THE FATAL POLICY OF MORTGAGING CITIES AND COUNTIES FOR THE CONSTRUCTION
OF RAILROADS.
The justification for the munificent grants and lavish taxation of the
people in aid of railroads has been, that these roads afford the
necessary facilities for transportation of freight, promote speedy
communication throughout the country, provide ready markets for the
products of husbandry, increase the value of property in their vicinity,
and assist in improving and developing the new portions of our country.
While some, or all, of these objects may have been in a degree promoted,
the little good thus accomplished has been more than counterbalanced by
the evils uniformly attending this species of aid to railroads. What are
the evils incident to the general incorporation acts, and local taxation
in favor of railroads?
_First._ They take from the individual the natural and constitutional
right of owning and controlling his own property, and license the agents
of a county, city, or town, to incumber his property with a debt,
without his consent and against his protest.
_Second._ The policy engenders a rivalry between different localities,
causing reckless extravagance and the creation of an immense
indebtedness by public corporations. This indebtedness not unfrequently
retards the settlement of the locality expected to be benefited, and
depreciates instead of enhancing the value of property, for the constant
and compulsory drain of the resources of the place in payment of the
debt thus created can leave nothing but barrenness behind, the rule
being, with but few exceptions, that non-residents hold the evidences of
the indebtedness, and as a consequence, payment must be made to distant
creditors. If one thinks that this is overdrawing the picture, let him
examine the condition of those counties and cities that years ago loaned
their credit to railroad companies, or subscribed to their capital
stock. Localities less favorably situated, with fewer natural
advantages, fewer miles of railroad, and with less productive countries
tributary to their growth, have far outstripped their bonded neighbors
in wealth, improvements, and the increased value of their property.
Persons who are seeking locations dread and shun these bond-_cursed_
localities, and seek homes elsewhere. New counties far outstrip these
old ones in improvement and wealth; new towns and cities spring up and
destroy the business of these old bond-ridden ones, and the latter,
instead of receiving the anticipated and promised increase of wealth,
show a paralyzed industry and depreciated property. Localities that
fifteen or twenty years ago gave promise of a prosperous future, are
less wealthy, less prosperous, and in some instances less populous than
when they subscribed stock, and issued bonds to railroads. For years to
come, the wealth and industry of these places must suffer from the
incubus of enormous taxes levied for the payment of bonds issued under
the mistaken idea that great benefit was to result from the
indebtedness.
_Third._ It places the pecuniary interests of all of the people of the
counties and cities creating this kind of indebtedness in the hands of
unscrupulous and relentless non-resident creditors, mainly Wall Street
stock-jobbers, who obtained it at large discounts, often at one-fourth
its par value, and who own not only the county and city bonds, but
control the railroads in aid of which they were issued, and so by
constantly collecting from the people the oppressive taxes required to
pay the interest and principal of these bonds, withdrawing the amounts
so collected from circulation and sending it to the east without
leaving, or ever having paid any equivalent, they are constantly
impoverishing the people with the very means which were to have been
sources of prosperity.
