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facilities are often given by the cities and towns giving securities for certain amounts on their Municipal Bonds. The cities in which it is to have its termini also agree to subscribe for portions of its share capital, and so do the inhabitants of the towns and villages through which it is to pass. This is a very important feature of the American railway system, inasmuch as it gives the inhabitants of each district which a railway traverses, a direct local and individual interest in the promotion and well-working of the line. Every one, in fact, is interested in contributing traffic to his own railway.
Not only the whole cost of maintaining the roads, but a very considerable proportion of the cost of their construction, has, in the case of the majority of the lines in America, been thrown upon revenue. I am afraid that the consequence of this has been injurious to public confidence in the American railways as commercial securities. Where lines are imperfectly constructed in the first instance—where they have to bear all the effects of climate and of wear and tear, whilst in indifferent condition, it is quite obvious that the cost of reparations, even in the very early stages of their working, must be a serious burden. And where all this is thrown, at once, on revenue, adequate dividends cannot be expected. . . .
Most of the American lines were originally made in short lengths, as lines of communication between different towns in the same State; and without regard to any general system of communication for the nation. It follows, that even in the cases of lines which are now united and brought under a single management, much diversity of construction, and a great want of unity of system is observable. One of the great deficiencies of the American railroad system is, in fact, the absence of a general policy of management. Scarcely any attempts are made to render the working of lines convenient to travellers, by working the trains of one company in conjunction with another; and this gives rise to complaints on the part of the public, which may, some day or other, be made to afford a ground of excuse for governmental interference. Nothing can be more desirable for the success of American railroad enterprises than well-considered general arrangements for the working and interchange of traffic.
Remarkable as has been the rapidity with which the American railroads have been constructed, and great as is the total mileage already made, the railroad accommodation of the United States is not to be regarded as by any means meeting the requirements of the country.
The rapid growth of the system has only been co-equal with the rapid growth of the population: the extent of mileage is attributable to the vast extent of territory settled, and the great distances between the seats of population.
In many parts of the States, indeed, the existing railways are quite insufficient. In the South, the system is very imperfectly developed. Whilst slaves existed, there was a determined hostility in the Southern States to the expansion of any general railway system, arising from the apprehension that it would be used for the escape of slaves. . . .
From West to East, also, the present railways are quite insufficient for the growing traffic. The lines of communication from the West by canal, &c., which existed previously to railways, have not been affected by their construction. The produce of the Western States has, in fact, increased faster than the means of transport, and additional facilities for the conveyance of goods are urgently required. It is of the utmost importance to the development of the West that no time should be lost in making this additional provision.
Sir S. Morton Peto, Resources and Prospects of America (New York, 1866), 255-265 passim.
163. Completion of the Pacific Railroad (1869)
BY HENRY VARNUM POOR
Poor established Poor's Manual of Railroads, and was for many years an authority on railroad interests. — Bibliography: Library of Leland Stanford Junior University, Catalogue of the Hopkins Railway Library, 73–86.
HE present year witnesses the completion of the most important enterprise of the kind ever executed in any country a line of railroad from the Missouri River across the Continent, and with connecting lines, from the Atlantic to Pacific Ocean, a distance of 3,250 miles. This great undertaking was commenced in the latter part of 1863, but no considerable amount of work was made till 1865, in which year only about 100 miles were constructed; in 1866, about 300 miles were opened; in 1867, about the same number; in 1868, about 800 miles; and in the present year, about 300: the whole distance from the Missouri to Sacramento being 1,800 miles. . . . Toward the construction of these roads the Government has, or will, issue its 6 per cent. currency bonds, to the amount of about $63,616,000, viz.: upon 300
miles at the rate of $48,000 per mile; upon 976 miles at the rate of $32,000 per mile; and upon 1,124 miles at the rate of $16,000 per mile. The annual interest upon the above sum will equal $3,816,960. These bonds are a second mortgage upon the respective lines, the several Companies being authorized to issue their own bonds to an amount equal to the Government subsidy, and to make them a first mortgage upon their roads.
The influence of these works . . . upon the commerce and welfare of the country, must be immense. A vast commerce, yet in its infancy, already exists between the two shores of the Continent. With the advantage and stimulus of the railroad this commerce must soon assume colossal proportions. Fronting the Pacific slope are hundreds of millions of people in Eastern Asia, who are rapidly taking part in the commerce of the world, and who will have the most intimate relations with our own Continent, which produces the gold and silver which at present forms one of the chief staples of commerce with them. It is hardly possible to estimate the magnitude of the commerce which will eventually exist between the Pacific coast and China and Japan. It is a commerce in which the world is to engage, and in which the Pacific Railroad is to be one of the most important instruments.
This road, too, will open up to settlement vast tracts of hitherto inaccessible territory, either fertile in soil, or rich in the more valuable minerals which are likely amply to compensate for the want of agricultural wealth. The main line will serve as the trunk from which lateral roads, constructed by private enterprise, will branch off in every direction. Already several important branches are in progress one to Denver, Colorado; one to Salt Lake City; and one to connect it with the Columbia River. These branches will open up wide sections and add largely to the traffic of the trunk line.
