large proportion, if not the whole, of the second mortgage, and in prosperous times they may succeed in building and equipping the road on the issue of the bonds secured by the first mortgage alone. By this system the road comes into existence laboring under the necessity to earn, over and above operating expenses, interest on a funded debt, about double the cost of the enterprise, and, if possible, to earn dividends on the stock beyond that sum. That this rate of earnings has been accomplished in the United States to a very considerable degree is an illustration of the remarkable development which the country has experienced in every direction during the past twenty years, and is an illustration, likewise, of the enormous growth and progress of all material interests which have taken place; because this mode of stock and bond issue is the all but universal rule with reference to the construction of new lines in the United States.-The excuse made by railway builders for this course of proceeding | is, that upon the basis of an ordinary profit no one would undertake the extremely hazardous task of introducing railways into new territory. The peculiar risks incident to such an enterprise are, that if the traffic fails to come they lose their money, and if the traffic develops they are in imminent danger of being immediately compelled to divide such traffic with some other rival line; that, therefore, they must find the return of the capital and their profit, not in waiting for the development of the business, but in selling bonds and stock to the investing public upon a basis of fictitious value. So long as investors purchase without proper investigation this class of securities, it is difficult to see how they have any ground for complaint; as the mode of manufacturing these securities is sufficiently well known to be a matter of public notoriety. As to the people at large, however, the effect of this fictitious capitalization bears a different aspect. It is true that the cost of a road and its capital account have but little to do with the rate at which it is required to carry to and from a few competitive points. It has, however, very much to do with the fixing of the local rates, and is a constant incentive to increase the rates for the purpose of paying interest and return upon all the capital issues of the road. For the state to interfere and absolutely forbid any false capitalization, which is, in other words, the anticipation in the capital account of the development in time of the traffic, would probably interfere considerably with the undertaking of new railroad building, unless such interference and prohibition are accompanied | with some guarantee of the field. The two evils, unrestricted competition in railroad build-ization is entirely fictitious. He says, with great ing and false capitalization, hang together. Were railway projectors secure that a certain territory would be left in their possession until they could receive back the return of their capital and a reasonable percentage on the outlay, there would be no reason for continuing the incentive to railway construction of false capitalization, so that the | promoters can immediately obtain by means of this quasi-fraudulent element a return and-profit for the outlay of their money; they could then contentedly wait to receive an adequate return for their money upon the basis of a capitalization bearing a close relation to the actual cost of the construction and its equipment. Justified as is the opposition to stock watering, both on the part of the investor and on the part of the public, the reform of this evil can only then be safely entered upon, so as not to avoid materially checking new railway enterprises, with a concomitant change in the policy of the state governments as well as the national government, recognizing the fact that railway construction should not be left to absolute free competition, but is a trust which should be given with circumspection, and, when given, surrounded, first, with guarantees to the state and to the people that the men who undertake it will faithfully perform their trust, and secondly, with guarantees from the people and the state to the entrepreneurs that they will permit them for a given number of years undisturbedly (under limitations as to charges) to obtain the advantage of the traffic development which their enterprise has created, without incurring the danger of being compelled to divide such traffic with another organization, which takes possession of the developed field, not to render additional services to the public embraced within its line, but simply to take away from and divide the income of the existing road. There is no question but that the system is entirely vicious, but it is a system that has its roots in the false path which the public has traveled in relation to railway enterprises by treating them as private enterprises instead of public ones, and therefore has given a basis for the railway speculators point of view, that it is their business, and not the public's business, at what rate they see fit to capitalize their roads; and, as the public gives no care to protect the railway constructor in his enterprise, the railway builder, in his turn, imagines that he owes nothing to the public in that regard. Mr. Poor, in his introduction to his Manual for 1883 (and he speaks from the railroad point of view), can not but admit "that the increase of share capital and indebtedness of the railroad companies for the three years ending Dec. 31, 1882, was $2,023,646,842, the average cost per mile of the new roads being in round numbers $70,000.” He estimates that the cash cost of all the railroads built in the United States in the last three years did not exceed probably $30,000 per mile, or $900,000,000 in all. He estimates, therefore, that more than half of this enormous capital | frankness, "Of course such an enormous increase of liabilities over cash outlay is to be greatly regretted, and is well calculated to create a distrust of all securities, good and bad." There is an abuse connected with railway