MODE OF CONSTRUCTION. By far the greater number of our roads in progress are in the interior of the country-in our agricultural districts, that do not possess an amount of accumulated capital equal to their cost. A business adequate to the support of a railroad may exist without the means to construct one. The construction of a railroad, too, creates opportunities for investment which promise a much greater return than the stock in such a work. While, therefore, our people are disposed to make every reasonable sacrifice to secure a railroad, they prefer, and in fact they find it more for their interest, to borrow a portion of the amount required, than to invest the whole means directly in the project. They can better afford to secure the co-operation of foreign capital, by offering high premiums for its use, than to embarrass themselves by making a permanent investment of too large a proportion of their own immediate means. These facts sufficiently explain the reasons why the borrowing of a considerable portion of the cost of our roads has become so universal a rule. It is only by the co-operation of capitalists residing at a distance, and having no interest in the collateral advantages due to railroads, that the great majority of our works could have been constructed. In the outset, money was furnished slowly and cautiously, and then only upon the most unquestioned security. As the result began to demonstrate the safety and productiveness of these investments, capital was more freely afforded, and became less exacting in its conditions. The result has been, that a confidence in the safety of our railroads, as investments of capital, has become general, not only in this country, but in Europe; and companies whose means and prospective advantages entitle them to credit, find no difficulty in borrowing a reasonable sum upon the security of their roads, with which to complete them. The amount usually borrowed for our roads in progress averages from $5,000 to $10,000 per mile. The general custom requires that a sum equal to the one sought to be borrowed shall be first paid in, or secured for construction. A road that will cost $20,000 per mile is considered as sufficient security for a loan of $10,000 per mile; and as the cost of new works will not much exceed the former sum, the latter is not, as a general rule, considered so large as to create distrust as to the safety of the investment, on account of the magnitude of the loan. This rule, which establishes the proportions to be supplied by those engaged in the construction, and capitalists, is well calculated to promote the best advantage of both parties. The fact that the people on the line of a contemplated road are willing to furnish one-half of the means requisite for construction, and to pledge this for an equal sum to complete the road, is sufficient evidence that in the opinion of such people, the construction of such work is justified by a prospective business. The interest they have in it also is a sufficient guarantee that its affairs will be carefully and prudently managed. The large amount paid in and at stake divests the project of all speculative features. Where the advantages and success are merely contingent, prudent persons do not usually hazard large sums. The lender has, therefore, all the guarantees of safety, both from the character of the project and its prospective income and proper management. It is on this account that the credits furnished by municipal bodies for the construction of railroads should be resorted to only in extreme cases. Individuals making up the aggregate community may be induced to vote the credits of the latter in aid of a project, when they by no means could be induced to venture their own capital in its success. In this manner projects may be set afoot the consummation of which are not justified by these commercial and pecuniary considerations, which are the only safe guides of action in such cases. Railroads are purely commercial enterprises, and their construction should be made to depend upon the same rules of conduct that control the building of ships, or the erection of manufacturing establishments. The safety of the securities offered to the public will be readily seen from a comparison of the earnings of our railroads with the sum necessary to meet the interest on the loans. Allowing the sum borrowed to equal $10,000 per mile, it would require from $600 to $700, according to the rates, annually, to meet the accruing interest. But the net earnings of our new projects more than treble this amount, leaving for dividends on stock a sum equal to double that paid on loans. That such will be the result, as far as our new and less expensive works are concerned, for some years to come, till a greater abundance of money shall have lowered the rates of interest, and the competition of new works shall have reduced the rates charged for persons and property, there cannot be a doubt. Below is given a table of the gross and net earnings of several of our new roads, and of the same class as those that are now coming into market for money: Cost of Railroads in the United States. With the exception of those in the States of Massachusetts and New York, it is difficult to get at the exact cost of our roads. The companies within the States named are required by law to return to their legislatures the cost of their respective lines. To ascertain the cost of other roads, resort must be had to the published statements of their affairs. These statements, though generally to be relied upon, are uniform neither in their character nor in the time at which they make their appearance; and some of our largest companies make no exhibit f their affairs save to their own stockholders. It may be here stated that it is in the power of the general government to supply the lack of information which at present exists in reference to our railroads, by requiring all companies with whom contracts are made for transportation of the mails to return to the Post Office Department full and accurate statements of their cost, income, debts, expenses, &c., &c. Such returns, made in a proper manner, would be exceedingly advantageous in many points of view. They would show annually the extent to which these works are carried, their cost, income, expenditures, mode of conducting the various works, &c., &c. The returns of their business operations would afford a great amount of useful information, in reference to the internal commerce of the country, which could be obtained from no other sources. The great lack of correct statistical knowledge upon this subject is felt and acknowledged by all; and there seems to be no other mode of