When it became possible to economically apply electric power to the street railway service, the first step was naturally the conversion of the horse propelled cars to those driven by electricity, and this change has very generally taken place throughout the country. While there were roads to be so converted, there was not so much attention paid to constructing new lines. Of late years, however, this field has been extensively exploited, and, perhaps, in some instances, too much so. Although a vast number of roads have been honestly built and capitalized, there have been construction companies and promoters who were so anxious to profit from the building of electric roads, that some ill-advised properties have been financed. This is especially true in the smaller towns and sparsely settled sections. This 5eal for construction is bound, in such cases, to result in some re-organizations. In many instances, the impending disaster may be averted by the consolidation with, or the sale of the property to, a connecting line of greater importance, which can, with its own power and equipment, more economically conduct the smaller line.
Whereas, as stated above, there have been some ill-advised roads constructed, roads built where there is little business, little to support them, or, as we might say, where the nickels do not exist in sufficient quantities, this is not the whole trouble. Recent construction shows a great contrast to earlier methods. The latter allowed the use of too light rails and much equipment which is now out of date, and the construction was almost exclusively upon the highways. Modern methods take all these matters into consideration. The physical condition, such as grades, curves, general construction, etc., are all important. In New England, the hilly character of the country with the sharp and frequent curves makes it unsafe to run heavy cars at express speed. The privilege of constructing over a private right of way is frequently difficult to obtain. The cost for the removal of snow in roads running upon the highway is far greater than if operated over a private right of way. In many sections of the country, where it is possible to build long stretches of road, practically without curves and appreciable grades, all conditions incident to a low operating cost are favourable.
High rate of speed over privately owned rights of way is, where the natural conditions are favourable, resulting in the carrying of through passengers for long hauls, and the transportation of freight to very profitable ends. It is continually bringing electric railways into stronger competition with the steam roads. The introduction of dining, sleeping, and drawing-room cars is making one system of transportation more like the other. The filling in of small links of road here and there is furnishing the means for long distance service, and, withal, the electric railway situation is constantly shaping itself upon a permanent basis and upon different lines, capable of a reasonable certainty as to results.
The modern inter-urban electric railway, which has the best chance for a successful future, is the one which operates over a private right of way, and approximates in its character the construction and equipment of the standard steam railroads.
The inter-urban electric has a distinct function, and it is predicted that the ultimate outcome will be that these roads will do most of the short haul passenger business, and leave to the steam roads the long haul and freight. And, furthermore, that many electric roads feeding into, or parallel with, the steam roads will eventually be absorbed by the latter.
It is a peculiar fact, and recognized by many, that the inter-urban road parallelling the steam road does not result in a reduction of the passenger business of the latter, but seems to create a new business for itself. In other words, it is recognized that the "trolley lines" "breed" business.
Much information and experience have been gained of late, and the roads recently constructed are on a different scale and less likely to come to grief than the earlier ones. Judging by this, it is reasonable to suppose that new properties, built according to modern methods, and serving populous communities, will prove desirable and profitable investments.
The question of equipping steam railroads with electrical power has received consideration, as is evidenced by steps taken in that direction by the New York Central & Hudson River, and the New York, New Haven & Hartford, the Chicago, Milwaukee & St. Paul, and other railroad companies.
Some of the things to consider in the selecting of a street railway security have already been set forth, to which may be added:
The length of franchise, which, in the case of a bond, or other security having a definite maturity, should always outlive it. (See "Franchise.") The earnings should be given careful consideration. Proper charges should be made each year for improvements, and assurance had that the road is being maintained in a high state of physical condition from its earnings, and that no new indebtedness is being created to pay for what is strictly wear and tear. (In this connection it may be well for the reader to consider the matter under " Depreciation.") When a property of this kind is first constructed it is usually in a high state of efficiency, and the road and equipment do not begin to show visible increased cost of maintenance for the first few years, thus permitting it to be operated at a lower cost than later on when the wear and tear will become more apparent and replacements necessary. A road giving service where the riding is more or less for pleasure, rather than for necessity, is also likely to show unduly large earnings at first, owing to the novelty afforded the patrons. Thus, the earnings of a new road should be studied from this point of view.
The power is all-important, whether it be purchased or furnished from the road's own plant. The question is: If furnished by water-power, is the power sufficient for service at all times of the year, and has provision for the future been taken into consideration?
In all such matters the opinion of a well-established expert engineer should be furnished, and his report should not only cover the physical condition of the property, but should enter with care into the business tributary to the road. In considering this, the reader is asked to turn to the subject " Auditor," which treats further upon this matter.
The net earnings of a company ought to be nearly double the interest charges; the mortgage ought not to exceed 75% of the replacement value of the property; a sinking fund is advisable, which it is well should become operative at an early date after the issuance of the bonds.