administration which requires legislative remedy—the granting of the right of way for telegraphic purposes at the same time with that for railway purposes. With every extension of an old railroad or the building of a new one, the Western Union telegraph company is ready to step in and stretch wires for the new corporation or line, under a contract that the railway company gives to the Western Union telegraph company the exclusive right to maintain the telegraph service to the towns and stations along the line, in consideration of which the railway company can, for its purposes in the management of its road and in the dispatching of its trains, use the telegraph line thus built. This gives to the telegraph line a free right of way; and, as the railway in all territory west of the Mississippi and south of the Potomac is in reality the main line of travel, along the line of which towns spring up and population congregates, it gives to that particular organization an enormous advantage over its competitors and all new organizations, inasmuch as it not only gives the free right of way along the line of the railways, but an exclusive service in connection with the railways. This abuse, which as yet has scarcely attracted public attention, came to the surface only during the recent controversies in relation to the stock waterings and acquisitions of rival properties by the Western Union telegraph company. This is also difficult of remedy without legislation recognizing the monopoly character of railroad and telegraphic enterprises, and should, if permitted hereafter, be allowed only on condition that such field may be secured in consideration either of lower charges to the community, or providing some species of sinking fund by which the community shall ultimately acquire the property. This brings us to the final consideration of what is the probable future of the railway question in the United States. The railways now represent an aggregate capital of something approaching $7,000,000,000. A considerable proportion of that total capitalization is in the hands, or largely under the control, of less than one hundred men, who are not the highest type of modern civilized life. After giving them credit for business capacity, shrewdness and intelligence, there are still lacking some elements of character which are created by living up fully at all times to contracts, the basis of the modern social organism. Unlike increase of capitalization in any other business, increased capitalization in railroad enterprises does not increase the number of great capitalists engaged in the business, but has a tendency to decrease them, because amalgamation and consolidation proceed with greater rapidity than extension of mileage. Compared with the power represented by this vast aggregate of capital, the power and the influence of nobility in any civilized community are small. One of the arguments in favor of a great national indebtedness at the time when it was in process of growth, was, that, though unfortunate for the country to be compelled to roll up so large a debt, yet it had a counterbalancing good, inasmuch as it interested vast numbers of people in the success of the government and in its stability by the pecu153 - 34 VOL III. | | niary interest of the bondholders. As the indebtedness of the United States was, at its very highest, less than one-half of the aggregate capital now represented by the railway interest, it is clear that there is a larger pecuniary interest on the side of the railway to-day, arising from capital investment in its obligations, than there was at any time on the side of the government. Railway capital is now four times the amount of the public debt. In any contest, therefore, between the government and the railway enterprises, it is clear, that, so far as mere pecuniary interests are concerned, the railway enterprises largely preponderate. Adding to this the circumstance of the concentration of this great railway power in comparatively few hands, the extent to which they can corrupt the commonwealths is practically limited only by their will. — At the time of the institution of the government of the United States and of the various states, European governments were great monopolies in the hands of the few. From the corrupting influence of a like power American statesmen sought to shield the American people. Governmental responsibility and prerogatives of executive power, instead of being centralized, were diffused and split up, and to a large extent sacrificed, for the purpose of creating a larger degree of individual freedom. The gov ernments of the states of the Union were therefore loosely put together, so that public opinion could break through at any point and influence them. Permanent large ownerships of land; titles of nobility, special privileges and great accumulations of capital were guarded against by abolishing the right of primogeniture, of patents of nobility and of accumulations. The corporation was but little extended, because credit was but little developed at the time of the organization of the United States government. Hence it was not observed that some of the evils which were thus carefully intended to be guarded against, such as primogeniture and accumulations, were allowed to come back in more aggravated form through the perpetual existence of the corporation, making a continuous increase of capital accumulations possible through its instrumentality, with the aggravating circumstances, that, instead of those vast properties being in the hands of individuals responsible for their right conduct in their individual capacity, and distributed by the natural process of death into a greater number of portions, the great accumulations and vast possessions of modern times are under the control of boards of directors having less immediate responsibility than the individual to legal influences, and being less governed by considerations of a social character properly to administer their trusts. The United States constitution and the constitution of the states contain provisions against unjust taxation by carefully