Space will not permit here a full statement of the many serious evils and abuses with which our present system of railway management is burdened. The study which the author has made of them has convinced him of their importance and magnitude. The following plan is designed to permit their remedy as well as to remedy the special evils of monopoly with which our present investigation is concerned:
Let the government acquire the title to the franchise, permanent way, and real estate of all the railway lines in the country. Let a few corporations be organized under government auspices; and let each, by the terms of its charter, receive a perpetual lease of all the railway lines built or to be built within a given territory. Let the territory of each of these corporations be so large and so planned with regard to its neighbors that there shall be, so far as possible, no competition between them. For instance, one corporation would operate all lines south of the Ohio and east of the Mississippi rivers; another all lines east of the Hudson and of Lake Champlain, etc. Let the terms of rental of these lines be about 3¼ per cent. on the road's actual "present cost" (the sum of money it would cost to rebuild it entirely at present prices of material and labor) less a due allowance for depreciation. The corporations would be obliged to keep the property in as good condition as when received, and would own absolutely all their rolling stock, machinery, etc.
It is not proposed, however, that the government shall own any interest in the railways save the legal title. Bonds would be issued to the full amount of the appraised valuation, running twenty-five years and bearing interest at 3 per cent., principal and interest guaranteed by the government, and these would be sold to the highest bidder. Thus the real ownership of the roads would be vested in the bondholders. As is well known, there is a great and fast increasing need for investments of absolute safety, even though they bear very low rates of interest. This is especially desirable for the continuance of our national banking system, in order to insure us a safe, stable, and ample currency. Such bonds would find a market at a premium as fast as offered.