The Sun.
London, England, 1868-07-06 00:00:00

TUE SUN, LONDON, MONDAY EVENING, JULY 6, 1868.

ROMAN AFFAIRS.

(From the Roman Correspondent of the Westminster Gazette.)
RO3IE, June 27.

I mentioned by anticipation in my last the
mode of keeping the Pope's coronation day,
and I did not notice any departure from the
usual programme.
The Allocution delivered in the Consistory,
held next day, will reach you in its entirety
before this, and I need not therefore sum-
marize it ; more particularly as it touches no
important matter but such as I have already
announced. The occasion of the bishops for
Mexico being preconized, was that Juarez
wrote a letter to the Pope, couched in very
respectful terms, to announce that the Mexican
Republic, in virtue of the great principle of
" a free Church in a free State," will abstain
from all interference with the nomination of
the Mexican bishops.

The Pope went on Wednesday, being St.
John the Baptist's clay and his name day, to
St. John Lateran, to hold a Capella Papale,
according to custom. The Cardinal Arch-
priest of the Basilica sang the Mass. After
first Vespers on the eve, the same cardinal had
blessed the sprigs of carnation which are dis-
tributed to the sick.
The ancient order of Knights of Malta,
some remnants of which still cling about Rome,
celebrated on the same day at its church of
the Sta. Croce, a solemn Mass, in honour of
St. John, who is one of their patrons. It
was sung by one of the chaplains of the order.
The mischief to the new camp havinc, been
repaired, the troops received orders to take
up their quarters there on Tuesday.
.The de-
tachments appointed to make the first trial
of camp life, started off with admirable spirit
and enthusiasm. The Annuario Militare, for
1868, just published, shows in the additions
of its summarized tables the immense prepon-
derance of the native element in the appoint-
ments of the army. It appears there are
altogether 704 officers, and of these 462 (more
than two-thirds) are Italian ; 129 French ;
59 Swiss; 19 German ; 20 Belgian; 9 Dutch;
4 English ; and 2 Spanish. Among new re-
cruits for the Zouaves, we have an Abyssinian,
a very fine-looking fellow, though with skin of
the deepest hue.
There has been some little excitement to-
day, about an alleged accident, or worse, to
the Ancona mail train. It certainly was pulled
up at an unusual point for stoppage, a short
distance on the stage between Monte Rotondo
and Rome. Any railway irregularity is so
unusual about here, that a thing which would
scarcely have given the most timid passenger
a moment's anxiety at home, becomes the sub-
ject of much canvassing. The form the story
finally assumed being that fifty Garibaldians
had overpowered the signalman, hoisted the
danger signal in order to bring the train to a
stand, but were so alarmed at the idea of com-
ing to close quarters with some half-dozen
Zouaves who happened to be in the train, that
they made off too fast for one of them to be
seen. The probable state of the case, how-
ever, was that the signalman was a new hand,
and gave the wrong signal by mistake.
Prince Dorea has, I am told, just made
arraegements with the Passionists to give a
regular series of missions in the various little
villages which own him for a landlord—some
forty in number. The turn of each will come
round about once in eight years ; they will
begin early in July at St. Martino, a village
near Viterbo. Giving missions being a special
work of the Passionists, the Fathers will re-
ceive no fee or reward for their labours, but
will be entertained during their sojourn in
each place at the Prince's expense. It is not
altogether a new project, but a more syste-
matic and abiding plan than has hitherto been
in operation.

RAILWAY MORTGAGE SYSTEM.

