The properties of many systems are already encumbered to the limit of credit and solvency. Securities have been consolidated, equipment trusts have placed what are practically chattel mortgages on rolling stock, and money cannot be raised except for a short term and at high rates. Ten or fifteen years ago 4 per cent would bring in capital for railroad improvements. Strong properties sold their bonds bearing 3½ per cent interest. Now some of the strongest roads are paying 4½ per cent for new capital. Properties less well known for stability and earning power pay more. The rate has advanced by from 1½ to 2 per cent in little more than ten years. The great sums required to extend our terminals to meet the actual business of the country can be had only on condition that the payment of principal and interest is absolutely secured. The railroads can pay money only as they are permitted to earn it. In the last resort it is up to the people to say whether or not these terminals and other facilities shall be supplied; just as it is up to them to suffer the severest of the consequences if they are not. Two questions arise immediately and naturally from the situation as it discloses itself to any one who chooses to look at the facts. The first is, “Why are the railways not now in a position to borrow the money and build the terminals at once?”; the second is, “What have the railways done to entitle them to confidence, to relief and to a more fair and generous treatment by the public?”. Each of them can be answered by an examination of facts officially vouched for. The impairment of credit has already been partly set forth in presenting the difficulty of making loans for improvement purposes, and noting the higher rate that must be paid. How has this happened? The limitation has come, of course, from two directions; decreased earning power and increased expenses. A railroad has no other source of income, generally speaking, than receipts from rates. These have steadily declined. While the price of everything else rises, the price of transportation falls. The average freight rate per ton per mile received by the railroads of the United States fell from 9.27 mills in 1890 to 7.53 mills in 1910. This is partly the effect of legislative regulations and the orders of public commissions, and partly due to voluntary reductions made possible by increased efficiency and increase in the density of traffic. On the whole, railroad rates in the United States are the lowest in the world. But they cannot continue to grow less forever.