worded provisions that taxation shall be equal. The amount collected for freight and passenger traffic in the United States by the railways of the United States in 1882 was $770,000,000, an amount double that of the revenues of the United States government. Every dollar of this, as der the manipulations of these great corporations, to mode and manner of expenditure, is in the hands is a truth which, in all the more densely popuof boards of direction, with scarcely any accounta- lated states, in the north and the east, the people bility to the public, and but a very remote one to have been made to feel. How to get back their their own shareholding interests. — In every pres- control, and yet not change it into a control of a idential election for the past twenty years the rail- very dangerous character, by adding the supervisway corporations took an important part. In the ion of the expenditures of the enormous revenues election of governors in the various states and of the railways to the supervision of the enorin the formation of the state legislatures, in influ- mous revenues of the United States, and of state encing appointments of committees, they play a and local administrations, administered as they are significant rôle, and one which is scarcely any in the main by politicians not much, if any, above longer disguised. They do this avowedly on the the status of the railway magnates, is probably the theory of self-protection; but no irresponsible most serious problem which, since the abolition of body ever stopped short at self-protection, be- slavery, has confronted the people of the United cause the power which enables them to protect States. There is much keen perception and wisthemselves against aggression is likewise a' pow- dom in the way Professor Sumner puts the relaer which may be wielded in aggressing upon tion of the government to the people in the United the rights of others. - The mode and manner of States, when he says that the government, in the the collection of this revenue is not yet amena- abstract, is all of us, and, in the concrete, some of ble to public control in the United States, and us, who, by accident or chicane, obtain control, yet the cost of transportation more closely resem- and those some of us not the best of us, and that, bles taxation in all its incidents than any other therefore, it always becomes a serious question method of receiving return for services in the what these some of us should be permitted to do industrial world. When the railway corpora- for all of us. Therefore, no heroic measures can, tions, under the administration of Mr. Fink, in in the present aspect of political conditions in the July, 1882, raised their rates on west-bound United States, safely be entered upon. These very freight from New York to Chicago, from forty- political conditions suggest a possible point of five to sixty cents per hundred pounds on first view from which we can regard this powerful class, from thirty-two to fifty cents on second imperium in imperio of the aggregated railway class, from twenty-six to forty cents on third corporations as something other than an unmixed class, and from nineteen to thirty cents on fourth evil. The corruption of our political machinery class, every commodity transported from New has proceeded almost simultaneously with the York to Chicago had this additional tax imposed growth of the railway corporation. As the basis upon it as part of its cost of production in Chi- of civilization, the security of capital is certainly cago, in the same manner as though the govern- of as much importance to a community as its form ment had imposed the tax, and there was little of government. Peoples have become civilized, and even less possibility of escaping from that and enjoyed a certain degree of prosperity, under imposition than there is from a governmental tax. forms of government other than our own. No - It is, therefore, of at least as much importance community can enjoy prosperity, or attain any to a community to be fairly and equitably dealt high degree of civilization, where property rights with in its cost of transportation as it is to be are not secured. Property protects itself best from fairly and equitably dealt with as to taxation. aggression, or unjust tribute, when it is congreAnd unfairness and injustice in the cost of trans- gated under corporate management, in few hands, portation bring about the same disastrous conse- because it becomes, in its centralized form, capaquences to individuals and to classes as unfair ble of wielding a power which the politician is and unjust taxation does. It is, indeed, a mild bound to respect. Under the corrupting condistatement of the case to say that the injury in- tions of existing administrations, it has, perhaps, flicted by the unfair cost of transportation is as been one of the modes of preserving property great as that inflicted by unequal taxation, be- from the grasp of those who, in national, state cause the mischievous consequences of unfair or and municipal governments, represented public unwise transportation rates are necessarily great-power ostensibly, but really represented their perer than those that arise from unequal taxation, and dry up, more rapidly than would bad taxing laws, the prosperity of a community. Therefore, by carefully worded constitutional provisions, to protect the community from the evils of oppressive and unequal taxation by government, and then to leave this great and growing power of private taxation without responsibility to government in its administration, is to guard the public against the ravages of the wolf, and to leave it unguarded from the attacks of the tiger. That already the legislative bodies of the states of the Union are as wax in the hands of the modeler un sonal interests first, and party caucus and boss interests in the second rank. In the long run, how. ever, this condition becomes intolerable. No community can safely pursue its course of happiness and well-being where the actual highest power wielded in the community is not responsible to the people, where its government