The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-09-21

FYom the Hartford Times, Sept ID
taken an upward turn from the lowest point Erie and
several other fancy stocks which regarded the
financial baroetees In Wall street, have advanced very
below their old mark a. It Is far from being clear that
they possess any value at oil. To show how fooishly
.nss 81 to s
the dsbt Of the Erie road amounts 70 about for
every mile Of the road while the road ct vsry fair and
nil. And :, rv rt economically could have been con-
.trus..d for hat iaA. AN, vi = ~ .;r.se
and several competing routes, this roxa might earn,
~, 600 per mile, but II can seven per
cent On s debt Of 900 per mile AID until it earns
seven per cent On its whole dsbt ts stock can have
value The constant and nonsRpus accumulation Of
things with perfect csAness that the dividends paid
road has bssn 1t least per cent Of the whole
csipts instead Of ny Per cent the directors have
stated In their reporf and that the rates received for
low Of any profit or dividend On the stock The New
York Central road has been vasefuy constructed ~
the Erie and ~ resents capital st east double It's &c.
Inflated largely BY fictitious capital before the con-
soldatop and general and whslesAe fictitious capital
earn sin nee ant On ts rssssnt fictitious and inflated
capital stock, the road "a compelled to earn twelve
per cent its actual cost. In one respect, aud
one only, It has the advantage Of the Erie road
TWO .hirds Of its cost being represented BY stock,
the interest ON Its debt is not likely to absorb al
to eainiDgs, and some portion Of them must reach
the stockhcldcrs,. provided It's charges leave any
p-oft-wh,reas the cost Of the Eis road being
chiefly represented by an enorm us bonded debt, on
which per cent interest Ia to DO paid eli events,
Ito whole net earnings, and probably much more til an
the whole, are thus annually swallowed up, so that
pothrg remains for the stock. Wo sele,. these two
railroads conspicuous illustrations Of that
wssfsfuf financial mana cement, enormous seals,
wbc has beer at the bottom OF much Of this present
strineG cy In the money marAet The schuv1er frauds
rsern IN nxfck h,1h %ha~ vo<
duce Il.
The sudden reaction in the price OF IA ICY stocks Ia
Attributed 70 the feet that loan Of S6o0 900 has been
made mp tor the Erie road by the banks 10 ,e them
TO "A, CD portion OF their floating debt to avoid lon
mediate bankruptcy But this Is not much paw.
mont a. postpocsment OF payment ., great sacri
fce. The hanks required the endorsement or Nes,rs
Drew and Vanderbilt, who doubtless exacted round
commission for the service and they turn required all
the gnos and cars TO b rtgaget for their security
which gives them the power Of stopping the running
Of tho road II there Il any default mads In payment
OF their notes 1t was necessary to resort 10 this
extreme measure Of mortgagipg tho rolling stock, the
mortgage OF tscf should have been sufficient 70
the loan without paying In addition large shave for
the use Of names which top Of good m3rtgsgs
useless. 1hs bonds falling duo 10 Fsbsr be
paid In cash, and must either be protested renewed
at sacrifice Of 20 or 30 per cont The HERALD stated
that the holders Of these bonds could compel payment
by stopping the payment Of the convertible bonds the
ground o. uaury they having been originally sold at
are enforced with vainous severity and tyranny and
though corporations are prevented by statute from
setting mp the plea OF usury a. to the original sale OF
tbef bonds the Herald states that third parties can
This question very important ono 70 the many hold
ers Of these bonds In other ates and the HERALD u
correct tbs value Of these securities very seriously AZ
fected BY this liability Cannot some Of the hwyers or
Judges in New York give ths public o. little light on
question which has become very important one 81 the
present time