fourteen feet deep to the levees at the mouth of the Mississippi, and
there are plans to lath and plaster the bottoms of a great many other
streams throughout the country, and so many that in order to get
any appropriation for an enterprise of great national merit, it is
necessary to divide up and load it down with a lot of appropriations.
These make what is known as the pork barrel, the river and harbor
bill. They load it down with the various enterprises that have no
value to anybody, streams on which the government is called to spend
more money than all the boats would bring if sold at auction, and in
some cases where there have been no boats run for ten years.
LEADS WORLD IN TONNAGE.
"They say they ought to regulate the railroads. Now, when you come
to consider the matter practically, I would rather have a railroad
alongside of a navigable river, or a river with six or eight or ten
feet of water in it, than to have it far away from the river. A box
car will beat any ten-foot channel in the world, but when we get
twenty or twenty-five-foot channels, the box car is not in it in
bulky freight. You have got to have depth of water.
"Some years ago I built six freight steamers on the Great Lakes and
they were considered whales in their day. They could carry 3,000
tons. Today a lake steamer and a double channel through the Soo Canal
carries 12,000 tons, and has two additional firemen and one deckhand,
and that is all the additional crew.
"Sometime I would like to have the city council of the City of
Seattle, if they had the time, run down to the head of Lake Superior,
and see what is the greatest port in the matter of tons moved in
the world. London was, and Duluth and Superior a few years ago were
trailing along fifth or sixth place; but last year it took first
place with the cities of the world, and it handled more tonnage than
any other city. London had 30,000,000 tons and Duluth had 34,000,000.
"Now, to show the enormous importance of that load of tonnage, that
tonnage that is greater than any other city in the world, I undertake
to say, and do say, that there are not 1,000 people, men, women and
children, connected directly or indirectly, with moving that traffic
between the land and the water in both directions. There is such a
thing as doing a very large business without a harbor at all.
SEATTLE SPIRIT WINS.
"Although as far as foreign commerce is concerned, as far as business
is concerned, when we get to the seaside, we have to hand it over
to the ships. It must be done. But the great business is done in
the railroad yards. I would not be without the harbor--far from it,
but don't feel that the harbor is going to make you, and don't feel
as a gentleman in public life in Washington, when a friend of mine
talking with him said, 'You won't get any more railways built along
the policies you advocate.' 'Oh, well,' he said, 'we have got them,
we have got them.' And he was a member of the house committee of
interstate commerce, a rather dangerous statement for him to make."
AT TACOMA.
In his address at the banquet of the Tacoma Chamber of Commerce on
the preceding evening (November 9), Mr. Hill dwelt especially on the
intimate relation of railway and agriculture interests. Among other
things he said:
"The question of terminals means a great deal to a railroad and it is
getting to be more and more full of meaning every year. Some cities,
and large cities, today have all the railroads they will ever get,
simply on account of the difficulty in getting terminals. I think the
Northern Pacific terminals today--I think to buy them on the entire
system--would cost more money than to grade the whole road, and I do
not know but what it would cost more than to grade and put the rails
down. That is a condition and, remember, that you pay the freight.
* * * * *
WILL SOON NEED ALL THE WHEAT WE RAISE.
"Within a comparatively short time, I will say that within six years,
I will go on record, you won't send many cargoes of wheat from Tacoma
by sea, simply because the United States wants every bushel that will
be raised within the United States to feed her own people, and will
pay you more money for it. If they didn't pay you more money for it,
it would go to the foreigner, but our own people will pay more money
for it and take it somewhere and grind it into flour. If you look for
greater avenues or greater economy in transportation, but it will
cease to go out as wheat. I will give you an illustration and you can
draw your own conclusions as well as I can: In 1882 the United Slates
raised 504,000,000 bushels of wheat and we had 52,000,000 people and
we exported somewhere between 175,000,000 and 200,000,000 bushels.
Twenty-five years later, in 1907, we raised 634,000,000 bushels. We
increased in that twenty-five years a little less than 25 per cent.
in our wheat yield, or 130,000,000 bushels.
"Our population increased 64 per cent., and converging lines meet
somewhere. Now, if we had 90,000,000 of people--and we have between
88,000,000 and 90,000,000 this year--and use six and a half bushels
per capita, it would take 585,000,000 bushels for bread and seed.
Professor Rogers, of the Minnesota Agricultural College, puts our
consumption for bread and seed for the last few years at a trifle
over or a trifle under seven bushels. I think he uses ten years for
his average, and I use twenty-five to get an average of about six
bushels and forty pounds, and I call it six and one-half bushels.
"On last year's crop, with 634,000,000, we have had about 59,000,000
bushels to sell and we sold about 80,000,000. What is the result?
After the 15th of January wheat was higher in Minneapolis than it was
in Chicago, even up to the first of August, and part of the time it
was higher than it was in New York, because they wanted it to make a
loaf of bread to feed our people at home.
