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THE RELATIONS 
 
 OF 
 
 KANSAS RAILROADS 
 
 TO THE 
 
 STATE OF KANSAS 
 
 NORRIS L. GAGE. 
 
 TOPEKA, KANSAS. 
 
 KANSAS PUBLISHING HOUSE: T. D. THACHER, STATE PRINTER. 
 1884. 
 
THE RELATIONS 
 
 OF 
 
 KANSAS RAILROADS 
 
 TO THE 
 
 STATE OF KANSAS. 
 
 
 NORRIS L. GAGE. 
 
 TOPEKA, KANSAS. 
 
 KANSAS 1'UBLISHING HOUSE: T. D. THACHER, STATE PRINTER. 
 1884. 
 
"SUITABLE railways, honestly and sensibly managed, furnish the cheapest possible 
 transportation; and can be supported by even the poorest communities." [FAKLKHJH. 
 
 "THE railroads of the United States assure us commercial supremacy; make fam- 
 ine impossible, and insure general prosperity and plenty, by carrying local surplus to 
 the relief of local failure." [POOR'S MANUAL, 1883. 
 
STATEMENT OF THE FACTS, AND REVIEW OF THE SITUATION. 
 
 THE management of the Atchison, Topeka & Santa F6 Railroad Com- 
 pany have requested me to investigate the transportation question, as 
 affecting the interests of the State of Kansas and the interests of the 
 Atchison road, and to submit the results of such investigation to the 
 Honorable Board of Railroad Commissioners. 
 
 This request appears to have been made in consequence of certain- 
 complaints now pending before this commission. 
 
 It appears that the railroad law of Kansas requires two things first, 
 that freight rates shall be regulated so as not to unjustly discriminate 
 between individuals or between localities; and second, that such rates 
 shall be reasonable. 
 
 UNJUST DISCRIMINATIONS. 
 
 No complaint, whatever, of unjust discriminations has been made 
 against the Atchison, Topeka & Santa Fe Railroad Company, except in 
 the case of Osage City as to coal rates, and this complaint seems finally 
 to have resolved itself into a desire for reduced coal rates. (Since 4 this 
 statement was prepared, the city council of Osage City has taken the 
 necessary action to withdraw the complaint of that city.) 
 
 Thus one entire branch of alleged abuses is eliminated from this 
 hearing, and that, too, a branch which has everywhere given rise to the 
 most numerous and most serious complaints. Heretofore, in the old 
 countries and in all of the United States, the great cause of complaint 
 has been alleged unjust discriminations, either between individuals or be- 
 tween rival localities. The history of the railroad problem shows, that 
 wherever and by whomsoever it has been investigated, it has been conceded 
 that the precise range of rates was not a matter of so much importance 
 to shippers and to the public, as it was to have them uniform under like 
 circumstances and free from unjust discriminations. 
 
 It has not been the result of chance, that* the adjustment of rates on the 
 Atchison system of roads has been such as to avoid in the main charges 
 of this kind, but it has been the result of great care and a scrupulous 
 attention to the equities of the situation and the rights of all parties. 
 
This success has been attained in the face of the most severe and constant 
 pressure and temptation on the part of many of its patrons in the di- 
 rection of favoritism, and of itself tends strongly to show that the com- 
 pany has been actuated by similar correct business principles when 
 dealing with the other branch of the question, namely, that of 
 
 REASONABLENESS OF RATES. 
 
 Out of the many hundreds of townships and cities on the line of the 
 Atchison railroad system, for which the law provides a cheap and easy 
 way of making complaints, only three, and those with a strongly pro- 
 tiounced division of sentiment, claim that their freight rates are not 
 reasonable"; and these three cities only, to wit, Great Bend, Newton and 
 Osage City, have entered complaints before the State Board of Com- 
 missioners, as provided by law. At the other hundreds of townships 
 and cities either no action whatever has been taken, or expressions 
 favorable to the reasonableness of the company's rates have been given, 
 and this after the law has been in force more than one entire year. It 
 .appears, therefore, that no wide-spread or general dissatisfaction exists 
 ^imong the actual patrons of the road, as has been frequently and loosely 
 stated by persons who were either honestly ignorant of the real Situation, 
 or who were influenced by considerations not creditable to themselves 
 and not worthy of consideration by this or any other tribunal. 
 
 This tends strongly to corroborate what the experience of the officers 
 of this road shows to be true, that there is in the main a decided feel- 
 ing of harmony existing between the road and its patrons, and especially 
 o when we reflect that the nature, extent and variety of the business is 
 such* that it is not possible to satisfy everybody. It is an axiom of gov- 
 ernment, that its value' is largely in the content it gives; and this state 
 of facts should have its full weight with the Board in deciding the 
 three complaints which have been made. No doubt every patron of 
 the road would like to have his rates cut down until they entirely dis- 
 appeared, if it were possible; so also would the company, if it were 
 possible; but this cannot be considered a complaint in any business or 
 legal sense. 
 
 The complainants in these cases advance no method whatever by 
 which to decide this most vital question. They ask for lower rates on 
 general principles, without assuming to prove whether the present rates 
 .are or are not reasonable. 
 
 The Board of Commissioners in its preliminary consideration of this 
 subject has, however, set up two tests by which to determine the reason- 
 ableness of the rates now in force by the company first, by compari- 
 son with the rates prescribed by the Commissioners of Illinois in their 
 
revised schedule of 1882; and second, by an examination of the receipts 
 and profits of the company. 
 
 These tests may be accepted as fair ones, provided they are applied io 
 Ti'ew of all the facts and conditions. It is plain that a direct compari- 
 son of rates is misleading and worse than useless, unless we have a gen- 
 eral knowledge of the conditions which govern them. The Board has 
 not heretofore had its attention called fully to these conditions, and may 
 not have given them that weight to which they are justly entitled. It 
 will be conceded that all parties in interest have heretofore been acting, 
 to a greater or less degree, in the dark as to the facts and the bearings of 
 the law when applied to railroad business, and that the magnitude of 
 the interests involved requires that the subject should now be considered,, 
 as far as possible, in its entirety. 
 
 KANSAS AND ILLINOIS RATES COMPARED. 
 
 Freight rates should range higher in Kansas than in Illinois, for these 
 reasons : 
 
 No. 1. In the State of Illinois there are fifty-five persons to the square 
 mile, while in Kansas there are only twelve persons to the square mile,, 
 making the former State more than four-and-a-half times more densely 
 populated than the latter. More than seventy-three per cent, of the 
 land in Illinois is improved, while only about twenty per cent, of the 
 land in Kansas is improved. In Illinois the population per mile of 
 railroad is more than fifty per cent, greater than in Kansas. True, the 
 railroad mileage per square mile of territory is not so great in Kansas 
 as in Illinois; but if no impediment is thrown in the way by the State, 
 and even a part only of the roads are built which ha.ve recently been 
 inaugurated, competition among railroads will very soon be as intense 
 in Kansas as in any part of the country, if indeed it be not so now. 
 
 No. 2. The live stock traffic in Kansas is in the main spasmodic, and 
 not continuous. During the cattle drives from the South, and the 
 annual "round ups" in the West, this traffic has been large for about 
 four months in the year, while during the balance of the year most of 
 the stock cars, and their motive power, remain idle. Seventy-four per 
 cent, of the entire cattle movement on the Atchison road in the year 
 1883 was made in the four months of August, September, October, and 
 November. About six times as many cattle cars are required during 
 those four months as are required during the other eight months. As 
 this is not a dull time on other roads, it is not possible to hire cattle 
 cars during this period, and the result is that during eight months in 
 the year miles of side track are filled with these idle cars, a few being 
 forced at an additional expense into lines of business for which they are 
 
6 
 
 not adapted. Everywhere east of the Missouri river it is a fat-cattle 
 traffic, and very nearly continuous during the year; and these condi- 
 tions, so much to the disadvantage of this road, only exist on a few roads 
 west of the Missouri line, which run out and tap the great grazing fields. 
 
