USA > New Hampshire > History of New Hampshire, Volume III > Part 14
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Thus six railroads, chartered as independent, were in 1884 managed as one line, under the control of the Concord Railroad Corporation, which was paying a dividend of ten per cent. on a capitalization of $1,500,000, after paying $54,300 to leased lines. This dividend had been paid for fifteen years, and the road always kept something in reserve, for the law did not allow more than a ten per cent. dividend to be declared annually. It earned more money than it could divide. This was due to its location and the comparatively small cost of its construction. Roads north and south were feeders to this. Some years it earned thirty per cent. on its capital. Hence the money that it could not divide it expended upon a palatial railway station at Concord, costing a quarter of a million dollars, and it kept in- creasing the salaries of its chief officials. The salary of the president was at first $1,000 annually, then it gradually went up to $2,500 and then it was not reported in the printed returns, but salaries of president, treasurer and superintendent were lumped together with "clerks" and "other expenses." This road had at one time about two million dollars of undivided surplus, which ought to have been paid over to the State, or the rates should have been lowered so as to have made such earnings, or extortions, impossible. The exceptional opportunities of this road made a few men millionaires at the expense of the travelers and manufacturers and producers on the farms. The road had a lucrative monopoly. They were the Hohenzollerns, the high- taxers, of New Hampshire. All travelers and transporters paid them such a toll as they demanded.
The Northern Railroad Company was chartered in 1844. It extends from Concord through Boscawen, Franklin, Andover, Wilmot, Danbury, Grafton, southeast corner of Orange, Canaan, northwest corner of Enfield, and Lebanon to White River Junc- tion in Hartford, Vermont. The distance is sixty-nine and a
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half miles. The Bristol branch, chartered in 1846, extends from Franklin through Hill to Bristol and is about thirteen miles in length. It was consolidated in 1869 with the Northern Rail- road, with two thousand shares of stock, making seventeen thousand shares in the consolidated line. The road to Bristol was opened in 1847 and that to Lebanon in 1848. The construc- tion and management of this road owed much to George W. Nesmith and Onslow Stearns, who were presidents for many years.
Earlier than 1884 the Northern Railroad had leased the Concord and Claremont Railroad. The latter was chartered in 1848. It was consolidated with the Central Railroad Company in 1853, taking the title of the Merrimack and Connecticut River Railroad Company, and this became the owner of the road built in 1850 from Concord to Bradford, twenty-seven miles. In 1856 it was united with the Contoocook Railroad, chartered in 1849 and opened the same year, extending from Contoocook to Hillsborough Bridge, fourteen and a half miles. The Contoocook Valley Railroad, chartered in 1848, was sold a few years later to the Merrimack and Connecticut River Railroad. The Sugar River Railroad, chartered in 1856, to con- nect Bradford with the Sullivan Railroad in Claremont, a distance of twenty-nine miles, was completed in 1873 and consolidated with the Merrimack and Connecticut the following year, under the restored title of the Concord and Claremont Railroad. Thus twenty-five years after the first charter to that road six distinct roads were operated as one under the old name. The aggregate cost of these consolidated roads was about $1,850,000, but the total cost to the Concord and Claremont Railroad, up to 1879, was $1,126,606. A controlling interest in these six consolidated roads was, in 1873, owned by the Northern Railroad Company, who furnished all the rolling stock and managed the roads as one enterprise with itself. The Northern managed also in the same connection the Peterborough and Hillsborough Railroad, built at a cost of $589,000 from Hillsborough Bridge to Peter- borough, eighteen and a half miles, chartered in 1869 and opened in 1878. Thus the Northern Railroad system was operating in 1884 a total of one hundred and seventy-two miles. In that year it was leased to the Boston and Lowell Railroad, but the lease was declared void in 1887. The dividends of the Northern were
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for a few years about two per cent. Then they rose gradually to eight per cent. and fell back to five and six. In 1885 a divi- dend of thirteen per cent. was declared, and in 1890 it reached thirty-one per cent. It has been a payer from the beginning. Its connection with western roads made it so.