obtaining this correctly than by the one pointed out. The returns, too, by collecting all the existing information upon the subject of railroad management, could not fail to exert the most beneficial influence, by making public whatever is valuable in the experience of each company. The cost of our roads depends very much upon the character of the country through which they are built. Those in the New England States are the most expensive, not only from the greater difficulty of construction, but from the greater cost of right of way, land, &c. The general surface of the country is unfavorable. It becomes better adapted to these works on going south, though the roads of all the eastern States, as far south as Maryland, cost much higher, per mile, than those of the southern or western States. The difference in the cost between the roads of the two sections of the country is confined principally to the items of grading, bridging, and lands. In the States of Indiana and Illinois, the cost of these items, upon long and important lines, will not often exceed $5,000 per mile; while in the eastern States the average for the same is four or five times greater. The Mississippi valley consists of an immense plain, presenting but a few obstacles to the easy construction of a railroad. The same may be said of the greater portion of the southern Atlantic and Gulf States. Throughout the country, except in the eastern States, the lands required for right of way, depots, and stations, are either given gratuitously, or are had at very low cost; the owners being sufficiently remunerated in the incidental advantages resulting from these works. The average cost of the roads of the States of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, and Maryland is not far from $40,000 per mile. The cost of those of the States not enumerated is not far from $20,000 per mile. The average for the whole country will not exceed $30,000 per mile, including full equipment, and everything necessary for their efficient operation. This would give for one road, completed and in progress, the following as the total cost: Roads completed, 12,821 miles, at $30,000 per mile.. Total.... $384,630,000 252,560,000 637,190,000 It is believed that an extent of line equal to the whole number of miles now in operation will be completed within three years from the present time, at which period the cost of our roads will equal the above sum. The probable extent to which the construction of railroads will be ultimately increased in this country, is an interesting subject of speculation. At the present time they are very unequally distributed. In Massachusetts, for instance, we find one mile of railroad to every six square miles of territory. The same ratio applied to the area in which these works are in progress, would give 183,000 miles of railroads against 26,000 miles, which is not far from the extent of line in operation and progress at the present time. It would give to the State of Ohio nearly 7,000 miles, where there are not one-half of this number either in operation, in progress, or contemplated. It would give to Illinois 11,000 miles, and nearly the same amount to Virginia. Both of these States have not more than 4,000 miles in operation and progress. There can be no reason why the State of Ohio should not, in time, and in fact as soon as they can be reasonably constructed, have the same number of miles of railroad, in proportion to its area, as Massachusetts; nor why the western States of Michigan, Indiana, Illinois, Wisconsin, Iowa, and Missouri should not have the same number of miles of railroad, their areas compared, as Ohio. They are equally well adapted to these works, and the same necessity exists for their construction in the former as in the latter. The only element wanting to secure a similar result is time, which will supply population, and develop their resources to an equal extent. There is no reason why railroads should not keep pace with the progress of the States in population and wealth, nor why, when they have reached the present position of Ohio, they should not boast an equal number of miles of railroad. The area of the States above named is equal to 400,000 squaremiles. To supply these with railroads, to the same extent that we now find in Oliio, including those in progress, would require 26,000 miles of road. The same ratio that we find in Massachusetts would require more than 66,000 miles. Now, no one acquainted with the resources and wants of the southwestern States, and the character of their people, can doubt that, in time, an equal area will call for an equal extent of lines, and that the construction of these roads will proceed with equal pace with their population. The probable rapid expansion of these works is well shown by a comparison of Georgia with other southern States. In the former there are about one thousand miles of road in operation, all of which are lu- cratively employed. Now, the States of North Carolina, Alabama, Mississippi, Louisiana, Tennessee, and Kentucky will all compare favorably with Georgia in population, in wealth, in extent, and in natural resources. Railroads are just as much needed by the former as by the latter. They would cost no more per mile. They would pay equally well, and would accomplish as much in improving the condition of their r people. But the aggregate length of line of all these States is not equal to the extent of railroad which we find in Georgia. Here, then, is a field: where at least five thousand miles of railroad are shown to be needed, for no one can doubt that railroads in the States named will be equally as useful and productive as those of Georgia. But even Georgia is very poorly supplied with railroad facilities. Not one-half of her territory, and hardly one-half of her population, are within reach of them. A very large proportion of her products are wagoned, or sent down her rivers at great expense, to inconvenient markets. Her area is at least eight times greater than that of Massachusetts. The latter State has one mile of railroad to every six square miles of territory. The same ratio would give to Georgia 9,600 miles of railroad, equalling two-thirds the whole extent of lines in the United States, and to the States named, including Georgia, (embracing an area of 390,000 square miles,) more than 65,000 miles of railroad. There can be no doubt that, in the States named, ten thousand miles of railroad are needed to meet the immediate commercial wants of the people, and that this extent of road would find lucrative employment. Tabular statement showing the number of miles of railroad in progress and in operation in the United States. |