naires
within the last twenty years. It is no exaggeration to
characterize these transactions as direct frauds upon the
public. They may not be such in a sense recognized by the
law, for legislation has strangely neglected to provide
against their perpetration; but morally they are nothing
less, for they are essentially deceptive and unjust, and
involve an oppressive taxation of the public at large for
the benefit of a few individuals who have given no
equivalent for what they get. The result of this system is
that, on the average, the railroads of the country are
capitalized at probably fully 50 per cent. in excess of
their actual cost. The managers of the roads claim the right
to earn dividends upon this fictitious capital, and it is
their constant effort to accomplish that object. So far as
they succeed they exercise an utterly unjust taxation upon
the public by exacting a compensation in excess of a fair
return upon the capital actually invested. This unjust
exaction amounts to a direct charge and burden on the trade
of the country which limits the ability of the American
producer and merchant to compete with those of foreign
nations and checks the development of our vast natural
resources. In a country of 'magnificent distances' like ours
the cost of transportation is one of the foremost factors
affecting the capacity for progress; and the artificial
enhancement of freight and passenger rates due to this false
capitalization has been a far more serious bar to our
material development than public opinion has yet realized.
The hundreds of millions of wealth so suddenly accumulated
by our railroad monarchs is the measure of this iniquitous
taxation, this perverted distribution of wealth. This
creation of a powerful aristocracy of wealth, which
originated in a diseased system of finance, must ultimately
become a source of very serious social and political
disorder. The descendants of the mushroom millionaires of
the present generation will consolidate into a broad and
almost omnipotent money power, whose sympathies and
influence will conflict with our political institutions at
every point of contact. They will exercise a vast control
over the larger organizations and movements of capital