Again, the problem was over capacity. Yes, railroads are good at long hauls, which is why the GN and NP were already built and they live on as part of BNSF. The misguided part was the government fixing the rates below level of maximum profitability, which had the feature of allowing (and sometimes forcing) marginal lines like the Pacific Extension to survive. This rate structure didn't allow railroads to negotiate contacts for services in competitive fashion, but instead give them a fixed amount per mile. Obviously, the more revenues miles you had to spread the cost over the better off you were. But in a competitive market the Milwaukee road would have had trouble establishing market share and the line would have been forced out. As to the point, about capital investment. You've missed the entire point of the scheme. The idea was to burden the railroad with debt so it could buy the copper from the copper companies to increase their profitability so their stock price would go up, etc. The railroad failure was immaterial to the copper barons as their investment had already been realized via this manipulation. But for the other share-holders and bond-holders, the usual way of measuring an investment is it's return on capital and have the hard time imagining that the Pacific Extension was anything other than a loser in that category.