 It is clear that a live-stock business of this character cannot be done 
 as cheaply as a continuous business, and it is also clear that it would be 
 better for the road, for its patrons, and for the State at large (while 
 injuring no one) if during such dull periods the company could use this 
 extra motive power on heavy and special kinds of work which admit of 
 only the lowest prices such as filling "stone contracts for public works 
 and the like without subjecting itself to a multiplicity of suits for dis- 
 criminations, as might be the case under the present law if rigidly en- 
 forced. This illustrates the kind of commercial freedom which the 
 company asks upon every principle of equity and economy, and for its 
 patrons as well as for itself. 
 
 No. 3. Railroad transportation cannot be sold in Kansas as cheaply as 
 in Illinois, for the same reason that groceries, hardware and agricultural 
 implements cannot be sold as cheaply. Distance from the base of sup- 
 plies is the important element which enters into the cost of everything 
 of a heavy or bulky nature. It would not be fair for the dealer at 
 Osage City, at Newton, or at Great Bend, to be forced by law to sell 
 these articles at Peoria or Galesburg prices; and it would be an additional 
 hardship if he were forced to remain in business at all hazards and 
 without regard to profits, as is the railroad company. 
 
 No tribunal having power to fix the prices on merchandise should 
 exercise it in such a case except under the most severe provocation, and 
 then at a most conservative limit, even though there might be a unani- 
 mous desire on the part of the purchasers to secure the articles as cheaply 
 as possible. Iron, steel, machinery, lumber, railroad ties, tools, oils and 
 supplies of all kinds are, and always will be, dearer in Kansas than in 
 Illinois. No art or legislation has yet been able to overcome this law 
 of nature. Railroads themselves have come the nearest to it, as is shown 
 by the fact that without them the great bulk of Kansas to-day would 
 necessarily be without towns or farms, and its occupancy contested by 
 cattle herders and Indians. Justice to themselves as well as to the rail- 
 roads require that the Commissioners and the people of Kansas should 
 not ignore this fact. 
 
 No. 4. By far the largest single item of freight shipped on Illinois roads 
 consists of coal. It fs of a high steam-producing quality, and is found 
 in large quantities nearly all over the State. Immense shipments are 
 being made in continuous volumes to Lake Michigan, the canals, the 
 Ohio river, and the great manufacturing centers within and adjacent to 
 
the State. Every one knows that the cost of moving coal diminishes 
 rapidly as the amount increases and the shipments become uniform, un- 
 til what are known as the "coal roads" reach the lowest limit of cost. 
 
 On the line of the Atchison road in Kansas, coal is produced and 
 shipped in comparatively small quantities. Of the total product in the 
 year 1883, seventy-one per cent, was during the six winter months, and 
 this, no doubt, fairly represents the movement in the summer and win- 
 ter months. It cost, in 1883, on the track at the points of production, 
 an average of $2.48 per ton, while the average cost on the Chicago & 
 Alton, the C. B. & Q,., and the Wabash roads, for the same year, was 
 $1.40 per ton, as per statement herewith submitted. Taking quality into 
 account, the Atchison road paid more than twice as much per ton for its 
 coal as was paid by the great roads in Illinois. On the total amount 
 >used by the company in Kansas in 1883, the difference would amount 
 to about $250,000. 
 
 To this extent, on that one item, in one year, nature discriminated 
 against the Atchison road compared with an Illinois road. The pro- 
 ducer, as well as the carrier, must submit to such natural discriminations, 
 believing that they are just, or at least unavoidable, and that the dif- 
 ference will be made up in other ways by the great laws of compensa- 
 tion, such as relative cheapness of our lands, and rapid development of 
 our State compared with other States. 
 
 With us, coal is used mainly in the winter season, and for domestic 
 purposes, and for quality, quantity and cheapness of production cannot 
 be compared with Illinois coal. 
 
 This necessary high price of coal is a fact of as much importance to 
 the Atchisou road as a consumer as it is to the other consumers along its 
 line. If the road was as favorably situated with reference to coal as are 
 the great roads in Illinois, it would be of incalculable value to the road 
 itself, as well as its patrons; and it could afford to move it at Illinois 
 rates, while all other rates could also be reduced. 
 
 It will be seen that there are three reasons why coal cannot be moved 
 at as low a rate in Kansas as in Illinois first, smaller volume of move- 
 ment; second, less uniformity of movement; third, greater cost of the 
 coal consumed by the road in the movement. The last reason is also a 
 material element in enhancing the cost of all freight and passenger move- 
 ments on this road. 
 
 No. 5. A glance at the map of the United States will show that Illi- 
 nois is so located, and the railroad routes east and west are so established, 
 that the vast commerce of the great West, Northwest and Southweast, 
 each an empire of itself, is poured to and fro in ceaseless volumes across 
 that State. The same remarks apply to Indiana and Ohio rates. It 
 
8 
 
 goes and comes by the unbroken train-load, and costs those roads very 
 little in the way of original investment or of current expenses to gather 
 it up, compared to what it has cost the Atchison road to gather up and 
 in most cases to actually create its through business from the west; and 
 in this way the roads of that State are assisted by their location, and 
 have means of reducing local rates accordingly. 
 
 No. 6. There are other special reasons, each of a material character, 
 which operate against the cheapness of rates on the Atchison road, such 
 as, liability to drouth in some parts of the State, the high percentage of 
 land unfitted for cultivation, and destructive effects of lime and alkali 
 water on boilers and machinery. A set of locomotive boiler flues lasts 
 three years in Missouri or Illinois, and only eight months in Kansas. 
 
 It must be conceded that these differences are substantial; that they 
 are based upon sound business principles; and that they appeal to the 
 common sense of every intelligent man. 
 
 INTERNAL EVIDENCE. 
 
 There is also a mass of internal evidence, not dependent upon com- 
 parisons, going to show that Kansas rates are reasonable, and some of 
 which should be noticed. Every road in the State, except one, has been 
 forced by these rates into bankrupcty. At present, on no Kansas road 
 will Kansas business more than pay running expenses, fixed charges, 
 and keep the road up in repair. But few of them can do that much, 
 and not one can pay a dividend on Kansas business. Except the 
 Atchison road, not one of them has been able to stand alone, and not 
 one of them could do so now except for the aid it receives from its 
 stronger foreign allies, who live in hopes of a better future. Even the 
 Kansas Pacific, with the aid of its Colorado business, became so poor that it 
 could not furnish facilities for the convenience and safety of its patrons, 
 and finally ceased to exist as an independent road. These results 
 mainly were the necessary product of the situation, and could not have 
 been avoided, when the rates and amount of business are considered. 
 On all Kansas roads, during all these years, the rates have constantly 
 been decreasing and have not materially varied compared with each 
 other. The desperately bad condition to which some of them have been 
 driven in the way of facilities for the comfort, convenience and safety of 
 their patrons, is becoming known to your Board. That the Atchison 
 road is an exception to this rule, may be accounted for by reasons which 
 will appear further on. 
 
