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Michigan Railroad Legislation

Michigan Railroad Legislation image
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From the New York Commercial Advertiser, whose standing as one of the leadinjr financial papers of the cast, is well understood, we clip ,he following relative to the railroad leeislation now under consideration at Lansing: Michigan, so long noted f or her conservatism and the encouragenient she gave railway cnterprises, has lately succumbed to the crusade against the corporations, and lts progress is ï. atened witL the keenest interest. The capital invested here ia railway property has not as a rule proved reinuuerative to the iuvestors. Of all the roads organized under the "tjeneral railroad law" during the last twehe years, and not leased to either the Michigan Central or Lake Shore Companies, there are but few which have not gone through insolvency. The only exception is, perhaps, the Grand Rapids and Indiana Road, the interest on whose bonds ;o a large extent has been guaranteed by the ?ennsylvania Railroad. The leased lines of ;he Michigan Central and Lake Shore Companies have proven for years an onerous burden to the leseees, and it is only within the last two or three years that they have become, evon to a moderite extent, self-sustaining. The Detroit and Milwaukee Road has been foreclosed twice ; the Detroit, Lansing and Northern Road, built by 3oston capital, has been foreclosed once, the xmded debt having been scaled down 50 per cent., and preferrecl stock issued in lieu thereof. ín 1880, with a fair trafflc and fairly remunerative rates, that company was only able to pay 7 per cent. on its preferred stock, which would amount to about 3 1-2 per cent. interest on the original bonded debt. The aTerage dividend earned by the Michigan Central, during ,he eight years endlng December 81, 1881, was rat 2.85 per annum. To the above list of foreclosures can be added the Detroit, Hillsdale and Southwestern ; Fort Wayne, Jackson and Saginaw; Flint and Pere Marquette; Michigan Air Line ; Chicago and Michigan Lake Shore ; tf arquette, Houghton and Ontonagon ; Detroit a.nd Bay City, and Michigan Air Line Eastern Jivision. It is safe to say that one-half the capital originally invested in railroads in Michigan has been eutirely lost to the investors by oreclosure of mortgages. A glance at the map shows that this embraces ïearly all the roads in Michigan, except those eased to the Michigan Central or Lake Shore, md the Grand Rapids and Indiana Railroads. '.n spite of all this the State has prospered. These roads, built by foreign capital, have been nstrumental in developing portions of the State hitherto inaccessible, affording an outlet to market for its wheat, salt and forest products, aud stimulating to an unusual extent its manufactures, and the increased value which they have given to lands has proven an immense source of wealth tothe State. The State tself is unusually prosperous, having but a small debt and a large balance in its treasury. The svstem of taxing railroads on groes earnngs, has been proven by experience to be the best and it can be shown that no other interest in Michigan pays as large a portion of the taxes as the railroad companies. While the State las prospered railroads have suffered, and the misfortunes of the latter have been due to nrcumstances outside of the control of the Legislature or the people. Poor crops, the panie of 1873, and many other causes which aave tended to deprecíate the value of railroad property in the West during the Ia3t ten years have all had their effect in brineing about the disastrous reeults to capital referred to. During all these years, however, the Legislature of the State has kept faith with the railroads. There have been no unusually onerous hurdens thrown upon the latter, and no attempt lias been made to regúlate rates beyond that f.hey Bhould be reasonable and without discrimination, and the poliey of the State through its Railroad Commission has been as f ar as possible, to follow the Massaclrasetts Commission, in which the principal duty of the Commission is to reconcile seeming differences between the railroad and the peopïe, whose inlerests should be and really are identical, and by open, cand'd investigations remove these apparent differences between the people and the corporations. The average rate per ton p?r mile rei:eived by all the roads in Michigan In the year 1881 was 1 110 cents, and the average rate for passengers per mile 2 2-10 cents, showing conelusively that for cheapness ot transportation the State of Michigan stands on a par with any less than alnaost all of the other states in the Union. This year, bowever, the tendency of legislation seems to be in an opposite direction. Bills reducing passenger Eares ; reducing and establishing f reight rates under a general law applicable to all roads, on a strictly mileage basis regardless of net earnings ; arbitrary classiflcation of freights ; fixing of maximum rates regardless of the cost of service - Ilústrate the character and tendency of pending legislation which is being pressed bv no inconsiderable portion of the Legislature. With an area of 56,457 square miles, there is nearly one-half cf the State, namely, the upper península and that portion of the lower península north of Sawinaw Bay, with very limited railroad facilities. The people of these portions of the State are anxious for more roads, believing that they are a necessity, and knowing full well the advantages such roads would be to them. How are they to bc built? There is not a road in Michigan to-day, with perhaps one or two minor exceptions, which is not controlled or which bas not been built by capital from outside of the Sta'e. Can the people of Michigan expect, if host ile intentions is snown by the Legislature, and the measures above referred to should become laws, that capital will be disposed to take any additional risks in the State i The good faith of the State, as hitherto shown only to the full and proper performance of their duties a3 common carriers, has been an incentive to capital, and encouraged its investment in various enterprises of the State, although the return might be and has been light. If, however, another poliey should be pureued, would it not inevitably result that capital will 6hrink from and refuse to become further involved in the enterprises of a State which if stehmeasures and stringent restrictions are put into effect, will cast suspicion upon the good faith of the State with innocent investors whom it should cultivate and offer inducements to.


Old News
Ann Arbor Democrat