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 31/4 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.

It would not even be necessary that the money to pay the interest
coupons should pass through the government's hands. The operating
company would pay it directly to the bond-holder and at the same time
the 1/4 of 1 per cent. would be paid into the government treasury.

The object in making the bonds run for no longer time than twenty-five
years, when it is intended that the whole value of the road shall be
perpetually held in the form of bonds, is that at proper intervals a
revaluation may be made of the improvements to the road and the
interest charges may be readjusted to correspond with the general
change in the income from capital. When the bonds fall due, a new block
would be issued and sold to the highest bidder. The interest rate should
be set at such a point that the bonds could be sold at a premium. These
premiums, with the 1/4 of 1 per cent. on the bonds, paid by the operating
company to the government, (which we may regard as a legitimate fee to
the government for its guaranty) should form a government railway fund.
T