is a mere simulacrum, and all real power is moulded behind the throne by a moving power. It is just as objectionable if this moving power be a band of railroad directors who move the government, as that it should be the mayor of the palace, a church institution, a cabal of courtiers or loose women. the road shall become public property. — We are very far yet from this solution. The course which is likely to be run in the United States in regard to the railway problem is the extension of the commissioner system by state legislation and its adoption by the federal government. A mass of light thrown through the investigations of these bodies upon the subject will make matters appertaining to railway administration more generally understood by the people of the United States. And, by the time the railways are ripe for more heroic treatment of the question, the people in all probability will also be ripe to treat it more intelligently, and will have made such progress in the moral development of the administrative machinery of the government that the additional powers to be intrusted to that machinery can safely be to it delegated by the people. SIMON STERNE. RAILWAY CLEARING HOUSE. (See CLEARING, AND CLEARING HOUSES.) Against such an insidious power the ballot is inef- | transacting the business that could be accommofectual, and even revolution almost hopeless.- It dated by the road already built, the cost of transis, therefore, essential, as a necessary part of the so- portation is increased from 40 to 60 per cent." lution of the problem before us, that the people of This truth borne in mind would enable the govthe United States should awaken to the fact that ernment to give practical control of the field, their methods of legislation and their methods of se- without thereby adding to the cost of transportalecting legislators, their political organization and tion. It could at all times annex the condition political administration, must be reformed as well that no more than a certain percentage of profit as the railway administration, and that the amen- shall be earned, and that out of this surplus a ability of railways to the public is very largely sinking fund shall be provided, to repay capital dependent upon such reform in political adminis-outlay, and that, when the cost shall be repaid, tration. The civil service reform is already a step in the right direction, and its permanent establishment will make thoughtful investigators on current events less fearful of clothing governments, both state and national, with the additional powers necessary to cope with the railway problem. The other more important reforms, however, are those of methods of legislation and representation. (See LEGISLATION, REPRESENTATION.) The people must concede, once for all, that the line of policy as to railway management has proceeded upon a mistake. They must recognize the fact, that in all services, the supply of which is limited to a certain locality, and which, as to such locality, can practically be indefinitely increased without proportionately increasing the plant, there is a monopoly character implanted upon such service, whether it be the supply of ways and means of transportation, of gas, of water, of electricity, or of motive power on some general plan, which takes these enterprises out of the domain of competition, and compels a treatment separate and apart from that of strictly private enterprises. Some modification must be made, limiting the existence of corporations, so that from time to time something analogous to the service that death performs in the individual world shall happen to their accumulations and power. Some plan should be provided, by way of sinking fund, or gradual acquisition by the government, by which enterprises of this character shall in time become the property of the .state. Such a plan of compulsory sinking fund to repay capital must, of course, in all cases be accompanied by some guarantee against invasion of the field by other organizations; and, as Mr. Fink observes, in his answer to inquiries of Mr. Nimmo, in his report for 1878, "In the consideration of this subject one important fact should always be kept in view, to-wit, that the effect of the construction of a greater number of railroads than are necessary to accommodate the traffic, is to increase to a great extent, not decrease, the cost of transportation. The interest on the cost of two roads built for the purpose of transacting the business that could be transacted by one, and the cost of maintaining the two roads, are of course twice as much as the interest and the cost of maintaining one road." The interest and cost of maintaining a road, he estimates as from 40 to 60 per cent. of the whole cost of transportation. "It follows, therefore," he continues, "that for every additional road built for the purpose of | RANDOLPH, John, was born in Chesterfield county, Va., June 2, 1773, and died at Philadelphia, May 24, 1833. From 1799 until 1813 he was a democratic congressman from Virginia. After 1801 he was for some years the administration leader in the house; but in 1805 he quarreled with his party (see QUIDS), and for some years he was a free lance, claiming to be a better democrat than the dominant party, and yet opposing the embargo and the war of 1812 in company with the federalists. He was out of congress 1813-15, having been defeated by Jefferson's son-in-law, John W. Eppes, but was again in congress 1815-17, 1819-23 and 1827-9, and in the last interval was United States senator, 1825-7. During a part of the year 1830 he was minister to Russia. — Randolph's attenuated frame, his shrill voice, his powers of bitter sarcasm, his extraordinary eccentricities of speech, dress and manner, his pride of descent from Pocahontas, and, with it all, his real political power of thought, made him the problem of his own time. He was variously supposed to be crazy, emasculated, or guilty of some enormous secret crime; but he seems to have been only a supremely selfish spirit, loving a few others because they belonged to him, and his selfishness was concentrated into disease as they were taken from him by death. See Garland's Life of Randolph; F.W.Thomas' John Randolph, Parton's Fa mous Americans; 2, 5 Harper's Monthly; 103 North American Review. ALEXANDER JOHNSTON. REBELLION. By rebellion is understood the act of resistance by one or more individuals to lawful authority acting within the limits of its power. Insurgents are those who attack the government with the intent of overturning it, and rebels those who refuse to obey it. It is true that rebellion quickly becomes insurrection. The distinction between them, consequently, exists especially at the beginning, but exact definitions are necessary in political language. Rebellion is, at bottom or in principle, a refusal of obedience, which manifests itself either by violence and assault, or by passive resistance.