shape of reduced rates, but is wasted in extravagances; in undue multiplication of employes, in excessive wages, in costly improvements, in luxurious appointments. Every dollar thus withheld from the owners of a property is frittered away in unnecessary improvements, or divided up among employes, or those who furnish supplies. The surplus of a railway adjusts itself naturally, whether much or little. The attempt to limit it is sentimental; is not based on correct principles or good sense. The owner should be encouraged to earn all he can. He will thus be led to economize, to operate prudently. Every dollar he gets we may be assured he will use wisely-will wisely re-invest. Every dollar improperly withheld from him, we may be sure will be wasted. An official for many years. connected with the government of England, referring to this subject, says: "The principle of limitation of dividend is in itself faulty. So long as the charge is not too high, the public have no interest in the reduction of dividend. Their interest is in the reduction of price, which is a totally different thing. The fallacy lies in supposing that what is taken from the shareholders necessarily goes into the pocket of the consumer. It does no such thing; it is probably wasted in extravagances, which the company have no motive whatever in reducing. Indeed, one of the worst consequences of the system is, that it takes away inducements to economy. It leads not only to extravagance in current expenses,

* Sir Thomas Farre

but to an extravagant waste of capital. In fact, in this parliamentary limitation of dividend and capital, we have gone on a perfectly wrong track, and have involved ourselves in a maze of absurdities."

Much dissatisfaction, at one time and another, has been expressed, both at home and abroad, in regard to the management of the railroads of the United States. Many of the criticisms have been justified. But the fact remains that the management of these roads has been the most effective in the world; they have been prudently constructed and economically worked; the rates they charge are abnormally low; their service reasonably safe and effective. This is now generally recognized. Reductions in rates have gone hand in hand with economizations in construction and operation. Similar conditions do not atted arbitrary reductions in rates; they manifest themselves in fewer and slower trains, in poorly maintained properties, in lack of general interest and concern. Americans do not want low rates on such terms. Their commercial prosperity and supremacy depend, not in curtailing facilities, but in constantly increasing them. These are to be obtained, not by harassing the owners of railroads, but by protecting and encouraging them. They have given us the lowest rates in the world. If left unhampered, we may be assured that they will further reduce them as opportunity offers. Nothing is to be gained by interference. Directly the contrary. The owners of railroads do not need any such spur.

In no instance has State ownership of railroads answered the expectation of those who advocated it

from a belief that rates would be cheapened and facilities bettered thereby. But nowhere, it is prob able, has public expectation been so grievously disappointed in this respect as in Germany: that country of exact ways, honest methods, and, comparatively, efficient public service. The German advocates of government ownership believed that the State would operate railways for the general good, that there would be low tariffs and better service. This expectation has not been realized. The State, because of the increasing financial importance of its railways, has gradually come to look upon them as a source of power and revenue, not as public institutions that should be administered so as to lessen the cost as much as possible of everything to the community. It is found that the State is quite as greedy as private owners were, while it is less economical and efficient; lacks the administrative genius they possessed. Its power enables it to defy public opinion, to refuse reductions of rates, to refuse facilities that are needed, to refuse to keep pace with the mechanical appliances of roads elsewhere. Frequent accidents make it apparent that no added security has been attained in this direction, while lack of facilities manifests a want of comprehension of the needs of trade that is distressing. For these reasons, State ownership in Germany has, from the standpoint of the people, proven a burden. From the government standpoint, however, it is esteemed a success, because it has added greatly to the power of the government.*

*I glean these facts in regard to German railroads from Die Nation, of July 25, 1891.

The question of government ownership and man. agement of railroads has not been much discussed in the United States. There seems to be a tacit understanding among practical men that it would not be desirable. The government itself has studiously discouraged such reference.*

* Government ownership of railways has been tried in a limited way in the United States. Fifty years ago the State of Illinois constructed a road at a cost of one million dollars, but disposed of it later for one hundred thousand dollars. Indiana had a similar experience. Georgia owns a railroad, but has found it expedient to lease it to private persons. Pennsylvania constructed a railroad from Philadelphia to Columbia, but subsequently sold it, for the reason that the commonwealth, on reflection, believed that transportation was to be regarded as a private enterprise, and not as a public function. Massachusetts acquired the Troy and Greenfield line, but found it expedient to part with it. Michigan, in its early history, constructed and operated railroads, but within a decade found it advisable to dispose of them, and the people of that State, by provision of their constitution, subsequently forbade the State from participation in such work.

CHAPTER XII.

GOVERNMENTAL CONTROL VERSUS PRIVATE CONTROL

WHEN GOVERNMENT CONTROL IS DESIRABLE
-WHEN UNDESIRABLE — ITS TENDENCIES.

Among other reasons assigned why governments should own and operate railroads, and one much applauded, is that it will take them out of the hands of rich men; that the latter already are too powerful. This is very much like advising the people on board a ship to throw the pilot overboard, because of his prominence and the prerogatives he exercises. The rich men, including the honestlystriving-to-be-rich, are the commercial pilots of a nation, sagacious, progressive, and conservative. They are not only its safest advisers, but the only ones who have ability to forecast the future. They alone have surplus capital to invest or the courage to make new improvements. A nation without such men to advise and lead, is like a school without a teacher. They represent its accumulated experience and wisdom. They alone know how to make money, how to preserve it, how to invest it. They are the storehouse of a nation, the reservoir from which the stream that animates its industries flows.

If I were asked when government ownership and management of railways would be advisable, I should reply, when the self-interest and experience of indi