that has been made on railroads in the United States, those most affected have known nothing. They have not only been indifferent, but have been participants oftentimes. They have neither understood nor appreciated the community of interest that existed. They looked on complacently. It was somebody else's bull that was being gored. In this they erred. Each one of them contributes from his own veins some portion of the blood that is being spilt; each one is robbed; each one is injured. They would discover this if they stopped to trace the close relation that carriers in our day sustain to every industry and calling; to trace cause and effect. The employes of railroads, and those engaged in the manufacture of railway supplies, and all the classes dependent upon them, are, above all others, especially and markedly concerned in the prosperity of railways. In order to enable a company to pay fair wages, to buy needed supplies, and make necessary improvements and additions, it must be accorded fair treatment and equitable rates.*

*No other capitalized industry, whether controlled by persons acting as individuals or in a corporate capacity, purchases so largely in the general markets of a country. These purchases give employment to vast numbers of people, directly and indirectly. Railroads are also the largest single employers of common and professional labor. Vast numbers of civil engineers and attorneys find steady or occasional employment in their service, and many eminent doctors and surgeons thus add largely to their income. Few indeed are the professional men who live along the lines of our railroads, who have not, at some period of their experience, found both profit and professional distinction in the, to them, fortuitous circumstances that called them, either temporarily or permanently, into the service of some railroad company.

The pocket of every individual is directly affected by any act of injustice to railroads. Herein lies the hope of everyone who wishes to see fair play. When the pocket is touched, we may be sure the conscience and intelligence of the individual will not long slumber. We may therefore, I think, safely leave the interests of railroads, so far as the community is concerned, to time and the reflections of mankind. Enlightenment is all that is required. When the public understand that the prosperity of railroads is necessary to their own prosperity; that it must be continuous, not spasmodical; that railroads must have an income sufficient to remunerate owners and meet necessary and reasonable expenses of operation and maintenance; that the confidence of those who own railroads must be respected, they will accord them protection and regard. When this is generally understood, the people will frown upon unjust and demagogical acts affecting railway property with the same unanimity that they frown upon open or covert attacks upon financial institutions, mercantile houses, manufactories, and other interests necessary to the comfort and prosperity of society. Heretofore, the community of interest has appeared so distant, has been so illy defined, as not to be recognized. Hence the indifference of all classes, even of railway employes, to attacks upon railways. The indifference has been like that of a man who stood calmly by and watched the burning of his own house, under the impression that it was the house of an enemy.

In addition to those I have particularized as

directly affected by the disbursements of railways, there is another and constantly growing class, for which this phase of the subject possesses a vital interest. I refer to the owners of railway bonds and stocks. They are more or less dependent for their support upon the return their investment renders. Attacks on railroads not only endanger the returns on such securities, but endanger the principal as well. They certainly affect the selling price. The owners of these securities embrace representatives from every branch of society-capitalists, business men, clergymen, clerks, trustees of estates, managers of savings banks, widows, children, sewing women, and others. A default of interest or a reduction of a dividend means, to them (or the bulk of them, at least), something more than an incident or inconvenience. It means a sacrifice of property to meet present necessities. It foretells future anxiety, destitution, want. All these people are concerned in putting a stop to demagogical warfare on railroads. The number of those directly interested in the welfare of railways can not be computed. They comprise a large element, at least onehalf, of the population; the balance are also concerned, but not so directly.

CHAPTER X V.

COST OF RAILROADS NOT FULLY CAPITALIZED-THE REASONS WHY-EFFECT ON RATES.

Rates are affected much more sensibly by the expense of working a railroad than by the cost of constructing it. But in so far as the latter operates, it is, in the United States at least, generally favorable to low rates. Cost is rarely, if ever, fully capitalized.

Many people regard a railway as fully completed when opened for business. To such, all stocks and bonds issued after the opening are thought to be fictitious. These people are as sincere as they are ignorant. Others, however, make such charges maliciously. Every dollar thus added to the capital of a railway, the latter represent as "water;" as having a reality only in the desire of the proprietor to make the community pay dividends thereon. They seek to make it appear that the rates of railroads are higher than necessary to afford a reasonable return on the capital actually invested. proof of this charge, they cite isolated instances.

As

Some excuse has been afforded for these charges in the general neglect of railway companies to emphasize in their accounts the distinction between construction and operating expenditures. Failure to capitalize construction expenditures when made,

or otherwise definitely locate them in the records and returns at the time, renders the public distrustful of claims subsequently put forward. When the owner seeks to capitalize his investments, the community has ceased to remember the benefits they conferred, and is loth to acknowledge its justice. Much of the misapprehension of the public, in regard to the cost of railroads and their capitalization, the companies themselves are thus responsible for. The neglect of owners to capitalize their investments at the time, or particularize them in their returns, does not presuppose wrong, nor has any followed, except to the owners.

When the construction charges of a railroad are embraced under the head of operating expenses, it is because it is necessary to build up the property in the confidence of owners and investors; to strengthen it against the time when its resources may be unduly taxed. It is a simple, practical way, that every business man and investor understands. Because of this necessity, many companies have not thought it necessary to separate construction from operating expenses in their reports. The returns of the Interstate Commerce Commission requiring construction charges to be particularized, will remedy this omission in the future.

Many weak companies have made it a practice systematically to include the cost of additions and improvements under the head of operating. If a railroad was unproductive or in discredit, its owners bolstered up its falling fortune by using net receipts to add to property account, without thinking of sub