(From the Anglo-American Times)

The Erie Railway War has had an effect which
neither VANDERBILT nor DREW desired, as it
must be injurious to the interest of speculators.
Public attention, first attracted in the direction by
this remarkable fight, has been fastened inquiringly
on railway management in the United States. The
Nation has followed up a very powerful article o❑
the subject by giving the main reason why rail-
roads are there badly managed. One word com-
prises that reason—Mortgage ; the assertion being
" it is scarcely too much to say that leaving out of
view half-a-dozen exceptional lines, the railways of
the United States are on an average mortgaged for
an amount fully equal to the market value even at
present inflation prices of the whole of their stock,
while manyare mortgaged for more than the nominal
value of their stock, some for more than all the
road is worth, and others never had any real stock
capital at all, bat were built exclusively with the
money raised by the sAle of the bonds for which the
money was pledged." Looking over the full list of
American railways, and comparing the shire capi-
ta with the mortgag3 debt, we find that there is no
exaggeration in what the Nation says—the sum
raised in bonds being often in excess of the shard
capital. For instance, take Indiana, and the follow-
ing is the result : . _

Paid in on On Bonds.
Shares.
Chicago and Groat Eastern
Evansville and Ora,wfordsvillle 1,112,831 1,240,000
Indiana Central 611,030 1,254,500
Indianapolis and Cincinnati
Ind., Pittsburg, and Cleveland
Jeffersonville 1,015,907 621,000
Indianapolis and Madeira
Louis v. N. Albany and Chicago
Terre Haute and Indianapolis
The bonds are independent of other liabilities,
which, in the case of the Louisville, N. Albany,
and Chicago Railway, amounts to $2,009,000.
These lines, on the whole, owe more than the
shareholders have paid, the larger interest being
then not in the owner of the property, but in
the mortgagee. Yet the bondholders have no vote
in the management, and it sometimes happens
that the rule falls into the hands of men who have,
as the Nation asserts, never fairly invested a single
dollar in the property, and this is shown by the
operations in IVall-street. A prosperous road
earns enough to pay say 7 per cent. to the bond-
holder and 7 per cent. to the stockholder. Bad
years come, and the earnings decline, while the
expenses remain the same. Then the stockholder
receives nothing, the profit being only sufficient
to pay the interest due to the bondholder.
The violent fluctuations of the dividends are fol-
lowed by violent fluctuations in the stock, and as
the gain of speculators consists in the extent of these
fluctuations, their object is to increase them to the
utmost degree. They make money by being on the
spot and having the means instantly to avail them-
selves of early information,
and they play against
the stockholders with all the chances in their favour.
But the fluctuations so profitable to speculators are
disastrous to investors keeping them constantly in
anxious insecurity, so they sell such property, and
the shares become the foot-ball of the speculators
who have no permanent interest in the road, and
neither know nor care anything about it. It is
always worth something to have the control of a
line, which means the monopoly of the transport
between two points. Those whose purpose it suits
experience little difficulty in being elected if they
aro prepared to pay for the proxies of the men who
care so little about the management of the property.
" Armies of drummers are employed previous to an
election, canvassing, begging, bribing, and buying
proxies, until at the election itself proxies of half
the stock of a company are in one or two hands,
and until a stockholders' meeting of a company, re-
presenting ten millions of capital, owned by 500
individuals, frequently consists of half-a-dozen
smiling knaves and a doorkeeper. The directors
elected at such a meeting have full control over all
the property of the road for one year, with no
earthly power to call them to account stye the
next yearly meeting of stockholders, similar to the
one just described." Yet these are the men who
manage a road upon which thousands daily
risk their lives, and sometimes lose them. When
the line has reached this stage the public are
pretty sure to ba the sufferers. The Stock
is avoided by honest investors, and is used as a mere
means of gambling by men= who have otherwise no
interest whatever in the property. It is managed by
those who intend to subserve other than the interests
of the line. The greater portion of the capital has
been advanced by the bondholders, and they neither
have a control, nor do they desire it so long as the
road can return the stipulated percentage. Failing
this payment a foreclosure takes place, followed by
a sheriff's sale, when the share capital and the oc-
cupation of the directors are at once lost, which, of
course, it is the business of the managers to avert
by every means. But should the line be intrinsically
good there is even a temptation to the holders of the
firatmortgage bonds to give the preference to the worst
n
management, for in default of payment the first mort-
sgiarbgelhde pr can forecloset
eply f
maintains that the chief step towards railway reform
is the abolition of the entire system of mortgage in-
debtedness. The subject is occupying much atten-
tion in the United States, but the system continues,
and is glaringly the case in that greatest of all rail-
way undertakings—the Union Pacific—which must
be the most powerful of railway corporations. And
who are the shareholders ? No such thing as shares
are ever offered on the market, nor are they likely
to be, so long as the agreeable plan now followed
will answer. The railway is built by Government
grants and by Mortgage Bonds, and in proportion
to the sums thus obtained the subscriptions received
from the shareholders are contemptible in amount.
Out of an estimate of the cost of 1,100 miles,
amounting to $85,145,750 but $5,369,750 is
the capital stock paid in. By such a system
the corporation uses the money of the public to
work out a speculation which in all probability
will yiel d an enormous gain to themselves, while
the risk is mainly borne by the Government and
those who cannot get more then a certain interest
for their money. What the country surrenders may
be estimated from these words of SAMUEL F. CAREY,
of Ohio, " That more land had been given to the
Pacific Railway Company than is contained in the
States of New York, Pennsylvania, Ohio, and
Indiana, with enough over for a State twice as large
as Massachusetts." This contribution is not to
those who furnish the money and run the risk, for
they are the bondholders, who have, for an imaginary
security, stipulating only for a certain percentage.
'The Nation asserts (and quotes the recent ex-
ample of England in proof) it to be susceptible
of almost mathematical demonstration that the
depreciated value of railway shares is mostly due
to the recklessness and mismanagement which the
Mortgage system has engendered, and that had it
not been introduced the shares would to-day in
nearly all the roads be far better than the bonds now
are. We believe that the case of the English lines
will fully bear out the Nation in the assertion that
the common stock of the companies would be a
better security than the Bonds bad no such system
been permitted ; and the single instance of the
London, Chatham, and Dover fully proves how the
system can be abused in the hands of the unscru-
pulous. That railways will pay in America better
than in England has been shown by experience,
for the grand desideratum is a rising country, where
the land can be obtained cheap, and to which the
railway itself gives the chief value, connecting
towns growing all the more rapidly from the benefit
of such communication. But no advantages can bear
up against careless and unscrupulous mismanagement;
and even in the United States railway shareholders
are made painfully aware that the most bountiful
gifts of nature, and the best conceived plans, may
be thus defeated, and result to them in total loss.
The full remedy has not yet been discussed by our
able contemporary ; but this main reform of raising
no capital except by the sale of shares is strongly
insisted on, and we anticipate that the Nation
is not unfavourable to Government control. The
argument is that there are three principal par-
ties interested. First, the railway fraternity ; next,
the actual stockholders ; and, lastly, the great
body of travellers and freight-senders, between
whom, throughout th 9 world, a civil wallet is pre-