The Boston, Concord and Montreal Railroad was incor- porated in 1844. It extends from Concord through Canterbury, Northfield, Tilton, Belmont, Laconia, Gilford, Meredith, New Hampton, Ashland, north corner of Bridgewater, Plymouth, southwest corner of Campton, Rumney, Wentworth, Warren, northwest corner of Benton, Haverhill, to Wells River, Vermont, a distance of ninety-three miles. It was opened from Concord to Plymouth in 1849, to Wells River in 1853. Up to 1856 it had cost $3,045,226. The road was in the hands of trustees in 1857-9, and was handed back to the stockholders in an improved condi- tion. No dividend was declared till 1867. From that date till 1885 six per cent. was paid on the preferred stock. The White Mountain Railroad, chartered in 1848, was opened to Littleton in 1853. This was sold at auction in 1858 for $24,000 and debts. Thereafter it was managed by the Boston, Concord and Montreal Railroad under a lease. The fixed rental was $12,000. The road from Littleton to Groveton Junction, on the Atlantic and St. Lawrence Railroad, a distance of about fifty-one miles, was com- pleted in 1880. A branch has been built to the base of Mount Washington. These northern roads were for the accommoda- tion of summer tourists especially. The cost of construction was great, and the road was for a long time embarrassed with debt. The Pemigewasset Valley Railroad, chartered in 1874 and opened in 1883, extends from Plymouth to North Woodstock and was further extended to Lincoln in 1895. The cost was $541,262. It was leased to the Boston, Concord and Montreal Railroad in 1883 for ninety-nine years, at six per cent. on its cost up to that date. Thus the Boston, Concord and Montreal Railroad, in 1884, was managing one hundred and ninety-seven miles of road. The cost was close to five million dollars for the entire line. The first president of the road was Hon. Josiah Quincy, and he was succeeded by John E. Lyon. Both did much for the develop- ment of the road. It was consolidated with the Concord Rail- road in 1889, under the name of the Concord and Montreal Rail- road. Then the total outlay on the combined system was esti-
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mated to have been $11,142,515. When leased to the Boston and Maine Railroad the capitalization was $11,485,500, and in 19II it had risen to $15,327,326.
Little need be said about the Atlantic and St. Lawrence Railroad. It has not figured in railroad controversies. It was chartered in Maine in 1845 and in New Hampshire in 1847, to extend from Portland, Maine, to Island Pond, Vermont, about one hundred and fifty miles. The line was completed in 1853 and at once leased to the Grand Trunk Railroad Company for 999 years at an annual rental of six per cent. on the funded debt and capital stock. The New Hampshire section of this road passes through the towns of Shelburn, Gorham, Berlin, southeast corner of Dummer, Stark, Northumberland, and Stratford on the Connecticut river, a distance of fifty-two miles. It pays because of its through traffic from the West to Portland, where freight is shipped to Europe. As a passenger route it has a large patron- age. The pulp mills at Berlin and the summer tourists add to its revenues.
The Eastern Railroad of New Hampshire was chartered in 1836 as a continuance of the Eastern Railroad, which extends from Boston to the State line. Thence to Portsmouth is a dis- tance of sixteen miles. The Portland, Saco and Portsmouth Rail- road continued this line to Portland, making a total distance from Portland to Boston of one hundred and eight miles. On the completion of the part of the road in New Hampshire it was leased to the Eastern Railroad for ninety-nine years, for an equal division of the profits. The amount of capital stock in 1856 was $492,500. Up to that date it had paid an annual divi- dend of from six to nine per cent. Thereafter for six years it paid no dividend, and then rose slowly to eight per cent, again to fall off. A compromise was effected in 1878, or modification of lease, whereby the Eastern of Massachusetts was to pay to the Eastern of New Hampshire four and one-half per cent. divi- dends annually on its stock for sixty years.
In 1847 the Portland, Saco and Portsmouth Railroad was leased for ninety-nine years to the Eastern Railroad in joint interest with the Boston and Maine Railroad, making a through line to Portland for both roads. In 1871 The Eastern Railroad leased the Portsmouth, Great Falls and Conway Railroad for sixty-nine years. This road extends from Conway Junction, near
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South Berwick, Maine, to North Conway Junction, on the Port- land and Ogdensburg Railroad, a distance of about seventy-one miles. In 1876 a compromise was made, whereby the Eastern Railroad was to pay four and a half per cent., instead of seven per cent. on the funded debt of the Portsmouth, Great Falls and Conway Railroad, amounting to $1,000,000. The branch road to Wolfeborough and the road from Portsmouth to Dover came under the control of the Eastern system, the latter by lease in 1874, at an annual rental of six per cent. on its cost, viz., $800,000. In 1879 the Eastern Railroad had control of four railroads in the State, of an aggregate length of over one hundred and seven miles. The road was greatly embarrassed from the year 1875 onward, and there were special acts, litigations and compromises, at the expense of the stockholders.
