MR. MIDGLEY'S ARTICLE.-CONTINUED.

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matters not how wretched their failures, renewed attempts are made. Experience, however, has developed considerations that must be admitted in determining what is a reasonable rate. Let us note a few:

Every railroad undertaking involves two sorts of expenditures; investments, which includes the cost of the roadway, rolling stock, depots, etc.; and expenditures, which cover outlays for labor and material consumed in the daily service of transportation or in maintaining the property. No one will deny that the charges should be made to yield a remunerative return upon the investment over and above all working and incidental expenses. Ordinary foresight dictates that the receipts should so far exceed expenses as to induce capital to make the necessary investments. This excess is commonly designated as a certain per centage on the investment, a fixed interest on the borrowed principal, and dividends, fluctuating with prosperity, on the contributed part, represented by shares. No other result is satisfactory, either to the owners or patrons of the road. But the benefits of a good, well-managed railroad accrue more directly to the community than to the stockholders.

Every railroad is worth what it would cost to replace it, and upon that valuation the company are entitled to a fair return. In sparsely settled localities this policy might establish rates deemed exorbitant. But is it not a fact, too often lost sight of, that it costs just as much to construct a railway across a new territory as it does through a densely populated district? It may cost more. The iron, material, and supplies have to be transported so much further; and the capital which furnished them commands interest upon its outlay as imperatively as if expended where the return would be surer and more speedy. In the nature of things, therefore, the rates exacted must be gauged to yield the

necessary return. So long as the charges are such as to render transportation by rail preferable to any other mode, they are reasonable. If any one is assured that existing rates are too high, the liberty to build a rival line is free to all. There is no monopoly in this country of the right to construct railways.

The actual cost of operating the road should be ascertained. Experts only could perform the task. Novices would not think of one-half the items of expense. This statement the history of railway legislation confirms.

Has American legislation ever considered the question of speed while framing pro rata and non-discriminating laws? Yet, it is a well-established law of railroad economics that speed is the essence of expense. The recognized rule is, that the cost of transportation increases as the square of the velocity. Thus, a speed of ten miles per hour would be equal to one hundred, twenty to four hundred, and fifty to two thousand five hundred. In all enactments hitherto perpetrated or threatened, this startling difference in the cost of moving trains, being as $16 to $4 between an express and an ordinary accommodation train, has been wholly ignored, doubtless never thought of.

This principle was recognized by the British Parliament when, in 1844, being urged to protect the poorest classes, they required all railway companies, one-third of whose gross earnings were derived from passengers, to run one train daily, each way, upon which passengers should be carried at 1d. per mile, at a rate not less than twelve miles an hour. The slow rate for third-class trains is still maintained, although express trains average forty miles an hour, including stops. In addition to this just recognition of speed as one item of expense, Parliament excepted the earnings of these slow trains from taxation.

MR. MIDGLEY'S ARTICLE.

-CONTINUED.

425

Motive power is another leading item of expense. This is largely dependent upon the character of the route. If fuel is abundant, the operating expenses are correspondingly reduced. But if, as in the case of the North-western and Milwaukee & St. Paul, there is scarcely a coal mine or a forest within reach of their far-extending systems, their cost per mile run is considerably increased, and should be taken into account in adjusting rates. Other roads again have heavy grades, up which engines of the largest capacity can not haul more than ten or fifteen cars at a time, while the same engines on other lines could easily draw fifty or sixty car loads.

A still more apparent consideration is, that the facilities. provided are only partially used. The current of eastward trade largely exceeds that running in the opposite direction, and it sets most heavily eastward when the return flow is the slightest, and vice versa. Empty cars, therefore, abound each way. This disproportion is so great that, upon a leading trunk line, of the track and rolling stock there is frequently employed about sixty per cent. in one direction, and twenty per cent. in the opposite. The waste of expenditure becomes an extra charge upon the freight actually carried; and the drawback will continue until wise measures shall tend more equally to diffuse the trade currents and balance their volume in opposite directions. For, it should be borne in mind that, whether a freight engine runs with a full or a partial load, the items of expense are the same.

Expenses are lessened when the volume of freight increases. This is a fundamental principle of cheap transportation. To forward a single letter, by special messenger, to California would cost hundreds of dollars; but, deposited in the government mails, three cents pays for its transportation. This cheap service is possible, because simultaneously

a like service is performed for the thousands of other patrons. Freight transportation is subject to the same law. Is any one stupid enough to murmur because the government carries one man's letter to San Francisco for three cents, while another is charged as much for having a letter carried four or five miles? What matters it how cheap another man's letter is carried so long as mine is taken at a reasonable rate? And if the rule holds good in regard to letters, why should it not embrace parcels and packages, etc.? The principle is so plain, when applied to postal service, that no word of complaint against its discrimination is ever heard; but when applied to property transportation, which is subject to precisely the same law, what a fearful commotion is raised!

CHAPTER XXXVI.

CONCERNING RATES AND GOVERNMENTAL RAIL

WAYS.

CONTINUATION OF CONTRIBUTED ARTICLE, BY J. W. MIDGLEY, ESQ., CHICAGO.

Much as we claim to be in advance of the "old country," in the recognition of the fundamental principles of cheap transportation, we are still far behind. This deplorable condition is begotten of that selfish determination not to let others get the "start." The grievous bubbles which stump orators and the country press are inflating are not novelties. They were pricked years ago in Europe. Inequality of charges is one of them. Parliament disposed of it in the Railway Clauses Consolidation Act, by declaring it "expedient that the companies should be enabled to vary the tolls upon the railways so as to accommodate them to the circumstances of the traffic," and pronounced it lawful for the companies "from time to time to alter or vary the tolls, either upon the whole or any particular portions of their railways, as they shall think fit." The people still harboring the belief that unequal rates were unreasonable, a Royal Commission, comprising Lord Stanley, Robt. Lowe, Chancellor of the Exchequer, Sir Rowland Hill, Postmaster-General, Mr. Ayrton, Commissioner of Public Works, and ten other influ