There is a large class of people who think that a r©ad should be valued according to the cost of replacing the property at the present time, i.e., buying the right-of-way, constructing the road-bed and track, and providing its equipment. There are several causes which will operate to make such a valuation very unfair. Such a valuation takes no account whatsoever of the earning capacity of the road. A railroad may be so well located that its annual earnings are very large, so large that the public values its stocks and bonds, as quoted in the stock-market, at a very high figure, and yet the cost of duplicating that road in every particular at present-day prices might be very much less than the market price of its securities. As another reason, it is almost invariably found that any business enterprise, whether it is a factory or a railroad, which has been in existence for a series of years long enough for a considerable part of its construction to have been renewed by methods which were not in vogue when the structure was originally built, has had a total amount of money spent on it which is very far in excess of the amount which would replace it at the present day. It would certainly be unfair to say that, because a railroad-cut, for example, which was originally dug out by hand labor at a high price per cubic yard could now be taken out with steam-shovel methods at one-half the cost, therefore those who had paid the high prices for the original work should now have the railroad earnings scaled down until they give merely a return on the cheapened method of construction. This method is usually advocated by those who wish to make it a basis for radical legislation which shall reduce railroad charges until they merely pay the cost of operation plus a comparatively insignificant return on what it would cost under present methods to reconstruct the road. Such methods seem to lose sight entirely of the fact that the element of risk in railroad construction is very great, and that, as given in a previous chapter, a very large proportion of railroad stock pays absolutely no dividends. Therefore it is but just that the permissible earnings of railroads should be made high enough to compensate for the great risk which is run by capitalists who build railroads.