 None, except those entirely ignorant of the rudiments of the subject, 
 have ever pretended that the rates on local freight gathered up along 
 the line of a road, should be as low as through rates on the great trunk 
 
9 
 
 lines between important points, where the large volume of business, its 
 continuous supply, competition by water and rail, assurance of return 
 freight, absence of local station charges, and many other circumstances, 
 make low rates possible. It can readily be seen that rates from points 
 west to the Missouri river cannot be as low as those from the Missouri 
 river^ to Chicago, and that the latter cannot be as low as those from 
 Chicago to New York, nor the last as low as those from New York to 
 Liverpool. It is equally true, and for the same reasons, that rates between 
 intermediate points both of which are within any one of these great di- 
 visions, can be made less as we go east, because it costs less to do the 
 business, all things considered. 
 
 The relative low price of lands and all real estate at local stations- 
 and in remote sections, compared with prices near great competing cen- 
 ters, has been long fixed with reference to this law of transportation. 
 Take land in central Kansas, which will produce sixty bushels of corn 
 or twenty-five bushels of* wheat per acre, and compare it with land of 
 equal productive capacity in central Illinois or central New York, and 
 the disparity in prices will be enormous. The present disparity between 
 rates is not so great as that between prices of land at those three points, 
 as is shown by the enormous emigration to this State. That is to say,. 
 Kansas rates are the cheapest, all things considered, or the tide of emi- 
 gration would be reversed. It is in the interest of Kansas roads, as 
 well as of the State, that this condition should be maintained, and it is 
 not right, by summary action in the interest of one party only, to force 
 rates down to a point which will make the disparity still greater, when 
 it is at present enormously in favor of Kansas growth and development* 
 
 We submit, therefore, that the facts, first, that Kansas rates permit a 
 development nowhere equaled, and second, that Kansas rates on Kansas 
 business do not pay expenses, furnish internal proof not dependent upon 
 comparisons which may be faulty, that the Atchison rates comply with 
 the law which requires them to be reasonable. 
 
 THROUGH AND LOCAL RATES. 
 
 It may not be out of place to notice here the statements which are 
 sometimes made, that rates from local points are too high, compared 
 with the low rates which are made for longer hauls between great com- 
 peting points, and that, if the roads can afford to do the competitive 
 business at the low rates received, they can afford to do local short-haul 
 business at corresponding rates. 
 
 Now the facts are, that nearly all railroads have to earn a large part 
 of their living from their local business, and are obliged to take the 
 through or competitive business for whatever profits they can make out 
 
10 
 
 of it, or not take it at all ; and to the extent of their net profits on their 
 competitive business over and above actual cost of the train service, they 
 can reduce their local rates. 
 
 A competitive point is one whose location, or water communication, or 
 numerous railroad extensions to different markets of the world, are such 
 that the town has power to dictate to a given railroad its rates from that 
 point. The road should be allowed, in the interest of its local patrons, 
 as well as in its own interest, to accept the^business at even this low rate, 
 if it can make even a small profit from the same. Deprive the road of 
 that small profit, and then it must necessarily exist alone on the local 
 business. The road is constructed through to the competitive point 
 mainly for the purpose of doing the way business. Its fixed charges, in- 
 terest on bonds, taxes, maintenance of way, etc., go on year after year, 
 whether it takes or refuses the competitive business. If it is forced 
 to reduce its way business to a mileage rate corresponding with the 
 rate which the competitive point, on account of its location, can force 
 it to take, it is robbed of its sustaining power, and must go into 
 bankruptcy. Sooner than accept this alternative, the road would be 
 obliged to give up the thorough business, and maintain itself on its 
 local business. If it charges only a fair rate to its local patrons, 
 a rate very much less than they could get in any other way, it 
 seems plain that it should be allowed to take business at the competi- 
 tive point at any rate which may be forced upon it, provided it yields a 
 profit above the naked cost of the train service. It is that or nothing 
 with the road. As before stated, such through business can be and 
 should be done materially cheaper than a scattered local business; but 
 wherever the through rate is cut down to a point below what it should 
 be, compared to the local rate, as between Kansas City and Chicago, or 
 Chicago and New York, it will be found that such low through rate 
 was forced upon the road by a power over which it had no control, as in 
 the former case by the rival route to the world's markets, the Missouri 
 and Mississippi rivers, and in the latter case by the Great Lakes and the 
 Erie canal. Now, while the through rate on grain from Kansas City or 
 St. Louis to New York is lower than it should be, compared with local 
 rates, and is lower than the rates from local points on the roads, which 
 points are nearer New York, still those roads must take the grain at 
 whatever prices the rival river route to the ocean dictates, or leave it 
 alone. If the through rate pays even a small profit above actual cost 
 of the haul, it helps the road that much, and it helps the local patrons 
 that much, as th f e roads must be kept running by some one; and more 
 than all others, it helps the Kansas farmer. The tendency of railroads 
 when left alone is always to give long-haul shipments the preference, 
 
11 . 
 
 and any inter-state commerce legislation by Congress will inevitably 
 tend to increase the rates between the Atlantic seaboard and Kansas; 
 and while it may help some intermediate State, it will injure the Kan- 
 sas producers. 
 
 This same sound business consideration is sometimes presented to a 
 road on its State business. Same natural product remains dormant, or 
 is going to decay. It cannot be utilized by its owners at rates which are 
 required on the mass of busines^ in order to keep the road running. 
 But the somewhat less rate which it can pay will make a little profit to 
 the company (above the cost of train service), considering that the fixed 
 charges of the company (about fifty per cent, of entire expenses of the 
 road) are going on whether this particular business is or is not taken. 
 Now if this product does not come into competition too much with pro- 
 ducts which are paying full rates, it may be best for all parties that it 
 be encouraged. There is a perfect maze of facts, figures and conditions 
 which bear upon each one of the numerous applications of this kind 
 which are constantly being made to a great system of roads, and there 
 is an exceeding reluctance on the part of any management to enter into 
 this branch of rate-making; for however wise the result, it will be sub- 
 ject to hostile criticism by those who are not educated into a perfect 
 knowledge of the entire situation. 
 
 I have given ample reasons why rates for all distances on the Atchison 
 road should be materially higher than those of an old State like Illinois, 
 and have pointed out internal evidence, which, if it does not absolutely 
 prove, at least raises a strong presumption that such rates are rea- 
 sonable. 
 
 RAILROADS THE FRIENDS OF LONG-HAUL TRAFFIC. 
 
 Notwithstanding these decided disadvantages with which the Atchison 
 road has had to contend, the Board of Commissioners, in their prelimi- 
 nary consideration of January 1st last, show that for the first seventy miles 
 west of the Missouri river, these rates are substantially as low as on 
 roads of the first class in Illinois, and should not be disturbed the 
 Illinois rates having been prescribed by State commissioners who had 
 ample powers conferred on them by law, who were acting in the interest 
 of low rates, and who, it is claimed, were traffic experts. 
 
 The fact that the Atchison road, with the odds so largely against it, 
 has voluntarily made a very low rate for these distances, certainly does 
 not show a grasping disposition on the part of the road at points where 
 it might have been exercised as freely as at any other points. The facts 
 will show that for longer hauls those rates have been placed equally low, 
 all things considered. 
 
 In this connection, it should be remembered what the road has already 
 
12 
 
 done voluntarily in the way of equalizing the charges for long hauls 
 compared with the charges for short hauls, and of placing towns remote 
 from the Missouri river on an equality with towns nearer the river. 
 