The construction of this, and of similar works, by the aid of the Federal Government, has excited great interest, and although at present public opinion seems to be against any further grants of money, there can be no doubt that Government has been largely the gainer by the aid it has extended to the Pacific Railroad and its branches. The public taxes equal, at the present time, ten dollars per head of our population. These works have been instrumental in adding more than 500,000 to our population, whose contributions to the National treasury have far exceeded the interest on the bonds issued to them. They have certainly been instrumental in securing the construction of an equal
extent of line which, but for them, would not have been built. Assuming the tonnage of these roads to equal 2,000 tons to the mile of road, the aggregate will be 9,800,000 tons, having a value of $490,000,000. The gain to the Federal Government from the creation of such an immense tonnage and value far exceeds the sums it has paid in aid of their construction, while the gain will, in a very short time, more than equal the principal sum of the bonds issued. Equally beneficent results will follow the construction of similar works. The people of the United States cannot afford to have extensive portions of their wide domain remain without means of access. In cases where such means have not been supplied by navigable water-courses they must be by a railway, or vast territories must remain, what they now are, deserts. The argument in favor of Government aid is as conclusive as it is simple. . .
There can be no doubt, if the railroads of the United States could have been secured in no other way, it would have been the soundest policy for Government to have assumed their construction, even without the expectation of realizing a dollar of direct income from them. The actual cost of these works have been about $1,200,000,000. The interest on this sum is $72,000,000. They have created a commerce worth $10,000,000,000 annually. Such a commerce has enabled the people to pay $400,000,000 into the public treasury with far greater ease than they could have paid $100,000,000 without them. No line of ordinary importance was ever constructed that did not, from the wealth it created, speedily repay its cost, although it may never have returned a dollar to its share or bondholders. If this be true of local and unimportant works, how much more so must it be of great lines, which will open vast sections of our public domain, now a desert, but abounding in all the elements of wealth.
While, therefore, there are but few cases which would justify the Government in extending aid to railroads, there are some in which its interposition becomes an imperative duty. In addition to the Central line now constructed, nothing could be more promotive of the general welfare than the opening, by its aid, both the Northern and Southern routes. Upon each of these are immense extents of territory, full of natural wealth, but which, without a railroad, are utterly beyond the reach of settlement or commerce. Aid extended to both lines, instead of weakening the public credit, would greatly strengthen it. Henry V. Poor, Manual of the Railroads of the United States, 1869-1870 (New York, 1869), xlvi-xlviii passim.
164. "A Condition, not a Theory" (1887)
BY PRESIDENT GROVER CLEVELAND
President Cleveland's annual message to Congress in December, 1887, from which this extract is taken, was devoted entirely to the question of surplus revenue, its causes and remedy. This unique presentation of the need of tariff reform as an issue of such paramount importance that, in a message devoted to the "state of the Union," no other subject was worthy of a place beside it, made tariff reform the issue in the presidential contest of the ensuing year. This was Cleveland's most famous message. -For Cleveland, see J. L. Whittle, Grover Cleveland, — Bibliography: Brookings and Ringwalt, Briefs for Debate, Nos. xxxvii-xliv; Bowker and Iles, Reader's Guide in Economic, Social, and Political Science, 54-64. — For other discussions of the tariff question, see Contemporaries, III, Nos. 78, 130; below, No. 166.
UR scheme of taxation, by means of which this needless surplus is taken from the people and put into the public treasury, consists of a tariff or duty levied upon importations from abroad, and internal-revenue taxes levied upon the consumption of tobacco and spirituous and malt liquors. It must be conceded that none of the things subjected to internal-revenue taxation are, strictly speaking, necessaries; there appears to be no just complaint of this taxation by the consumers of these articles, and there seems to be nothing so well able to bear the burden without hardship to any portion of the people.
But our present tariff laws, the vicious, inequitable, and illogical source of unnecessary taxation, ought to be at once revised and amended. These laws, as their primary and plain effect, raise the price to consumers of all articles imported and subject to duty by precisely the sum paid for such duties. Thus the amount of the duty measures the tax paid by those who purchase for use these imported articles. Many of these things, however, are raised or manufactured in our own country, and the duties now levied upon foreign goods and products are called protection to these home manufactures, because they render it possible for those of our people who are manufacturers to make these taxed articles and sell them for a price equal to that demanded for the imported goods that have paid customs duty. So it happens that while comparatively a few use the imported articles, millions of our people, who never use and never saw any of the foreign products, purchase and use things of the same kind made in this country, and pay therefor nearly or quite the same enhanced price which the duty adds to the imported articles. Those who buy imports pay the duty charged thereon into the public treasury, but the great majority of our citizens, who buy domestic articles of the same