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About The Hesperian / (Lincoln, Neb.) 1885-1899 | View Entire Issue (April 15, 1891)
opposite result is shown. Besides these amounts repaid in
taxes, a large part of the nniount of the bonds was repaid in
obtaining the right of way through the county. January I,
1880, Capitol and Midland' precincts issued bonds to the amount
of $5,000 each to the (). & K. V. railroad, and the city of
Lincoln gave $25,000 in bonds to the Lincoln and North
western. January 1, 1885, the city of Lincoln issued $50,000
to the Missouri Pacific railroad, and one year later gave $20,000
more. July 1, iS8f, $50,000 was given to the Fremont, Elk
horn and Missouri Valley railroad; while this last fall it was
voted to give $50,000 to the C. K. 1. & P. to build to
Lincoln; these bonds, however, have not yet been issued.
The result of all these issues of bonds is, that there arc now,
including the C. R. I. & P., not doing regular service, five com
peting roads between Lincoln and Omaha, and four between
Lincoln and Kansas City. The result of this number of par
allel lines is not competition, and it is impossible that the rates
can be reduced by such indiscriminate building, but on the
contrary, they must be raised. There is not more traffic than
could be carried over one, or at most, two tracks between
Omaha and Lincoln, should it be run to its full capacity. It
is generally admitted that railroads should earn a fair profit on
capital invested. The shortest line from Lincoln to Omaha
is about fifty-seven miles. Estimating average cost of road at
$20,000 per mile, we have a cost of $1,140,000 for each road,
and for the three surplus roads there are $3,420,000 more than
required, upon which the shippers have tu pay a fair profit,
lletwccn the cities mentioned, one half as many roads would
serve even better than at present, and in all southeastern
Nebraska there arc probably one-third too many roads for the
country. Space fails me to give here accounts of other coun
ties, but the questions that have arisen in Lancaster county arc
very similar to those that have come up elsewhere.
It is impossible for me to give a detailed history of the
congressional land grants in this connection, but, in brief,
congress made its first land grant to Pacific railways in 1862.
Different acts have given land to the different roads. The
grant usually consisted of the right of way over public lands
and every alternate section of land within a ten or twenty mile
limit on cither side of the road with the privilege of taking
indemnity lr.nds for lands pre-empted before the survey within
a fifty mile limit. Also there is usually a provision that the
alternate sections retained by the government shall not be sold
for less than double the price set upon thembeforc the pass
age of the act. Under such laws the Nebarska railroads have
received as follows: The H. & M. in Nebraska, 2,373,290.77
acres with some 9,057 acres yet to inure to the company. (It
will be noticed that the figures for land received differ mater
ially from reports given by the railroad to the Nebraska board
of transportation and which were used by C. G. Dawes in his
argument on the maximum freight bill; these figures were
obtained from the report of the United States land office.)
Tlc U. P., 5i933)i84 acres (estimate pro rata for Nebraska
mileage); S. C. & P., 41,398.23 acres; St. J. & D. (now St. J.
& G. I. under the U. P. system) 462,413.24 acres, (a small
portion of this, however, is situated in Kansas) making a total
of 8,810,286.24 acres.
'In 1 84 1 was an act of congress passed giving the states
500,000 acres of land each to be used for internal improve
ment. In 1869 this state passed a statute granting this land
to railroads building at least ten miles of road, at the rate of
2,000 acres per mile; no road to receive more than 100,000
acres. This was distributed in the following manner: 1$. & M.,
50,104.77 acres; A. & N., 12,841.54 acres; Hr., Ft. K. & Pac.,
19,98(3.12 acres; Mid. Pac, 99,973.08 'acres; O. & S. W.,
120,079.04 acres, (These roads are now all under the C.,Ii.& Q.
system as constituted' at present 302,987.55 acres.) F., E. &
M. V., 100,030.32 acres; O. & N. V., 60,416.24 acres; S. C.
& P., 47,646.10 acres, making a total of 511,080.21 acre?.