 From Great Bend to the eastern terminus of the road at Atchison, 
 the distance is about 269 J miles, and the rate on cattle is 35 per 
 car, on wheat 23 cents per 100 pounds, and on corn 14 cents per 100 
 pounds; while the distance from Topeka to Atchison is about 50J miles, 
 and the rates'are, respectively, 20, 9 cents, and 8 cents. It will be 
 seen that, while the distance from Topeka to the Missouri river is only 
 about 19 per cent, of the distance from Great Bend to the Missouri 
 river, the Topeka shipper pays about 57 per cent, as much on cattle, 
 about 40 per cent, as much on wheat, and about 57 per cent, as much on 
 corn as the Great Bend shipper pays*. In other words, while Topeka 
 pays 40 cents per mile per car of cattle, Great Bend pays but 13 cents 
 per mile per car; while Topeka pays 3J cents per ton per mile on wheat, 
 Great Bend pays but 1 T 7 ^ cents per ton per mile; and while Topeka pays 
 3^- cents per ton per mile on corn, Great Bend pays but 1 cent per ton per 
 mile on corn. The reasons why these large percentages in favor of the ship- 
 per for long distances are not always the same are susceptible of explana- 
 tion, and have been, as I am informed, heretofore set forth to your Board. 
 The percentages in favor of shippers in central and western Kansas, 
 compared with those nearer markets, also exist in a similar way on all 
 freights on the Atchison road, and to and from all the great markets 
 east, with which nearly all Kansas business is done. 
 
 If this stock was driven, or if this freight was carried by wagons or 
 by any other appliances known to man, it would cost very nearly a 
 given price per ton per mile, be the distance long or short. Thus it 
 will be seen that the great discrimination which nature set up in the 
 way of the settlers of the more remote parts of Kansas, but which did 
 not nevertheless prevent them from seeking those fields, has been in 
 great part already removed by railroads alone, when it could not have 
 been removed by any other power. And further, U will be seen that 
 the charges made by the Atchison road from points within seventy 
 miles of the Missouri river, while in themselves reasonable as stated by 
 the Commissioners, "judged by any standard of comparison," are still 
 enormously higher in proportion to the distance than are the charges 
 from more remote sections of the State. 
 
 The passenger from Coolidge, Dodge City, Great Bend, or Newton, 
 pays as much, mile for mile, as the Topeka or Lawrence passenger pays, 
 and no complaint is made. In the early history of railroading, freight 
 charges were made on the same basis, but steadily year after year, the 
 railroads have thus voluntarily, even on local freight where there is no 
 
13 
 
 competition, annihilated distance, and placed remote sections vastly 
 nearer markets than the distance away would justify when measured 
 by the surveyor's chain. 
 
 RATES FOR EASTERN AND WESTERN KANSAS. 
 
 But the complainants ask the road to place them still nearer the Mis- 
 souri river compared with places within the first seventy miles of the 
 road; and it is found that local rates for long hauls on the great roads 
 of Illinois are lower than they are in Kansas. The roads of Illinois 
 have always insisted that their rates for long distances were placed too 
 low. I know nothing as to that, but if there are not good resons why 
 the Illinois rates should be lower than Atchison rates for long distances, 
 then the Atchison road, I have reason to believe, will voluntarily agree 
 to reduce its rates accordingly. 
 
 The Atchison company did not fix its rates on the first seventy miles 
 of its road as low as Illinois, and for longer distances somewhat higher, 
 simply by accident, or from choice, or on account of friendship or 
 enmity to any part of the State, but they were so fixed on sound busi- 
 ness principles and from necessity; and if any power on earth can be 
 devised to remove, or evade, or still further reduce the discrimations 
 set up by nature, it will be as much for the interest of the company as 
 for its patrons that it be at once employed. 
 
 Almost every fact.advanced to prove that railroading in general and 
 for all distances is more expensive in Kansas than in Illinois, applies 
 with greater force to show that the longer distance hauls on the Atchi- 
 son road are specially expensive. 
 
 First. The eastern seventy miles of the State is more than four times 
 more densely populated than the remainder of the State. There is no 
 such local disparity in population between localities in Illinois as appears 
 in Kansas. This difference in population not only indicates to some 
 extent the difference in volume of business, but it is a fact which will 
 be apparent to anyone on reflection, that all the large number of ex- 
 penses which go to make up the entire cost of handling a business, large 
 or small, are less in an old-settled and densely-populated country than 
 in one sparsely populated. 
 
 Second. Every great road in Illinois terminates at both ends on navi- 
 gable waters and at great trade centers, or passes through great trade 
 centers near the borders of the State. This not only increases the aggre- 
 gate volume of business, and reduces the expense of transacting it, but 
 it puts all parts of the road nearer a base of supplies, a factor of no 
 small importance, as before shown. If St. Louis, with its markets, its 
 prices, its surroundings, its cheap supplies of lumber, railroad ties, iron 
 
14 
 
 and coal, was at Coolidge or Dodge City instead of where it now is, 
 with a cheap, direct and independent water-route outlet to all the great 
 markets of the world, how plainly would the situation be reversed. 
 With a rival base of supplies for the western divisions of the company, 
 rival markets for provisions, live stock and produce at various points 
 on the road, this long-haul State traffic would largely become short-haul 
 traffic, with the short-haul prices which the road is now getting, and 
 which are conceded to be fair. 
 
 Third. The volume of business on the Eastern Division of the road 
 ending at Emporia, is enormous compared with the volume of business 
 on the western part of the road. For example: For the four weeks end- 
 ing January 26, 1884, there originated on the Eastern Division (about 
 357 miles) 6,137 cars of freight, and on the other 625 miles of road in 
 the State only 2,737 cars. While each mile of the Eastern Division 
 furnished 17.2 cars per mile, only 4.4 cars per mile were furnished by 
 the western divisions. In the one case there are many less stations to 
 transact a much larger business; the help is employed more steadily ; 
 there is less loss of time; the cars are more apt to be loaded to their 
 maximum ; there is less empty-car hauling, as there is more return busi- 
 ness; and there are many other tangible elements of saving. 
 
 In short, in one case, it is a condensed wholesale business, transacted 
 on only about one-half the mileage, with a corresponding small amount 
 of money invested in the roadbed, and with every 'appliance at hand, 
 compared, in the other case, with a business of about one- half the 
 amount, scattered over about twice the territory. In all other industries 
 known to man, it would be regarded as just, to consider these elements 
 of cost, and there is no reason why they should not have equal weight 
 in the present case. The cost of one mile of this western road was 
 about the same as a mile of the eastern road, and by far the greater 
 expenses of sustaining a railroad do not vary with the amount of service 
 rendered, but are in the nature of what are known as " fixed charges/' 
 such as taxes, interest on cost, and maintenance of roadbed, and go on 
 year after year, whether more or less business is done. It is not prac- 
 ticable to ascertain the exact cost of business on each of the two great 
 sections of road above named, but it is sufficiently clear, from a com- 
 parison of the sura of those distances, and a comparison of the relative 
 amount of business in each case, and of the rates charged per ton per 
 mile in each case, that if there has been any discrimination shown by 
 the company, it has been in favor of the western part of the State. 
 
 Fourth. An ordinary heavy freight engine can haul on an average 
 fifty loaded freight cars from Topeka to Kansas City, the terminus to 
 which the greater part of all shipments are made, while the same engine 
 
15 
 
 can haul on an average only eighteen loaded cars from Eraporia to 
 Topeka, and only twenty-five loaded cars from Nickerson to Emporia. 
 A mere statement of this fact renders comment unnecessary. 
 
 The Atchison company should not be held responsible for the hills 
 encountered in Osage and Lyon counties, nor for the hills, only a little 
 less prominent, still further west; although it has reduced them as 
 much as is practicable, at great cost and labor. 
 