The Portland and Ogdensburg Railroad, in its Portland division, extends from Portland to the Connecticut river, at Lunenburg, Vermont, one hundred and fourteen miles. It was chartered in Maine in 1867, and in New Hampshire in 1869. The road was opened to Fabyan's in 1875, a distance of ninety-one miles from Portland, Maine. Thence a portion of the Boston, Concord and Montreal Railroad was used, making the total length of the New Hampshire part of this road sixty-three miles. This road cost nearly four million dollars. One of its greatest assets is its mountain scenery. It never "paid" financially. It went into the hands of a receiver in 1887 and thence passed under the control of the Maine Central Railroad, which later was swallowed up by the Boston and Maine.
The Boston and Maine Railroad was chartered in New Hampshire June 27, 1835. It was opened in 1840 from Haver- hill, Massachusetts, to Exeter, and in 1841 to Dover. It extends through Atkinson, Plaistow, Newton, Kingston, East Kingston, Exeter. South Newmarket, Newmarket, Durham, Madbury, Dover, Rollinsford and Somersworth. In 1842 it was consoli- dated with the Boston and Portland. In 1847 the cost of the road in New Hampshire was given as $804,455. In that year, in connection with the Eastern Railroad Company, it leased the Portland, Saco and Portsmouth Railroad. In 1871 the contract was broken by the Eastern Railroad, which paid to the Boston and Maine $100,000 for damages in so doing. Thereupon the Boston and Maine Railroad extended its line from South Ber-
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wick, Maine, to Portland, forty-two miles, completing it in 1872, at a cost of $3,941,323. Thus there were two competing lines from Boston to Portland, a circumstance which goes far to ex- plain the financial depression of the Eastern Railroad for some years thereafter. In 1863 the Boston and Maine took under its control by a business contract the Dover and Winnepiseogee Railroad, which was completed in 1851 from Dover to Alton Bay, twenty-nine miles. The agreement was to pay six per cent. annually on the cost, $480,000. The cost of this road, with equipment, was returned in 1874 as $825,000.
In 1884 the Boston and Maine Railroad leased the entire Eastern Railroad system. It went on buying and leasing rail- roads till in 1886 it controlled 227 miles in New Hampshire and in 1890 it had 1,122 miles of the 1,174 miles in the State, all except the fifty-two miles operated by the Grand Trunk in the northern part of the State. It had also under its control the Maine Central system, by purchasing fifty-one per cent. of its capital stock. Among the roads under its management and con- trol is the Worcester and Portland system of which fifty-eight miles are in New Hampshire. It was opened to Nashua in 1848 and thence to Rochester in 1874. The Boston and Maine Rail- road has also taken under its control the entire Fitchburg sys- tem, including the short roads in the southwest part of the State. The lease, made in 1900, was for ninety-nine years. Up to 1912 the Boston and Maine has paid large dividends, eight, nine and ten per cent., once as high as thirteen per cent. In 1912 it sunk to four per cent. Since that time there have been no divi- dends. The Boston and Maine Railroad owns and controls by lease 2,251 miles, having a monopoly of transportation in a large part of Maine, nearly all of New Hampshire, northern Massa- chusetts and much of Vermont. Besides it operates fifty miles of electric railway in New Hampshire. The capital stock of the entire system, leaving out the Maine Central railroad and its tributaries which were separated from the Boston and Maine system in -, is $103,000,000. About $7,000,000 must be paid annually in rentals before any surplus can be divided among the stockholders of the Boston and Maine Railroad.