"We have not the great margin that we used to have. The seed on last
year's crop went down to 59,000,000 bushels and, if my figures are
equal to Professor Rogers'--and he is a professor of agriculture
in the Agricultural College and maybe he has more time to look
these questions up more carefully--but with his figures we hadn't a
bushel to sell. Suppose we had 60,000,000 bushels to sell, and we
are increasing in population at the rate of 2,000,000 per year, our
natural figure is between 1,300,000 and 1,400,000, and allow 700,000
for immigration, not eleven, twelve, thirteen or fourteen as we have
been having, but say seven and by 1950 you will have in the United
States, it figures out to be accurate, 208,000,000, but suppose we
have 200,000,000, it might come by 1945, or 1947, or it might be in
1955, but about that time we will have 200,000,000 people, and if
they use six and a half bushels per capita for bread and seed, it
would take 1,300,000,000 bushels to feed them.
PROBLEM OF THE WHEAT.
"That is a little more than twice what you are raising today, and
you haven't any new fields to put a new plow in. From 1882, when
we raised 504,000,000 bushels of wheat, following that time more
than half of Minnesota, all the northern part of Minnesota, was
brought under the plow, all of North Dakota, all of South Dakota,
all of the state of Washington and all of Oregon, except 3,000,000
or 4,000,000 bushels raised in 1882, more than half of California,
two-thirds or three-quarters in Kansas and Nebraska, a large part,
practically all of Oklahoma or the Indian Territory and a large part
of Texas, and take what was raised in 1907 on the new fields that
were opened up, any new territory after 1882, and you will find that
it is approaching 300,000,000 bushels, but the increase in the whole
country in that twenty-five years was only 130,000,000 bushels, so
that the old fields fell off about 170,000,000 bushels.
"Are we increasing our yield per acre? By no manner of means. It has
been a steady and uniform decline for the past thirty years. Now, we
have as good wheat fields as there are anywhere on the continent, and
they will be made better. I am not a disciple of Malthus, because
Malthus was an honest man no doubt, but when he wrote he did not
understand the science of modern agriculture or the adaptation of
the soil or of the seed to the soil, or the commercial value of a
correct analysis of the soil and the adaptation of the soil nor its
commercial value as suited to the crop it is best fitted for. All
these things we have learned, and while you are teaching your young
people let me advise you that the school that is most entitled to
your care and the school that will do the most for the state in
every place and will turn out men and women as they have always in
industry and intelligence and everything else that goes to make good
citizenship, the school attended by the boy on the farm is certainly
as good as the best.
"When your forests are cut and hauled away, and sold to somebody
else you have then, and we will give you a perennial forest, a crop
every year of great value too. But we ought to be able to take
care of our land and we will. I have no doubt about the future.
We will do what other people have been compelled to do. In 1790,
Great Britain was down to fourteen bushels. We are down to thirteen
and nine-tenths now, average. They took the question up and it was
much easier for them to control, as far as territory was concerned,
because the territory was small, in the hands of a few land owners,
mostly rented, and they faced conditions compelling the land owner to
sub-fallow, and fertilize and carry one crop year after year. They
appointed a royal commission and that royal commission went to work
jointly. We have a royal commission, too, and they are able men. One
is a professor at Cornell and another is a publisher of books in
New York, and another is Mr. Pinchot, who is doing a great deal of
work, but he is overrun with the work he has to do. This commission
is to report in time for the meeting of Congress. Now, bear this in
mind, Great Britain started in 1790 trying to keep the people on the
land. The landlord was afraid of the great drift of the agricultural
people to the colonies and the new republic, the United States at
that time. The new republic was going to impoverish them, and leave
them without any rent rolls. They went to work intelligently and in
1810 and 1811 Sir Humphrey David, the foremost scientist of his time,
delivered most intelligent lectures on the qualities of the soil. In
forty or fifty years after they started they had gotten their yield
up to an average of twenty-five bushels per acre. Last year, it was
32.2. Starting at fourteen we ought to get up in place of 13.9 or
14, we ought to be able to get up to 28 or 30, and if we do we will
have grain to feed our 200,000,000 people and to spare, and what do I
hear? 'Some more, and then some?' Now in going over those questions,
I am not worrying about the future of the country. I have more
confidence in it today, the day for cheap wheat has left the United
States, not to return, and we can stand that. This land, this side of
the range, you can devote to better uses than raising wheat. I do not
know why you should not get returns, as I said, that would equal 10
per cent. on $2,000 per acre. You can do it. There is no question as
to that."
SOUTHERN RAILWAYS AND THEIR NEEDS
BY
JOHN F. WALLACE.
Abstract of Address before Southern Commercial Congress
Washington, D. C., Dec. 7 and 8, 1908.
