36

INDUSTRIAL REVOLUTION AND WAGES

land grants to Western Railroads to aid in their construction,
 to the amount of 305,114 square miles. This
is equivalent, approximately, to all the area east of the
Mississippi River and north of the Ohio and Potomac
Rivers, with the exception only of the States of Wisconsin
 and Michigan. The unfortunate feature of this landgrant
 policy was that these great subsidies were diverted
from their original purposes to the enrichment of a few
financial adventurers. A number of Western Railroads,
such as the so-called Pacific Lines, were built in a spirit
of financial corruption, by collusive construction contracts,
 stock manipulation, excess capitalization, and the
defrauding of the Government and the public. The value
of the extensive areas of lands granted was capitalized
and distributed in the form of securities to the stockholders.
 In other instances, the value or income-producing
 power of the land was capitalized. A few Railroads,
such as the Northern and Southern Pacifics, and the
Atchison, Topeka and Santa Fé, retained very valuable
holdings of timber and minerals, despite the stipulation
that such lands be sold to settlers in small tracts. They
are now among the unreported assets of these transportation
 companies. The Southern Pacific Company
alone is now estimated to have oil and timber holdings
ranging in value from $100,000,000 to $700,000,000,
which are reported to the Interstate Commerce Commission
 at a book value of slightly more than $40,000,000.
(b) During the years following the construction of
the Western Railroads through Government aid, and
extending into the early nineties, the greater number
were characterized either by financial managements
which dissipated their resources in the form of special
distributions to stockholders, or by stock manipulations,
or they capitalized cumulatively the expansion of trade
and business, and gains in operating efficiency. The
hundreds of millions of dollars of fictitious capital issued