 COMPARISONS WITH OTHER STATES. 
 
 Having stated some of the reasons why railroad rates in Illinois can 
 be made lower than in Kansas, it will be proper to institute a few ad- 
 ditional comparisons with roads whose cost of business is more on an 
 equality with the cost of business in this State, and I herewith submit 
 to the "Board of Commissioners for examination and comparison tabu- 
 lated and authenticated schedules of the rates which prevail on a num- 
 ber of well-known roads, located in sections of the country where the 
 surroundings, business and conditions are nearest like those of the Atchi- 
 son road. 
 
 The Board will find that the rates on the eastern divisions of the 
 Northern Pacific road average from 20 to 90 per cent, higher than 
 those of the schedule on which the Atchison company has done the 
 greater part of its business in this State. 
 
 The schedules in force on some of the chief roads in Nebraska, a State 
 where the Legislature has assumed the power to regulate rates in part 
 at least, range from 20 to 60 per cent, higher on nearly all classes of 
 freight and for nearly all distances, than the Atchison local tariff. 
 
 The Milwaukee & St. Paul schedule for Iowa State business aver- 
 ages about the same as the Atchison schedule on produce and livestock, 
 while it is somewhat lower on merchandise for long distances, and 
 higher for short distances. 
 
 The inter-state tariffs of this road, and of the Chicago & Northwestern 
 road, and of the Chicago, Rock Island & Pacific road, which tariffs also 
 govern business between points in Minnesota, range decidedly higher than 
 the Atchison tariff for corresponding business. 
 
 Rates on the Burlington & Missouri River road in Nebraska, on the 
 great bulk of business, average from 10 to 20 per cent, higher than the 
 Atchison rates. 
 
 The distance tariffs of the Missouri Pacific road and of the St. L >uis 
 & San Francisco road, when applied to terminal business, are noticeably 
 higher than these tariffs for corresponding business. Lumber, it is 
 true, is lower per hundred pounds in Missouri, but Missouri lumber 
 consists mostly of heavy pitch-pine and oak, and the difference would 
 
16 
 
 disappear when compared per thousand feet with soft lumber. The 
 Missouri Pacific inter-state tariff, for most of its system, is very much 
 higher than the Atchisou tariff. On no class of articles are the Atchison 
 rates higher than the rates which prevail on the great Louisville & 
 Nashville road, and for most classes they are noticeably lower. The 
 Louisville & Nashville tariff has been approved by the State Commis- 
 sioners of Alabama as reasonable for the roads of that State, as evidence 
 herewith submitted shows. Moreover, on this road and on most other 
 roads where these comparisons are made, it is customary to make the 
 charge for shipments from points on their leased lines to points on the 
 main line, and vice versa, equal the sum of the two rates, which still 
 increases the charges, a practice which never prevailed on the Atchison 
 system. 
 
 The Atchison local rates average lower than the rates of the Mis- 
 souri, Kansas & Texas road, and also lower than the rates of the St. 
 Paul, Minneapolis & Manitoba,, a road running into the heart of the 
 great Red river wheat regions. The same holds true with the Han- 
 nibal & St. Joe rates. 
 
 The rates prescribed by law in Wisconsin on most shipments, nota- 
 bly on live stock and produce, are from 10 to 30 per cent, higher 
 than Atchison rates. Some of the above tariffs, though in name dis- 
 tance tariffs, are in fact combination tariffs, under which all business 
 of the respective roads to terminal points is transacted, as for instance 
 to St. Louis; and taking into account the small amount of business be- 
 tween intermediate points, such tariffs should be more properly com- 
 pared with the Atchison rates to and from Missouri river points. 
 
 But it should be remembered that the greater part of the so-called 
 State business of the Atchison road is in fact inter-state business, ter- 
 minating at Kansas City, in Missouri, over which Kansas has no control. 
 Now, when the inter-state tariffs of the great roads in the west are 
 compared with the rates which the Atchison road has been receiving 
 for this inter-state business, the difference is still more largely in favor 
 of the Atchison rates. True, there is a class of inter-state business 
 moving in large volumes from competitive points on the Missouri and 
 Mississippi rivers, or from points on the Great Lakes to the Atlantic sea- 
 board, which is not done in the main under the above inter-State tariffs, 
 but which is moved at any price which may be forced upon the roads, 
 provided it is a little above the naked cost of the train service, as here- 
 inbefore explained. 
 
 A reference to the census returns, and to Poor's Manual, will show 
 that Wisconsin, Iowa, Missouri, Arkansas and Tennessee, where these 
 State and inter-state tariffs take effect, are much older States than 
 
17 
 
 Kansas, and have a greater density of population per square mile than 
 Kansas, and also a larger population per mile of railroad than Kansas; 
 and there can be no doubt, as before stated, that the lower rates which 
 Kansas has enjoyed, compared with these States, accounts in part at 
 least for the financial failure of so many Kansas roads, and also in part 
 for the recent and present more rapid development of Kansas than of 
 other and new States like Minnesota and Nebraska. The statistics of 
 these States, all of which are old-settled States compared with Kansas, 
 and all of which admit of a greater uniformity of settlement than Kan- 
 sas, are as follows: 
 
 STATES. 
 
 Population 
 per 
 square mile. 
 
 Population 
 per mile 
 of railroad. 
 
 
 29 
 
 234 
 
 
 33 
 
 482 
 
 
 37 
 
 746 
 
 
 15 
 
 523 
 
 
 24 
 
 344 
 
 
 12 
 
 234 
 
 
 
 
 Minnesota and Nebraska, though settled as early or earlier than 
 Kansas, and similarly situated with reference to the capacity for uni- 
 form settlement, have not advanced as rapidly in population as Kansas, 
 and the greatest known factor in this difference is the lower rates which 
 Kansas has enjoyed. It will be found that wherever comparisons are 
 made with a fair understanding of the surroundings and conditions, the 
 conclusion is clearly in favor of the view that Kansas has enjoyed rea- 
 sonable rates. Minnesota, Nebraska and Texas are the only States sit- 
 uated like Kansas for purposes of comparison of rates. Wisconsin, 
 Iowa, Missouri and Arkansas are more favorably situated as to popula- 
 tion, volume of local business, convenience to base of supplies, etc. 
 But the above four States are all about equally distant from a base of 
 supplies, are all somewhat densely populated, for such i new States, in 
 their eastern parts, and all extend out onto the Plains in a similar way. 
 Still, if the eight States are taken together, it will be found that local 
 business on the Atchison system is and has been done at decidedly the 
 lowest rates. 
 
 Comparisons have been made of charge per ton per mile of the total 
 traffic of the Atchison road for the year 1883 with the charge per ton 
 per mile on the total traffic of certain great roads entering Chicago, whose 
 business is confined almost exclusively to the States of Illinois, Iowa, 
 Missouri, Wisconsin, and Minnesota. 
 
 The unfairness of this test will be conceded when it is remembered 
 that more 'than one-half of the Atchison system extends over plains, 
 
18 
 
 deserts and mountains which furnish a meager business, and where the 
 necessary high charges per ton per mile go to make up a much higher 
 charge per ton per mile on the total traffic than would be the case if 
 business in the State of Kansas alone was taken into account. 
 
 The fact that certain points in central and western Kansas furnish 
 only two, three or four articles to ship in any quantity, for example, 
 wheat and live stock, or corn and livestock, and that New Mexico fur- 
 nishes only two articles in any quantity, to wit, silver ores and wool, 
 has been set up as a reason why the road should make the rates on those 
 articles very low, in the interest of the producers of the same. So the 
 road would no doubt, if it were possible, but the very fact of there be- 
 ing no diversity of production renders the transaction of what business 
 there is more expensive for the road. 
 