This question has been extensively treated by leading railroad men,
statesmen and Press of the South, and admirably covered by addresses
on numerous occasions before various audiences throughout the South.
I therefore feel that the southern railroad situation is gradually
becoming better understood, not only by the public at large, but by
the railway men of the South, who are jointly appreciative of the
fact that the greatest need of southern railroads is the confidence
and support of the communities through which they run and serve.
Therefore, my remarks will be few, and are made in order that certain
fundamentals may be read into the record of this convention.
For the purposes of this address the South is described as that
portion of the United States lying south of the Potomac and Ohio
Rivers and east of the Mississippi.
Shortly after the close of the Civil war, the South realizing the
changed order of things, accepted the situation in the spirit
of American manhood and started on a new era of industrial and
commercial development.
One of the first necessities was a comprehensive system of
transportation facilities. The railroads, which prior to the Civil
war had compared favorably with those in the North, at its close were
practically bankrupt financially and physically, and were more the
shadow than the substance of what they should have been.
Southerners with brains and energy, starting with 11,587 miles of
detached, dilapidated and crippled railways, immediately commenced
to lay the foundation of the present industrial and commercial
prosperity in the South by constructing its lines of railway.
The efforts of these men and the confidence they were able to inspire
in northern and foreign capital are best illustrated by the fact that
today the South is served with 46,434 miles of railroad, serving
eleven states, twenty million people, and representing a total
investment in round numbers of two billion dollars.
Of these 46,434 miles of railroads only 1,134 miles approximately, or
2½ percent, are double track. It is possible that the next ten years
will see at least one-fourth, or over ten thousand, additional miles
of second track.
It must be borne in mind that while transportation is the burden
bearer of both production and commerce, it is only able to perform
the full and complete measure of its functions when properly
nourished and assisted by finance.
In ancient days the birth of civilization started with the ability
to preserve food products. This grew from the temporary necessity of
accumulating sufficient food to last from one chase to another, or to
enable journeys to be performed or winter climates endured, to the
storage of vast quantities of food to enable nations to survive years
of famine, as was exemplified by the storage of grain in Egypt in the
days of Joseph, which period history shows us was the crowning epoch
of Egyptian civilization.
Today the measure of our modern civilization is our transportation
facilities. Safe, efficient and rapid communication, and the economy
of the world's transportation systems, are binding the nations of
the earth closer together day by day, and helping to create the
conditions which will ultimately place the crown of accomplishment
upon our modern civilization.
Coming back to the South, from which we have been temporarily led
astray, it is self-evident to the careful observer that all the
diverse interests of this section--agriculture, mining, manufacture,
commerce and banking--are unavoidably and irrevocably bound up with
the transportation facilities furnished and to be furnished by the
railway systems ramifying its territory and performing a service for
the South similar to that performed by the arteries and blood-vessels
in the body of corporeal man.
It is also apparent to the impartial observer that if the South is to
reach its highest state of development its transportation facilities
should not lag, but should lead the march of progress, and that this
development should be stimulated in every possible way; and men of
the South should never forget for a single moment that _the needs of
the railroads are the needs of the South_.
It has been our custom in America to anticipate future needs in
transportation, and in a measure attempt to forestall and provide for
them.
The policy of foreign countries has been practically the reverse. The
railway systems of England have been constructed to take care of and
supply a demand for transportation facilities that already existed.
The railroads of the United States in the South and West have been
projected and constructed, and to a great extent financed, by men
whose inspiration was a firm belief in an unseen future and whose
assets were largely composed of hope and an undying faith in the
future development of their country.
Now, the future demands for increased transportation facilities in
the South are plainly indicated by past records, showing the growth
of productive activities and the constant increase of tonnage to be
moved.
If these requirements are to be met, demand and supply must move
forward hand in hand. Additional tonnage will justify increased
facilities and increased facilities will stimulate still greater
tonnage.
During the past 25 years the total products of the South, from
agriculture, forest, mines and manufactures, have increased in
valuation over 225 per cent. During the last five years of this
period, ending in 1906, the increase has been 50 per cent.
The common fallacy that a railroad is completed when opened for
traffic has long since passed away, at least in the minds of
intelligent men.
The railroad of today is no sooner completed as a single track, than
it becomes necessary to provide industrial spurs; additional or
enlarged terminals; replace its temporary structures by permanent
ones; widen its excavations; strengthen its embankments; provide
passing tracks, additional shop facilities, enlarged passenger and
freight stations, warehouses, elevators, docks and wharves at water
terminals, additional tracks, heavier rail, rock ballast, elimination
of curves, reduction of grades, block signals, elimination of grade
crossings, heavier engines, larger and better cars, to the end that
the constantly growing requirements and exactions of modern traffic
conditions may be met; all of which requires increased expenditures,
which it is easily seen could not in any event be provided for out of
earnings.