Railroads, having put the turnpikes and canals out of com- mission in New Hampshire, are now indispensable. They must be operated, whether they pay financially or not. The post offi-
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ces throughout the United States as a whole do not pay in money received for postage; it would be profitable for the nation to maintain them, if there were no receipts in money. Post offices and railroads are now public necessities, demanded by modern civilization. If necessary, the people must be directly taxed to support them. The same might be said of supplies of water and light for cities. They must be had at any cost. Whether they pay dividends or not to private corporations or into the public treasury, the people will not part with them. If private capital can not manage them and make them yield divi- dends, then the State or the nation must either assist the cor- porations in some way, as subsidies are paid to steamship lines, or the state or nation must assume ownership and manage such utilities for the public good, even at the expense of taxing the people directly for their maintenance. The people are deter- mined to have these things somehow. Every man demands and gets a road to his door; every town ought to have within easy distance a railroad for its produce and wares. Modern civiliza- tion and economic wisdom demand it.
At first most of the short railroads did not pay dividends ; business had to be developed along their routes. In Governor Haile's message of 1858 he said that of the six hundred miles of railroad in New Hampshire, "They were constructed at very great expense, but have failed, except in rare instances, to make any returns whatever to the stockholders." Therefore he recom- mended a modification of the law respecting their taxation.
A similar recommendation appears in the inaugural message of Governor Goodwin, in 1859. He says that there were then seven hundred miles of railroad in the State, having a capital of sixteen millions of dollars, but had probably cost over twenty millions. "A large amount of this investment is unproductive or has been a total loss to the original stockholders. Could the energetic proprietors of these useful enterprises have been satis- fied with the trunk roads, and awaited a fuller development of the resources of the State to maintain them, it would probably have been wiser, in a personal point of view, and have saved many a fortune to the projectors. If they were, however, too hasty for individual good, in pushing forward this great improve- ment of the age, no one can doubt that a great benefit has been effected, in developing and augmenting the wealth of the State,
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and the rising generation are reaping advantages which cannot well be taken from them. Should the entire capital invested be lost to the original proprietors, the value of property would be enhanced more than double the cost of the railroads. Under these circumstances should there not be some discrimination in taxation made in favor of non-paying roads?"
Short roads have been built to a waterfall with the hope of a business boom; roads have been chartered in order to create a boom, but were never built. Before the year 1883 one hundred and eight railroads had been incorporated in New Hampshire, and in that year only thirty-five of them were in operation. Some of the latter have never yielded dividends independently, yet probably it would not be well to discontinue a single mile of railroad in the State. Were a comprehensive plan for the entire State to be made at the present time, doubtless passengers and freight traffic could be accommodated with less mileage, but the saving would not be great, for nature planned the principal lines. Railroads have to be built between ranges of mountains and high hills, and along river valleys, with as few tunnels as possible, for they are costly. They can not run up hill and down like the old country roads before the hills were "baled." The railroads in New Hampshire have been wisely planned, although they were built in small sections. One section joined onto another, and railroads bearing different names really formed one con- tinuous line, just as some of the old streets of London form a continuous avenue and for a similar reason. Tourists scarcely know when they pass from Holborn to Newgate Street, or from the latter to Cheapside. So the Nashua and Lowell, the Con- cord Railroad, and the Concord and Montreal, to use a modified geometrical phrase, "form one and the same crooked line."
Before the year 1883 it was the settled policy of the State that the short railroads should compete with one another, accord- ing to the old saying, that "competition is the soul of trade." A stringent law prevented consolidation of rival and competing lines. Thus it was thought that expenses would be kept down and that traffic would be increased by hustling. Experience con- vinced legislators that the short lines must be leased to the main lines, or they could not carry on business, since they were losing money all the time. Competition had to give way to co-opera- tion. Competition means war, among nations, corporations and
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individuals. One party gets ahead of the other, and this causes discontent and hatred. Co-operation means mutual helpfulness. The strong bear the burdens of the weak. By consolidation roads that could not pay dividends were made to share the sur- plus of more fortunate and lucrative roads. A law passed in 1883 gave permission to railroads to combine, but the supreme court, in 1887, held that the law was unconstitutional, and a new law was enacted two years later, giving authority to railroads to lease, purchase or consolidate with others. Doubtless in some cases this was so done as to enrich speculators and schemers, yet such combinations were needed for the public good. The Boston and Maine swallowed up all the other railroads, and one result was the lowering of fares from three and five cents per mile to two cents. One corporation can do the railroad business of the State better and with more economy than thirty-five cor- porations can. The same principle is true if applied on a still larger scale. Great railroad systems are now competing with each other for the travel and traffic of the West to Atlantic sea- ports. They are consolidating practically with transcontinental lines. The largest and most powerful systems seek to swallow up the smaller and weaker groups, and effort is made to keep them separate, just as was the case before 1883 in New Hamp- shire. The mighty tendency toward unification can not long be resisted. Fundamental economic laws are stronger than legis- lative enactments. In a great system it is easy to find ways to evade the spirit of a law while complying with its letter. Rail- roads will co-operate more and more and be conducted practically as one, whatever may be the law and the decision of the Inter- state Commission. One railroad system for all the United States is the ideal, if it were managed for the benefit of the public. A system like the Standard Oil Company, while it may furnish oil at a lower price than the small competing oil companies did, creates dissatisfaction so long as it is known that a few men are getting enormously rich thereby. The railroads are a public utility. They should be of the people, by the people and for the people. So with all public utilities that can be managed eco- nomically only as monopolies. The people feel that they should own them and get therefrom all the revenues accruing. This feeling seems to be at the bottom of the growing discontent.