 If agriculture flourished in New Mexico along with its mines, or if 
 mining or manufactures, or even a more diversified agriculture existed 
 among the farmers of western Kansas, the entire traffic, as can readily 
 be seen, could be disposed of on a lower scale of rates than at present. 
 
 Another mistaken idea has been advanced in connection with these 
 hearings, namely, that the percentage in decrease of rates should equal 
 the percentage in increase of business. Now no doubt the cost of mov- 
 ing freight, that is the naked train expenses, does decrease in such ratio, 
 or perhaps in greater ratio; but about 50 per cent, of the entire amount 
 of all rates goes to pay the fixed charges of the road, such as interest 
 and taxes. These fixed charges cannot be diminished, however large 
 the traffic. If the business should increase 100 per cent, and the rates 
 should decrease 100 per cent., the goods would go for nothing. 
 
 FACTS TO BE CONSIDERED IN DECIDING THE QUESTION OF 
 SEASONABLE PKOFITS. 
 
 It must be conceded that it is a business problem of great magnitude, 
 to determine whether the power of this road to earn receipts should re- 
 main where it is, or whether it should be abridged, and if abridged, to 
 what extent; also, whether this power should be exercised, if at all, by 
 the Federal Government on inter-state commerce, or by which one of 
 the seven States and Territories into which the system extends. 
 
 No business problem of this magnitude can be rightfully treated with- 
 out a knowledge of its surroundings and history. It will therefore be 
 necessary to allude briefly to a few general and controlling features 
 which govern the present situation. The company which built up this 
 great system of roads in a field where all other railroad efforts had 
 failed, and in a country where no similar effort has succeeded to the same 
 extent under like circumstances, has constantly kept in view the im- 
 
19 
 
 portance of imposing its necessary burdens among these seven political 
 divisions in the most equitable manner, to the end that each should bear 
 only its due share; and this by the aid of skilled and experienced agents, 
 many of whom have grown up with the road, and whose duties enable 
 them to examine the entire field to the best advantage. But with 
 Kansas as its base of operations, there can be no doubt that it has, 
 necessarily in many cases and voluntarily in other cases, conferred upon 
 this State vastly more incidental benefits, in proportion to its Kansas 
 receipts, than it could have done had the system been built only to the 
 west line of the State, and also vastly more than it has been able to 
 confer upon the States and Territories farther west. 
 
 This was, to some extent, the inevitable result of the situation, but 
 to a greater extent it was the result of the mutual friendship and har- 
 mony of the people and the company, both working for the same re- 
 sult the development of the State and the enhancement of all values. 
 The benefits thus conferred are seen from the east to the west line of 
 the State, in substantial fences, bridges and roadbed, in superior equip- 
 ment, and in commodious roundhouses, depots, offices, machine and 
 repair shops. Improvements of this character have not been made 
 solely from selfish considerations, for they are of equal value to the 
 patrons of the road, as promoting the comfort, convenience, certainty 
 and safety of travel and business, to the communities among whom the 
 money for their construction was distributed, and to the road itself. 
 
 Your commission has heard the complaints and seen the effects on a 
 community of a poor road in bad repair, and can appreciate the differ- 
 ence in value to the people of a well-preserved compared with a de- 
 crepid railroad. Every intelligent community requires its railroads to 
 be kept up abreast of the times, knowing that in the end it can thus do 
 business cheaper, with more satisfaction to all parties, and assist the 
 growth of their country. 
 
 While the rates in various States and Territories of this system have 
 been adjusted as nearly as possible with reference to the actual cost in 
 each case of rendering the service, it can readily be seen that Kansas 
 has been largely favored as the recipient of incidental benefits, and it is 
 a notorious fact that the management of the road have always given 
 Kansas the benefit of a doubt in these respects, and spent large amounts 
 of money in helping to build up the State when it might with more 
 propriety have gone elsewhere. 
 
 Two conclusions result from this state of facts: 
 
 First. It is fair to presume that a State thus voluntarily favored in 
 these respects has been at least put on an equality in the way of rates 
 with the other States and Territories and with inter-state business, and 
 
20 
 
 the records of the company confirm this presumption to an extent little 
 understood by the people of Kansas. 
 
 Second. That common fairness and public policy require that an en- 
 terprise which came into the State at the unanimous request of the 
 people, which has performed its service at rates which have from time 
 to time been voluntarily and largely cut down, and which has con- 
 ferred such valuable incidental benefits, should at least be allowed to 
 hope for profits equal to the best that can be expected from enterprises 
 of less public benefit, such as loaning money on mortgage, and invest- 
 ments in real estate. 
 
 It should also be remembered, that each of the other six States and 
 Territories embraced in the Atchison system may claim the same right 
 to cut down charges after the system of rates has once been broken into 
 by the State of Kansas; and also that the Federal Government is 
 threatening in like manner to cut down inter-state charges, and already, 
 only a few days ago, a bill passed one branch of Congress reducing by 
 one-half the regular charges for carrying the United States mails on the 
 Atchison road. It would be an act of common justice between sister 
 States and Territories, and it would distribute the inevitable burdens of 
 life more equitably and protect the future usefulness of this great prop- 
 erty, to have whatever reductions future developments may show to be 
 possible made uniformly and by the road, with all things considered, 
 rather than to have the system broken in upon by one State or Territory, 
 without regard to the condition or rights of the others. 
 
 Looking over the history of the State and the history of the road, the 
 relations of the two, and the reductions of the past, there can be no dan- 
 ger that Kansas rates will suffer in the future by comparison with the 
 others. 
 
 Again, it is a principle of political economy, everywhere recognized 
 as based upon common sense, that every financial enterprise should have 
 an opportunity for profits, if it succeeds, corresponding to the risks 
 which it assumes. Without such fair corresponding chances, all pro- 
 gress would cease, and a dead level of inaction would stay the advance 
 of civilization. Now, it is a notorious fact that, as a whole, there have 
 been immensely larger losses and bankruptcies in railroad investments 
 in Kansas than in any other, class of business. The ardent projectors 
 under-estimated the cost of the roads; they over-estimated the business; 
 they built ahead of the times; they were urged on to their work by the 
 united voice of the people; they failed to discount the drouth and other 
 scourges which subsequently visited the State; and they were offered a 
 a charter which conceded to them the privilege of making their own 
 rates, which charter at the time everyone believed to be a valid con- 
 
21 
 
 tract, under the Dartmouth College decision of the Supreme Court of 
 the United States. 
 
 It will be seen that the risks were enormous, and the signal and 
 almost uniform failures confirm this fact. I do not refer to this for the 
 purpose of entering up a claim for corresponding profits, as might well 
 be done, but this matter of public history is an element which common 
 justice requires should not be lost sight of in approaching the question 
 of profits. 
 
 There is no doubt, also, but that public policy requires that enter- 
 prises should be encouraged in proportion to the benefits which they 
 confer on the people. An enterprise of doubtful moral tendencies, or 
 which draws its sustenance without dispensing public benefits, should 
 be treated by the law with a jealous hand. Now railroads, as was once 
 stated by this Board, "have done more perhaps towards securing to 
 this State its present prosperity than all other enterprises combined," 
 and judged by this test should be allowed corresponding profits com- 
 pared with any and all other investments. 
 