paring, of larger proportions than any witnessed
since the abolition of feudalism. It is a popular
error to look for relief against the railroad men
from a change which restores the control of the
roads to the shareholders, and it is evident,
if for what each strives be considered, that the
people will not gain what they want through such
a change. They complain of the imperfect accom-
modation, the insufficient number of trains, the
high and arbitrary rates of fare and freight, the
difficulty of obtaining redress for wrongs, and,
above all, the constant and frightful risk to life
and property. But what the stockholders com-
plain of is the way in which their property is
wasted and rendered unproductive, and being held
at least in part responsible for the shortcomings of
the railroad men who in their turn throw the blame
upon the system, alleging the incessant, urgent de-
mands of the people for more roads, anl the indif-
ference and want of co-operation on the part of the
stockholders. The public, who are better able to ap-
preciate the errors of the managers than the errors
of the stockholders, accept the views of the
latter and tender to them their aid and sym-
pathy. We rejoice to see a subject of such over-
whelming importance thus earnestly taken up, and
it gives promise of an exhaustive discussion. A
check to investment in railways is a check to human
progress, and if unwise and unscrupulous manage-
ment be permitted such a check cannot fail to re-
sult, far there is no burnt child who so dreads
the fire as he who has invested in confidence and
finds that he has been sold a bargain. The great
mass of railway property in the United States is
not only good, but certainly among the best and
most secure in the world ; but there is a danger in
the very security into which it lulls the investor.
The point of the Nation's remarks, however, is to
protect the public against the evils of railway com-
p inies without responsible owners, against bad rai's,
ill-built bridges, and construction generally, as well
as the want of accommodation, of comfort, and of
punctuality.