These figures are .all obtained from the deed record of internal
improvement land in the land office in the capitol. It will be
noticed that there arc 11,080.21 acres, besides about 20,000
acres given for bridges, more than the state owned. Attention
is called to this by Governor Garber in Jus message to the leg
islature in 1875, m lnc following language: "Records show that
by reason of hastily deeding before confirmation 31,46 acres
have been deeded more than the state owned or was entitled to."
This makes a grand total of land received by the railroads in
this state of 9,321,366.45 acres. It is very difficult to estimate
how much the roads have realized from these grants of land.
Space will not permit me to go into detail here, but the total
realization will approximate $20,416,827.06.
Terminal giants consist of lands and town lots usually
given to someone as the trustee for the road, or to
the officials of the road, in return for whichthe depots
or some other desirable accpssory of the road is placed
where the donor desires. Of cour.se there is money in
the pockets of the donor as a result of their generosity, and
they look upon it as an investment. The deeds arc usually
made out to give some fictitious price, so that it is impossible to
obtain the amounts actually received, unless access could be
had to the companies' books, and then doubtless a great deal
would not appear, as much was given to the officials of the
roads. It would be impossible, therefore, for me to make any
estimate of the amounts so received. Mr. Garber, of. the
Nebraska board of transportation, intends making investiga
tions along this line, and he maybe able to find some impor
The cost of roads is something very difficult to obtain. The
Nebraska board of transportation for 1S90 gives the cost of
C, U. & Q., (system in Nebraska) U. P., and the C, St. P.,
Minn, cfc O, taking an average of these as an average of
the roads of the state we have $24,675.75 per mile. This is
probably a high average, as it includes that costly U. P. road.
Multiplying this by the total mileage in the state we have an
estimated cost of $134,243, 225187. There is on this a bonded
indebtedness of $127,006,859.28 (docs not include Neb. &
Western, the figures of which could not be obtained) and a
nominal capital of $99,203,659.88. The total aid rendered the
road as above is $34,366,827.06, added to bonded indebted
ness makes $161,343,686.34. According to these figures the
capital stock represents less than nothing, the bonded indebt
edness and the aid received amounting to more than the cost
of the road.
The question as to the bearing of these figures on the fixing
of a maximum rate is one that was opened by Mr. C. G.
Dawes before the senate committee, lie was answered by
Mr. W. S. Garber, of the state board of transportation. Not'
to enter into the discussion I will say simply it would be man
ifestly unfair to the railroads to claim, as figures seem to show,
that the capital stock represents nothing, and to allow only
enough earnings to pay interest on the lauds; and on the
other hand it is not right to leave these donations entirely ou
of the question. The municipal donations could hardly be
used to lower rates, for one city may give large bonds to secure
a road which necessarily passes through a rival place which
gives nothing. The city that gives no bonds can hardly claim
lower rates on account of the donations of the other city.
Neither could the city that '"jtcd bonds claim a discrimination
in its favor against the one that refused the bonds. While the
people have given so much for the roads, the roads have done
equally well lor them. Every bond issued has been repaid by
the road, with a few special exceptions. Donations have been
given simply as a bargain. This is well illustrated in the land
grants where (lie remaining sections were sold at a price equal
to that asked for the whole. There is an immense unearned
increment accumulated to the road that inust be taken into
account. When the road was built it was a losing invest
ment. The road has built up the cities, which in turn have
built up the traffic for the road. As the building of the road
was necessary for this increase of the community it might be
questioned how much of this was earned and how much un
earned. Economically the unearned increment should belong
to the community, but this is not practice. It is the same eco
nomical question that is brought forth in the single tax theory.
Law allows individuals so reap the benefit of the unearned
increment of the land. Economy qeustions this right, The
right of the state to regulate rates does not depend upon this,
as without the donations the state should have power to inter
fere with oppressive rates on the ground of public policy. The
only possible bearing of this question can be, how low can the
rates oe reduced without doing an injustice to the road.
C. E. Tinolkv, '90.
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