 Again, whether a railroad property or any other property deserves 
 to have its receipts increased or diminished, is a question not dependent 
 solely, or even mainly, on the dividends which may have been declared 
 for a short period of time, but it depends in a large degree upon the 
 chances for earnings and net profits in the future. In the present case 
 the opinion of the investing public at a time when capital is seeking 
 investments, is on record in the fact that Atchison stock is openly sell- 
 ing at from seventy-five to eighty cents on the dollar, while other roads 
 further east, paying the same dividends, but whose future is deemed 
 more assured, sell at par or largely above par. 
 
 The past five years have been years of exceptional prosperity and 
 activity, especially for railroads. Nothing like it was ever before known. 
 A wonderful business impetus seized hold of the people after the pre- 
 ceding season of depression, and at least an ordinary decade of business * 
 advance was crowded into one-half of the usual time. The Atchison 
 road has shared in this prosperity. It received large sums of money 
 for carrying the railroad material which this company and other friendly 
 companies were constructing in far distant localities during these pros- 
 perous years. 
 
 This freight money did not come from the pockets of the people on 
 the line, but from the construction account of the new roads. These 
 roads are now nearly all completed. It would be an exception to all 
 history if the law of reaction was not now felt. The only question is 
 as to its severity. Exceptional crops in Kansas, and exceptional efforts 
 on the part of the railroads, combined with a partial failure in other 
 
22 
 
 States, will enable this State, we hope, to make a good showing again 
 this summer. If this development can be continued in the future, so- 
 much the better for the State and the company, and freight rates should 
 then be and no doubt would be made accordingly. 
 
 But the history of Kansas and of the road for the ten years imme- 
 diately preceding this last era of five years, taken in connection with 
 the ordinary reaction which follows in the wake of such a wave of in- 
 dustrial activity, demands that such an enterprise upon which so much 
 and so many depend should be conducted upon conservative principles. 
 The processes of a great and far-reaching enterprise like this should be 
 like the processes of nature, gradual but reliable, and eager haste in the 
 one case, like a hot -bed method in the other, may not prove best for the 
 railroads, for the State as a unit, or for the people. We do not wish to 
 predict drouth, distress or any scourge of nature. They are bad enough 
 when they arrive, but common prudence, when the hopes and subsistence 
 of so many thousands are bound up in an enterprise, requires a reason- 
 able preparation for that reaction which all experience shows will come- 
 in a greater or less degree. 
 
 Railroad business is also peculiar in this: Other business enterprises- 
 have the privilege of accumulating the largest amount possible in times- 
 of prosperity, unrestricted by law, and if a dull time comes in that par- 
 ticular line, they have a margin of profit on which to reduce prices, or 
 they can change into other business, or if needs be, shut down for the 
 time being without special loss, and start up again at any time, not limited 
 as to prices except by competition. But when any general decline i& 
 made in railroad rates, if continued for any length of time as a basis on 
 which to sustain the road, experience shows, as this Board is aware, how 
 difficult it is ever again to make a general advance, however just and 
 necessary it may be that the advance should be made. It is difficult to- 
 even adjust or level up a rate on a particular article at a particular town, 
 when by accident it has been thrown out of its true relation to other rate* 
 at other towns. Suppose rates on the Atchison road should now be cut 
 down on the basis of the present business and present expenses of the 
 road, so as to cut off or materially interfere with the present moderate 
 surplus which the company is endeavoring to provide during these pros- 
 perous times, after paying its dividend of six per cent., then what 
 would follow in the not improbable event of other States and Ter- 
 ritories cutting down rates, or of the Federal Government interfering 
 with its inter-state commerce, or of a business reaction setting in, or 
 of drouth or distress of any kind affecting the people, or of the roads 
 being stricken with floods, or disaster, or accidents involving loss of life 
 and property, from which this road has been so free for the past few years,. 
 
23 
 
 but which are so imminent on a line of road of nearly 2,000 miles. As 
 an example, during the past month, a railroad connecting with the 
 Atchison system lost a sum estimated at from five hundred thousand to 
 one million of dollars as the damage inflicted by a few heavy rains in 
 Arizona and southern California, while the well-known Ashtabula dis- 
 aster cost the Lake Shore road in direct damages about one million of 
 dollars. 
 
 The road cannot insure itself against these losses, and the State will 
 not insure it against them. It cannot advance its rates during a public 
 distress, or during its own distress, above what the public are ac- 
 customed to. It cannot change its business, and it cannot go out of 
 business. It will be seen that it absolutely has no recourse in events of 
 the most probable character and within the range of the most common 
 experience, unless it be allowed to accumulate a reasonable surplus in 
 prosperous years. 
 
 It cannot be presumed, when this whole subject is examined on busi- 
 ness principles and in view of all the facts, that either the people or the 
 State will deem it just to place an enterprise wtyich has been such a 
 great benefactor to the State, directly and indirectly, in so close a place, 
 with the odds all against it, as though it were a malefactor or a public 
 ^nemy; neither can it be presumed that the people or the Board of 
 Commissioners ever so intended. 
 
 In determining, then, the question of what now constitutes fair pro- 
 fits, these material elements of the problem must be taken into account: 
 
 First. Railroads have conferred more benefits upon the State than all 
 other causes combined. 
 
 Second. While performing its regular duties to the public, the Atchi- 
 fion road has also conferred upon the State incidental benefits of great 
 value, and more than its Kansas business, compared with its entire busi- 
 ness, would justify. 
 
 Third. One State or Territory should not cut off receipts, unless all 
 the other political powers having jurisdiction could at the same time 
 cut off receipts to an equal extent, and then leave the company its fair 
 margin of profit. The burdens at present being uniformly distributed 
 and divided upon principles of equity, they should remain uniform. 
 
 Fourth. Profits should be allowed in view of the enormous risks 
 which were incurred risks which for several years threatened to over- 
 whelm the entire property, and during which the stock became worth- 
 less, and the first-mortgage bonds sold for less than one-half their cash 
 cost. 
 
 Fifth. Whether receipts should be cut down depends not entirely or 
 mainly upon the immediate profits made during a period of exceptional 
 
24 
 
 prosperity, during which all other profits and increase of values were also- 
 large, but upon the future chances, examined in the light of the past 
 history of this company and of such enterprises. 
 
 Sixth. Reductions cannot be made with a view of again making advan- 
 ces in the event of the enterprise becoming unprofitable. A step which 
 cannot be recalled if it proves unwise, should be taken with great cau- 
 tion, especially if it seriously affects an important and deserving inter- 
 est. 
 
 The considerations above presented are based upon the theory that 
 the business of this Atchisou railroad was business lying within the 
 State of Kansas only business which arose out of and was dependent 
 entirely upon the State development; but when we come to view the real 
 facts in the case in connection with the business of this great through 
 line, we are forced to the conviction that legislation which is aimed at 
 the profits of such an enterprise as this, is the most unwise legislation 
 which the State could enact, because, in striking at the results of such 
 an enterprise as this, the same blow is also struck at the direct material 
 interests of the State itself. A clear exemplification of this fact is given 
 in the following figures, showing the source from which the freight traf- 
 fic of this Atchison road sprung in 1882: 
 
 The accounts and figures for the year 1883 are not yet made up. The 
 freight earnings of 1883 were nearly $200,000 less than in 1882, so I 
 give you the facts for 1882 as made up by the General Auditor of the 
 Atchison road, as closely as he can figure them, it being difficult to get 
 the figures right to the last dollar, as the road is operated as a whole in 
 all the States and Territories. In 1882 the total freight earnings of the 
 Atchison system of roads in Kansas, Colorado, New Mexico, Missouri 
 and Texas, consisting of 1,820 miles, was $10,537,201.57. Of this sum, 
 the money earned on that portion of the road in Kansas, and a few 
 miles in Missouri, consisting of 912.10 miles, was $6,319,787.01. This 
 was the entire freight money earned on the business transported in Kan- 
 sas, whether it was going only across Kansas, or between two Kansas 
 points, or going to and from Kansas points to and from points in other 
 States. This sum was earned as follows : 
 