_Fourth._ The aid granted to railroad companies has enabled them to get
control of the commerce of the country. As a general rule, all of the
railroads receiving subsidies in land, government, state, county, and
city bonds, and large gifts in local taxes, have been owned or
controlled by the same class of men, and not a few of the roads by the
same ring or combination. Then speculators have visited all parts of the
country, claiming to be men of "large hearts" who desire to benefit
mankind. They talk of their large experience in railroad matters; of the
great benefit the particular locality will derive from the construction
of a certain line of road; of the great profit to be returned in the
shape of dividends if local aid is voted, and after having by fraud,
falsehood, and willful deception induced the people to move in the
matter, they then turn their attention to state legislatures and to
congress for more aid, and so perfect is their combination, that in
almost all their attempts they are successful. Among these rings and
combinations are found men to fill every department in the scheme for
plundering the people. Some of them become directors in the corporations
to which the aid is voted and granted, and they thus get control of the
donations, grants, and bonds. Some members of the ring become agents to
sell the bonds of the corporation, as well as any others received from
the general or local government, and to mortgage the lands granted to
the companies. Still another division of the ring become the purchasers
of the bonds at their _market_ value. They all unite in this way and
mortgage their roads, rights, and franchises, and construct the road,
taking care that when the road is completed, the liabilities resting
upon it shall be sufficient to represent its entire value. By this means
they become the creditors of the counties and towns through which the
road runs; they own and control the road; and the combination being the
same substantially throughout the country, owning and controlling all
the roads, holding and using the subsidy bonds, fixing the rates of
freight and passenger transportation, they control the whole country and
hold the best interests of the people subject to their will. In the
prosecution of their ends they bribe local officers, state legislatures,
and members of congress. To secure the election of their friends to
congress, large gifts are made. In one instance one of these raiders
upon the rights of the people bestowed upon a prospective United States
senator, $10,000, for the purpose, as he stated, of securing friendly
legislation for a certain railroad company. The pirates and robbers who
prey upon mankind are not more dishonest or unscrupulous than are these
rings who make the people their prey. They differ only in the degree of
punishment received; the former being executed or sent to prison, while,
of the latter, many are elected to congress or to other high and
responsible offices, or they are appointed to high places of trust and
profit in the government. If the reader will look through the _Railroad
Manual_, he will find a long list of names of men, prominent now from
the recent raids upon the people and public treasury, who have been
engaged in the same business for at least twenty years; men whose names
are now as familiar to the western people as "household words," who,
like birds of prey, have flitted from one part of the country to another
until their blighting influence is felt in the whole land. We are
referring of course to the men who have followed the business of
"organizing" railroad companies for the purpose of procuring aid in
lands, bonds, and taxes, and who have devoted their energies to this
class of railroads, and not to those capitalists who, with their own
money and credit, have constructed their roads and pursued a legitimate
business. Prominent among the men who have devoted their time and
talents to railroad enterprises, will be found the names of Thomas C.
Durant, John A. Dix, Henry Farnham and others, whose memory will remain
fresh with western men, because of their diligence in procuring local
aid to railroad companies from counties and cities fifteen or twenty
years ago, and who, after obtaining such aid, by some means became the
owners of city and county bonds, to a large amount, and then to prompt
the people to greater diligence in the payment of taxes, levied to
liquidate these bonds, applied to the president of the United States for
troops to aid in their collection. Slightly varied, the same
organization of men which inaugurated the system of constructing
railroads through land grants, donations, and subsidies, is still in the
same business. With their headquarters in New York and Boston; with Wall
Street as the principal depot for all railroad stocks and bonds, as well
as the bonds of the United States, and of such states, counties, and
cities as have been duped by them, these _raiders_ upon the treasury and
resources of a people have taken the absolute control of the railroad
interest of the country, and "run it" for their own exclusive benefit,
to the injury of the country and the absolute destruction of the
agricultural interests of the great west. By having placed in their
hands the large grants of land and subsidies voted to railroad
corporations, they acquired the means of controlling the principal roads
throughout the country. Roads in Texas, Louisiana, Alabama, Arkansas,
Kansas, Nebraska, Iowa, and in other states and territories, are owned
and managed in the exclusive interest of capitalists in the eastern
cities who have no interest in the communities where these roads are
located, save to realize large dividends by extortions and oppressions.
All of the roads receiving large grants and subsidies, whether from the
general or state government, or as local aid, are in the hands of this
class of men, with their fiscal and transfer agencies in the cities
above named.
