us revelations which have since been made to
the public, as to the real cost of railway construction, justify the
belief that the estimated cost of $78,000 per mile for those roads is
far too high. Mr. Henry Poor, several years ago, estimated the average
cost of the roads of the United States at $30,000 a mile. Making
allowance on one hand for Mr. Poor's tendency to favor the railroad side
of the question, and on the other hand for the more expensive grades,
double tracks and better terminal facilities of these trunk lines,
$50,000 per mile may be considered a fair estimate of their average
cost. Upon this basis the total cost of the three lines in question
would amount to $116,450,000, and the excess of their capital over
actual cost would be the enormous sum of $261,000,000, or 325 per cent.
of their actual cost, and probably not less than 400 per cent. of the
original cost to their stock-and bondholders. The capital of these
companies has since been considerably increased, to enable their
managers to increase their dividends, and with it the tax levied upon
the commerce of the country.

These are only a few of the many instances of stock watering that might
be mentioned. In fact, there are to-day very few railroads in the United
States that are entirely free from it. It is a notorious fact that the
stock of a large number of railroad companies represents little or no
value, having either been sold at a mere nominal price or been donated
as a premium or bonus to those who purchased a large amount of the
company's bonds. In recommending, in his December, 1891, annual message,
Government aid for the Nicaragua Canal, President Harrison said: "But if
its bonds are to be marketed at heavy discounts and every bond sold is
to be accompanied by a gift of stock, as has come to be expected by
investors in such enterprises, the traffic will be seriously burdened to
pay interest and dividends." It is not difficult to surmise to what
enterprises the President referred. It has for many years been a
well-settled principle among railroad incorporators that no larger
assessments should be made upon the stockholders than is necessary to
float the company's bonds. A company, for instance, is organized with a
capital stock of, say, $1,000,000. Five per cent. of this sum, or
$50,000, is paid into defray preliminary expenses. The road is then
bonded for perhaps $2,000,000, but as the bonds are sold for only 80 per
cent. of their face value