During the next ten years the railroads of the South will require
$1,000,000,000 to enable them to fully provide for the increased
demands for transportation facilities, an average of $100,000,000
per annum. Including the estimated increased mileage and the present
capital investment, the resulting average capitalization would amount
to $53,000 per mile, being $20,000 per mile under the present average
capitalization of all the railroads of the United States today, which
is $73,000 per mile.[B]
Meeting the requirements of the railroad situation in the South by
the expenditure of a round billion dollars during the next ten years,
as outlined herein, would make the total investment in southern
railways at the end of that period three billions of dollars on an
estimated mileage of 56,000.
It would require average earnings of $9,000 gross per mile per
annum, with operating expenses at 70 per cent of the gross, to yield
sufficient net income to provide a return of 5 per cent on this total
investment.
When these figures are compared with the present average gross
earnings of the railroads of the United States, $11,400 per mile
per annum, with an average cost of operation of $7,757 per annum,
resulting in a ratio of operating expenses to gross earnings of 68
per cent, the above estimates appear reasonable and conservative.
Even if this expenditure is made and the results predicted obtained
at the end of the ten-year period, southern railroads will still fall
approximately 25 per cent short of yielding the present average gross
earnings per mile per annum of the railroads of the United States
today.
To provide funds to meet these ever-growing and incessant demands for
additional facilities, the railroad companies must necessarily be
large borrowers.
The prosperity of the South in the next decade, and in those to
follow after, depends upon the ability of the owners and managers of
southern railways to foresee and provide for future necessities, and
upon the promptness with which the work is accomplished.
The ability of railroads to construct these improvements, which are
so essential to the future prosperity of the South, depends upon the
willingness of capital to furnish the necessary funds for the purpose.
While legislation may control and regulate the returns upon invested
capital, there is no process by which it can compel that investment
originally. While investment is easily retarded it is difficult to
attract.
There is probably no form of capital investment more open to attack
or more liable to depreciation through unfair or unwise legislation
than the railway investments of today.
While the speaker is a firm believer in the principles of
governmental control and supervision over the corporate entities
which have been created by the people and for the people, it must not
be forgotten that every shield has its reverse, and that the exercise
of such control and supervision must necessarily be along the lines
of right and justice, which no mere legislative enactment can change.
Any variance brings its own reward, which frequently spells disaster.
The power to control, regulate and supervise necessarily carries with
it responsibilities from which there can be no escape.
Every tax, every restriction, every requirement which costs money
or reduces revenue to our southern railroads is a tax which must
ultimately be paid by the communities which they serve.
The prosperity of the southern railroads and the prosperity of the
South are irrevocably bound together, and the _needs of the South are
identical with the needs of the railroads_.
The basis of securing capital must necessarily be the ability of
the borrower to inspire confidence in the lender that his capital
will ultimately be returned to him intact, and that he will receive
regularly and promptly adequate hire therefor.
No section of our great country has such reputation for united action
as the South. In political matters this unity of action for years has
led to the designation "The Solid South."
What the railroads in this section need today is _a solid South
behind and beneath them_; a solid South taking a calm and rational
view of the immense factor the railways have been and always will be
in the development of its future greatness.
The recent reversion of sentiment in the State of Georgia, brought
about by a calm and deliberate analysis of the present situation by
the business men of that State, should be the keynote of the future
action of the solid South.
_The adoption of a policy of fairness and liberality towards the
railroad interests on behalf of all the Southern States, and the
ability to convince the financial world that this action is sincere
and genuine and will be permanent, is the great paramount need of the
railroads of the South today._
Prompt action along these lines will enable the railroad companies of
this section to successfully compete in the markets of the world for
the capital needed to carry out the improvements outlined, and thus
provide the facilities which will enable the producers of the South
to ride the crest of the wave of coming prosperity.
In its calls for capital the southern railroads must come into
competition in the markets of the world, not only with the railroad
requirements of the North, of the East and the West, but with all the
lines of human industry and endeavor throughout the wide world.
The difference between the five or six per cent paid by southern
railroads for the money which goes into their additional facilities
or equipment, and the three or four per cent which may be yielded
by the high-class world investments, is merely the gauge by which
the confidence of the capitalist is measured in the integrity of his
investments.
Today it is difficult to secure money for railroad development,
either South or North, at any ordinary rate of interest. Why? Is it
because money is scarce? No.
I can best answer this by a story of the panic of '93, when a citizen
of Chicago dropped into the office of Lyman Gage, of the First
National Bank of that city, and inquired of Mr. Gage if money was
tight. He replied, "No, the bank had plenty of money." The citizen
said, "That's fine; can I secure a loan of $100,000?" Mr. Gage
replied, "Yes, you can have it; we will loan it to you. What is your
collateral, what security can you give?" It is needless to say that
the loan was not made.