This statement has its illustration in the Kansas City, St. Joseph, &
Council Bluffs company, which has five directors in Boston, two in New
York, one in Michigan, and one in Missouri--Fiscal agency and transfer
office, Boston. Peoria & Bureau Valley company has its principal office
in New York; Chicago & Northwestern--Financial and transfer office, Wall
street, New York; Dubuque & Southwestern--all of the directors, save
one, and its financial agency, in New York; Atchinson, Topeka, & Santa
Fe company--fiscal agency and transfer office, Boston; Galveston,
Harrisburg, & San Antonio company--Fiscal and transfer agency, Boston;
Leavenworth, Lawrence, & Galveston company--Fiscal agency and transfer
office, Boston; Kansas City & Sante Fe company--Fiscal and transfer
agency, Boston; Cedar Falls & Minnesota company--All of the directors
reside in New York; Iowa Falls & Sioux City company--Of the directors,
John B. Alley, Oliver Ames, P. S. Crowell, and W. T. Gilden, reside in
Massachusetts, J. I. Blair in New Jersey, and W. B. Allison and Horace
Williams in Iowa--Fiscal and transfer agency, Boston; Colorado Central
company--Of the directors, Oliver Ames, Frederick L. Ames, and four
others, reside in Massachusetts, and the fiscal agency is in Boston, and
the principal office in California; Cedar Rapids and Missouri River
company--John B. Alley, Oliver Ames, and nine other of the directors
are in the eastern states, and James F. Wilson, and three others, are of
Iowa; Northern Pacific company--Principal office, New York; Hannibal &
St. Joseph company--Fiscal and transfer office, New York; Burlington &
Missouri River company--Fiscal and transfer office, New York; Union
Pacific (central branch)--All but two of the directors in Washington
City and the east, and principal office in New York; Union
Pacific--Among the directors are Oliver Ames, Oakes Ames, and eleven
others in New York and Massachusetts, one in Illinois, and G. M. Dodge
in Iowa--Fiscal agency, Boston; transfer offices, Boston and New York;
Fremont, Elkhorn, & Missouri Valley company--John B. Alley, of Boston,
John I. and D. C. Blair, of New Jersey, C. G. Mitchell, of New York,
and three Cedar Rapids men, directors (this is a part of the Sioux
City & Pacific road); Winona & St. Peters company--Fiscal and
transfer office, Wall street, New York; Burlington & Missouri River
(in Nebraska)--Principal office, Boston; Sioux City & Pacific
company--Directors: Oakes Ames, and six others, in the east, and G. M.
Dodge, of Iowa--Fiscal and transfer office, Boston; Missouri River, Fort
Scott, & Gulf company--Fiscal and Transfer office, Boston; Central
Pacific company--Fiscal offices, San Francisco and New York; [A]New
Orleans, Mobile, & Texas company--Oakes Ames and twelve other directors,
resident in New York and the east, and two in New Orleans; principal
office, New York; Houston & Texas company--Fiscal agency and transfer
office, New York; Chicago & Northern Pacific Air Line company--Principal
office, New York; Elizabeth, Lexington, & Big Sandy company--Principal
office, New York; Dubuque & Sioux City company--General offices,
Dubuque, Iowa, and New York. [B]Texas and Pacific company--Principal
office, New York.
[A] NOTE.--This company has a donation from the state of Louisiana
of $3,000,000; a subscription of stock by the same state to
the amount of $2,500,000; and the same state has indorsed the
company's bonds to the amount of $12,500 per mile. This company
has also received other large sums in municipal aid and other
donations.
[B] NOTE.--This company has a grant of 13,440,000 acres of land,
and other aid.
We might continue the above list indefinitely, but think we have
extended it sufficiently to sustain our charges. If the reader is
desirous of learning who compose these various companies, the Railroad
Manual will disclose the same set of leading men, divided into three or
four principal squads or companies, who raid from one end of the country
to the other; control all the roads that have received aid, and at once
place them under the direction of the central railroad combinations in
Boston and New York; diverting the grants and donations supposed to have
been made for the benefit and in the interest of the people, to their
own selfish purposes; making the aid thus granted a means of oppression
to the people, rather than an agency for their relief.