which the charter was granted. Soon after the state also commenced building lines, but the growth of the Austrian system was slow until after the war of 1866. An era of railroad speculation was then inaugurated, which ended with the crisis of 1873. The total length of the railroads of Austria-Hungary was 10,790 miles in 1875. At present that monarchy has nearly 16,400 miles of railway, 8,600 of which are owned by private companies.
It has been the policy of Austria to reduce rates, and several roads, especially those built in mountainous districts, have a certain revenue guaranteed to them by the government.
The zone system recently adopted in Hungary reduced both the passenger and freight rates of the government roads at least one-third, and this reduction has, contrary to expectation, greatly increased their net revenues.
In France railroad agitation commenced in 1832. A few short lines were opened, as those from Paris to St. Germain and to Versailles; but, owing to the conservatism of French capitalists, but little more was done until the state took the matter in hand. Thiers proposed a scheme by which the state was to furnish about half the cost while private companies were to build the lines and operate them. The Western Railroad, the first line of any great extent, was opened in 1837 between Paris and Rouen, and the Eastern Railroad was opened two years later. There were in 1859 six large companies operating their lines with profit, but, to induce them to build additional lines that were needed, the state guaranteed the interest on the capital required to make their improvements. In 1884 there were about 17,000 miles of railroad in operation. To bring about the construction of another 7,000 miles of road, and to thus complete the railroad system of the country, the government now guaranteed each company a dividend equal to the average of recent years, but not to exceed seven per cent. It is doubtful whether this system of monopoly has in all respects been favorable to the encouragement of enterprise in the railroad circles of France. In granting charters the state has, however, reserved valuable rights which at a future period it will have an opportunity to assert for the public benefit. The railroad companies have generally a lease for ninety-nine years, and their lines become the property of the state after the expiration of that period. To extinguish the bonded debt and stock, a sinking fund has been created, from which a certain portion of the shares and outstanding bonds is annually paid off and canceled. The government requires of the companies the free carriage of the mails and the transportation of military and other employes at very low rates. Besides this the state levies upon the traffic of the railroads a duty of ten per cent. of their gross earnings from passengers and from all goods carried by fast trains. These facts are usually overlooked by our railroad men when they indulge in making comparisons between the railroad rates of this country and those of France. The French Republic had 13,400 miles of road in 1875, and 22,600 in 1890. When all of the proposed lines are completed, the total mileage of that country will be over 25,000.