THE FINAL RECONSIRUCTION BILL.

THE RESTORATION OF SIX STATES.

The following is the text of the bill for the ad-
mission of North Carolina, South Carolina, Ala-
bama, Louisiana; Georgia, and Florida, as passed by
both Houses of Congress and sent to the President :
—" Whereas, the people of North Carolina, South
Carolina, Louisiana, Georgia, Alabama, and Flo-
rida have, in pursuance of the provisions of an. Act
entitled, An Act for the more efficient Govern.
went of the Rebel States,' passed March 2, 1867,
and the Acts supplemental thereto, framed Consti-
tutions of State Governments which are Repub-
lican, and have adopted the said Constitutions by
large majorities of the votes cast at the elections
held for the ratification or rejection of the same :
Therefore, be it enacted, That each of the States
of North Carolina, South Carolina, Louisiana,
Georgia, Alabama, and Florida shall be entitled and
admitted to representation in Congress as a State
of the Union, when the Legislature of such States
shall have duly ratified the amendment to the Con-
stitution of the United States, proposed by the
thirty-ninth Congress, and known as Article 14,
upon the following fundamental conditions:—
Sec. 1. That the Constitution of neither of said
States shall never be so amended or changed as to
deprive any citizen or class bf citizens of the United
States of the right to vote in said State who are
entitled to vote by the Constitution thereof
herein recognized except as a punishment of
such crimes as are now felonies at common law,
whereof they shall have been duly convicted
under laws equally applicable to all the inhabi-
tants of said State; provided, that any alteration
of said Constitution, prospective in its effects, may
be made with regard to the time and place of resi-
dence of voters; and the State of Georgia shall only
be entitled and admitted to representation upon
this further fundamental condition : That the first
and third sub-divisions of section 17 of the fifth
Article ;of the Constitution of said State, except
the proviso to the first sub division, shall be null
and void, and that the General Assembly of said
State, by solemn public act, shall declare the assent
of the State to the foregoing fundamental condition.
Sec. 2. That if the dty fixed for the first meeting
of the Legislature of either of said States by the
Constitution or ordinance thereof shall have passed,
or so nearly arrived, before the passage of this
Act, that there shall not be time for the Legisla-
ture to assemble at the period fixed, such Lc;gis-
lature shall convene at the end of twenty days
from the time that this Act takes effect, unless
the Governor elect shall sooner convene the same.
Sec. 3. That the first section of this Act shall
take effect as to each State, except Georgia, when
such State shall, by its Legislature, duly ratify
Article 14 of the amendment to the Constitution of
the United States, proposed by the thirty-ninth
Congress ; and as to the State of Georgia, when
it shall, in addition, give the assent of said State
to the fundamental condition hereinbefore imposed
ur on the same, and thereupon the officers of each
State, duly elected and qualified under the Con-
stitution thereof, shall be inaugurated without de-
lay ; but no person prohibited from holding office.
under the United States, or under any State. by
section 3 of the proposed amendment to the Con-
stitution of the United States, known as Article
14, shall be deemed eligible to any office in either
of said States, unless relieved from disability as
provided in said amendment ; and it is hereby
made the duty of the President, within ten days
after receiving official information of the ratifica-
tion of said amendment by the Legislature of either
of said States to issue a proclamation announcing
that fact."