So long as the railroads were making money fast, distributing
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large dividends to stockholders and having left a large surplus, there was no request for additional legislation or increase of rates. There comes a year, or a series of years, of leanness, when there are no dividends. At once appeal is made to legislatures and Public Service Commissions for higher rates or change of leases. Why not take of the revenues of those full years to help through the years of leanness and financial depression? Stockholders who have been getting ten per cent. dividends for many years do not excite much pity, when for two or three years the dividends run low or wholly cease.
Moreover, the inquiry naturally arises, Why have the divi- dends ceased ? Have the roads been overcapitalized? Have they been leased at too high a rate of interest? Has the high cost of living raised prices of labor and material? Have improvements used up the earnings? Have the passenger and freight rates been too low?
Some would give an affirmative answer to all of these ques- tions. When the capitalization of the old Concord Railroad was raised from $1,500,000 to twice that figure, it was charged that stock was watered in order to divide a surplus of about two million dollars. The report of the Public Service Commission says that "there are certain roads in New Hampshire which present clear instances of stock watering." Improvements out of earnings, after a fair rate of dividend has been paid, should not be added to the capital stock, though this in some instances has been done. On the other hand, some roads in New Hamp- shire actually cost for construction more than the amount of their capitalization, so that it may be questioned whether the Boston and Maine Railroad system as a whole is overcapitalized, or is trying to pay dividends on watered stock.
That some branches have been leased at too high a rate is quite evident. They never paid before they were leased, and adding them to a system only bleeds the system. The State can afford to do this for the convenience of the public; a corporation bent on making money can not afford to carry such burdens. Some parts of a great system pay better than other parts, yet the extremities can not be cut off. They feed the trunk lines, and the little branches are needed. But they should not be paid from five to ten per cent. on cost of construction. Remote towns should be willing to sacrifice something for the great advantage
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of having a railroad. Such roads are built more for the benefit of communities than to add to the revenues of corporations. The purchase of stock in such cases is a voluntary contribution to the public good, with the expectation also of increasing the value of local real estate.
But the leasing of so many railroads by one small corpora- tion is not thought to be the best way of conducting business ; and it would be far better if the lessees owned the roads operated. A leased farm or building always deteriorates, espe- cially at the time when the lease is about to terminate. Every person will take better care of his own property than of that which he has leased for a time. He can not afford to make those lasting improvements whose benefits he will never reap. He will not, like the industrial husbandman, plant trees, a berry of which he himself will never behold. If great railroad systems are to continue, and it seems that they must become greater, then some way ought to be devised, whereby the managing corpora- tion should legally own all that they control. Can small com- panies of men, continually changing in their membership, be entrusted with so great power? The welfare, almost the means of sustinence of millions of people, would be in their hands. Can States and the United States sufficiently control and regulate them? The problem has not been solved. One of two things must be done, as admitted by all. Either government must actually regulate and control railroads for the public good, with justice to owners as well, or government must take possession of all its roads and manage them as it does its post offices. Then, whether they "pay" or not, the entire people get back the worth of their money invested. A hot debate is going on as to the relative advantages of the two systems. The corporations argue for government control, and then some of them try to evade it; the people are calling more and more for government ownership of all public utilities. Instances are cited where each system is said to be a success or a failure, according to the point of view of the advocate. It is certain that there can not be a return to the original plan of small competitions.
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