 On business between two points, both being in Kansas $1,325,192 20 
 
 On bustuess to or from Kansas points, and going to or from points in the States east of 
 
 Kansas 1,817,686 1& 
 
 On business to or from Kansas points, and going to or from points in States and Terri- 
 tories west of Kansas 519,298 56 
 
 On business to or from one foreign State or Territory going to or from another State or 
 
 Territory, and hence only going across Kansas 2,657,610 09 
 
 Total 86,819,787 01 
 
 As the courts have decreed that legislation on railroad tariffs covers 
 only business lying within the State, it will be readily seen that any leg- 
 
25 
 
 islation enacted would cover only about one-fifth of the freight traffic 
 of this through line. Another glance at these figures will show that 
 nearly one-half of the entire freight traffic of the road consists of busi- 
 nesssiraply brought across the State business which uses Kansas simply 
 as a bridge, but which while passing over the bridge leaves one-half of 
 the money earned upon the traffic to be distributed along the line, in 
 the way of expenses incurred for conducting the traffic. The aim of 
 the State, then, should be to do everything in reason to advance and 
 build up this class of traffic, so that it may come across the State of 
 Kansas instead of going in other directions, and the greatest degree of 
 profit made by the railroad company upon this class of business, means 
 a proportionately large degree of benefit conferred upon the State itself. 
 
 The duty of the road towards the State, as based on common-law prin- 
 ciples, is, to afford to the citizens of the State living on its line a 
 reasonable system of rates for the traffic produced by those citizens. 
 That that has been fully done, we think has been established by the 
 figures here presented. 
 
 It follows that the interest of the State is to allow the owners to 
 make the railroad as largely profitable as the energy, intelligence and 
 enterprise of those owners may enable them to accomplish. 
 
 It is possible that the public, in some parts of the country, may have 
 been misinformed upon this subject, as it appears that they were some 
 years ago upon a subject somewhat similar. It will be remembered that 
 a great deal of excitement, extending through a number of years, pre- 
 vailed almost everywhere among producers over the alleged extortions 
 of "middle men," a term which was applied to the dealers in mer- 
 chandise, groceries, produce, etc. Cooperative stores were established,, 
 and the matter was very fully discussed and tested, and many advocated 
 a resort to some legal measure. 
 
 A full investigation brought out all the facts, and it finally became 
 known to all, that competition was so intense that only the most careful 
 and industrious traders succeeded, and that the percentage of failures i 
 that business was as large as in any other. 
 
 On any complicated subject of this character, it seems that discussion 
 and investigation will finally bring the ultimate facts to the surface; and 
 in the end all parties are thus benefitted. 
 
LAND-GRANT STATEMENT. 
 
 So much has been said in regard to the land grant of the Atchison, 
 Topeka & Santa F6 Railroad, that an analysis of the grant has been 
 made, and is herewith given. 
 
 The Atchison, Topeka & Santa F6 Railroad received through the State 
 of Kansas from the General Government, a land grant consisting of 
 2,934,584.04 , acres of land. When the construction of the road was 
 begun by the original projectors, it was found that investors were un- 
 willing to purchase first-mortgage bonds of the road to a greater amount 
 than $16,000 per mile; and the actual cost^of the road being very much 
 in excess of this amount, it was found that the only means remaining to 
 the company for obtaining the necessary money to complete the road, 
 was, to borrow the additional funds, using the land grant as a security. 
 In consequence of this determination, the sum of $3,520,000 was bor- 
 rowed, and the land grant given as security therefor, and this $3,520,000 
 was used in completing and equipping the railroad extending from 
 Atchison to the west line of the State. 
 
 It will be remembered that, after the road was completed, and even 
 during the time of its construction, times were hard and the railroad 
 earnings were small. The land sales were also very small, and even 
 upon such sales as were made the amount of money which was collected 
 was small. The consequence was, that when the interest upon the land 
 mortgage fell due, amounting to about $250,000 a year, there were no 
 moneys from the land grant, nor even from the railroad, to meet the 
 interest, and in order to prevent the foreclosure of the mortgage, the 
 railroad company and the land trustees executed a second mortgage, 
 called the land income mortgage, amounting to $480,000, the proceeds 
 of which were used in paying the interest, charges and expenses of the 
 Land Department. This made an entire debt against the land grant of 
 $4,000,000. 
 
 Now let us see what has been done with the land grant itself. On 
 the first of January, 1884, we find the following condition of affairs: 
 There have been sold 1,855,490 acres of land for the sum of $8,634,- 
 741.01. The total amount of cash which has been received by the 
 
 (26) 
 
27 
 
 Land Department from its organization up to the 31st of December, 
 1883, has been $6,984,611.60, which has been disposed of as follows: 
 
 Paid out for taxes to State and counties $1,114,299 20 
 
 Paid out for immigration work, and for conducting the Land Department 1 ,228,976 19 
 
 Paid for interest on land-mortgage bonds and land-income bonds 2,655,017 27 
 
 Paid out for purchasing and cancelling land-grant bonds 814,000 00 
 
 Paid out for purchasing and cancelling land-income bonds 480,000 00 
 
 Funds for purchase of land-grant bonds 668,925 43 
 
 Paid out for the expenses of the land trust 23,393 51 
 
 Total 86,984,611 60 
 
 It will be seen from the above figures that not one dollar of the entire 
 receipts from the land grant has in any way, shape or form been received by 
 the stockholders of the railroad company, and up to this day every dollar 
 which has been received has been used, either in payment of taxes, in 
 payments for immigration and other work done for the road and the 
 State, or in payments of the principal and interest of the bonded debt 
 incurred in the construction of the railroad. 
 
 Now let us see what is the condition of the land grant as it is to-day : 
 There are outstanding debts still unpaid amounting to $2,706,500. 
 Against this debt there are the following assets belonging to the Land 
 Department: 
 
 Unpaid principal of land contracts $1,303,773 97 
 
 Land lying east of Dodge and nearly all west of Newton, 685,486.92 acres, at $1.75 per acre, 1,199,602 11 
 
 Land lying west of Dodge, 562,257.46 acres, at $1 per acre 562,257 46 
 
 Cash received from previous years, and held by trustees for purchase of land bonds 668,925 43 
 
 Total $3,731,568 97 
 
 It will thus be seen from the above figures, that if these prices are 
 successfully obtained for the part of the lands now remaining on hand, 
 the railroad company will receive about $1,000,000 from the land 
 grant, and this is the entire amount that has been realized, or will be 
 realized when the entire land grant shall have been sold. . 
 

 
 
 I 
 
14 DAY USE 
 
 RETURN TO DESK FROM WHICH BORROWED 
 
 LOAN DEPT. 
 
 This book is due on the last date stamped below, or 
 
 on the date to which renewed. 
 Renewed books are subject to immediate recall. 
 
 
 
 25Jun'608B 
 
 
 
 
 #*e*t 
 
 
 Mll m 
 
 
 K_o D 
 
 
 J UN 2 3 1960 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 LD 21A-50m-4,'60 
 (A9562slO) 
 
 UniTersity of California 
 Berkeley 
 
Stockton, Calif. 
 T.M. Reg. U.S. Pat. Off. 
 
 M17213G 
 
 THE UNIVERSITY OF CALIFORNIA LIBRARY