-There is no rebellion unless the public force, against which the rebels rise, be acting in the execution of the laws, or of legitimate orders of the authorities or the courts. This is the essential element of rebellion. When peace officers act outside of their right, or exceed their power, resistance is not rebellion. This principle was written in the Roman law (see law 5, of the Code De jure fisci); it was even taught in French law by Jousse (Traité des mat. crim., vol. iv., p. 79). In such a case, the act of the officer is an act of brute force. But the presumption of legality is in favor of the officer, and it is for the person who believes himself to have the right to resist, to show grounds of excuse in justification. And, further, when a public officer acts within the limits of his power, an irregularity | of form which clouded his title or acts would not constitute an excuse, because then the officer commits no violence, and at bottom his title and acts are legal. But if, for instance, the officer purposes to make an arrest, except in the case of flagrante delictu, or to effect an execution without a judgment, resistance is an act of lawful defense, provided that it does not go beyond the bounds of strict necessity. - These are the least serious cases of rebellion. They are what may be said to constitute petty rebellion. Rebellion, in its greatest development, goes much farther than contesting the acts of a police officer; it calls in question the very government whose orders he executes; it raises against the government the same objections, of incompetency, or of exceeding its powers, which we have just supposed in the case of pub lic officers. The same principle, as to the lawfulness of the resistance, must be applied here. Rebellion, we have said, may show itself without violence, and be entirely passive. Thus, breaches of certain legal obligations are, in our opinion, acts of rebellion. If the commander of an armed force refuse to cause it to act, though he be lawfully required to do so by the civil authority, he deserves, according to our idea, the title of rebel, quite as much as the wretch who meets a sheriff with a blow from his fist. F. A. HÉLIE. | by its result. If it had been successful, it would have decided that the United States had never been a nation in its domestic relations, and the conflict between the states of a voluntary confederacy might very properly have been termed a civil war. As it was unsuccessful, and as the nation maintained its previous and future entity, the logic of events has stamped the struggle as a rebellion by individuals, not a civil war between states. It is true that many of the enactments of congress and of the judicial decisions from 1861 to 1867 can only be explained on the theory that the war was maintained against states: these instances have been collected by Mr. Hurd, as cited below. But they are opposed by more numerous instances to the contrary, and are rather proofs of haste than of a consistent theory or policy. Legally, it may have been a civil war as well as a rebellion; politically, it was a rebellion only. Mr. A. H. Stephens, who regards the struggle as a revolution by which a voluntary confederacy was transformed into a nation, very properly entitles his history of it "A Constitutional View of the War Between the States"; but even he would be compelled to call any similar struggle in the future a rebellion. The name is retained here, therefore, not in any invidious sense, but as one which can not truthfully be avoided. (See NATION, STATE SOVEREIGNTY.) — It is impossible to date the outbreak of the rebellion exactly. The secession of South Carolina, or of any other state, can not be taken as the date, for it might have been possible for a state to pass an ordinance of secession, refuse to take part in the government, and yet remain peacefully in the Union so long as the execution of the laws was not resisted. The seizures of federal forts, arsenals, mints and vessels in January, 1861, bear far more affinity to a rebellion; and yet these were so irregular and scattered, some of them with, others without, and others disavowed by, the authority of the state, that there seems even yet to have been a locus penitentic to the participants. But the organization of the new government at Montgomery (see CONFEDERATE STATES), was a different matter; this was a step which there was no retracing, and with it the rebellion takes a tangible form. From that time there were two incompatible claims to the national jurisdiction of the seceding states, and neither of the two claimants could exist except by forcibly ending the claim of the other. War was a necessity, and the rebellion a fact to be acknowledged. The rebellion, however, was not at first acknowledged, nor were instant measures taken for its suppression. The responsibility for this mistake has been concentrated by popular belief upon the head of President Buchanan (see his name), but it is unfair to deny a very large share of it to the politicians of all parties in and out of congress, to their complete ignorance of their constituents, of their associates, and of themselves, and to the inevitable tardiness of action in a republic. Hardly a northern man in congress felt sure of his footing, or felt certain how far his |