Semi-weekly standard. [volume] (Raleigh, N.C.) 1853-18??, 1858-10-30
For the Standard.

The time is drawing nigh for the usual convention
of stockholders of the Railroad companies of the
State and the past year has not been very favor
able for receipts the likelihood is that there will
not be money enough in hand for usual dividend.
What will be done? This, I fear, lie as easily ao-
swered as the question what ought to be done?
Every prudent and honest man knows what ought
to be done. He knows that the debts and liabilities
of the companies ought to be promptly and honest
~ met that the roads and running apparatus ought
70 be kept in good and safe order and as all Of
them in debt, they ought not only to keep down
the interest upon their funded debt, but of such as
is due, pay off as mnch as possible. and augment
the sinking fund for payment of such as is payable
hereafter.
Every company that borrows money to pay divi-
dends, or for that purpose withholds the payment
of Just debts dminishes its ability discharge its
deferred debt and grossly violates its charter
Nothing but the profits can be lawfully divided.
II q company may borrow money to declare six per
cent, it may, with equal justice, borrow money to
declare twelve, twenty five, fifty hundred per
cent. A honest man can see no difference in the
principle and all that is thus raised dminishes the
ability of the company to discharge previously
listing debts. Thus, suppose company of 500, 900
capital, of half par value to owe $4,000 borrowed
money, and 81, 600 are borrowed to make dividends;
it is plain that the loan of $4,000 is become less
secure In plain words there is subtraction BY
the stockholders for their own Of Sc in each
500 subscribed stock Such operation is
merely dividing out the stock, and dwarfng against
the terms of the charter the artificial being created
by the legislature with full and complete stature.
If it were necessary that the corporation should
have the strength of its entire stock in order
der it fit instrument to effect the purposes design
ed, then such subtraction is not only unwarranta-
BILE, but is fraud the public if it be true that
charter is q contract between the public and the
company.
To illustrate this more forcibly and give practi
cal turn to the matter, suppose the company does
not borrow the money to make dividends, but issues
promissory note to each stakeholder to the amount
in the aggregate of $4,000, and suppose the notes
afe not redeemed before the next meeting, then
set of promissory notes is issued for the new
dividend and the first notes having got into other
hands, the company is sued thereupon and Ultimate
~ funds the debt. II, at the next convention, the
company should not be able to meet it's debts,
(among ,ohich the notes issued for dividends ,oiU be
recLoned) then there must be sudden stoppsge of
dividends and an exposure of the poverty of the
company, and down goes the stock. To avoid this
still to make false dividends by borrowing again, the
device is left. This time the money lender will de-
mand security, and mortgage is given on the road
thus the first debts Of the company due to strangers
and created on the faith of the corparate property
postponed to the last debt, debt really created
to enrich the stakeholder, and, is in truth, me'e
subtraction pro tant0 by the stakeholder of the cap
ital which he at first paid in.
There is another device sometimes resorted to to
give falacous value to the stock which is equally
cupable, and destitute of good faith to the creditor
and the sovereign, and that is to issue promissory
notes for the dividends payable at distant day,
say a! three four or ten years even.
Now it is palpable that in short time these little
notes payable at distant day will greatly depre-
cate and fall into the hands of a money dealer who
will take special care to bring the company to a
reckoning the moment they become due. The
this way than they have to procure from the COM
pany note to each one for the whole amount Of
his stock and sell them in market to q note shaver.
1t may be said that this mode Of issuing proms-
sorry notes scrip in payment Of dividends is
scarcely sufferable. I would myself have thought
so, but have lately haG the most irrefutable evil
dence that it has been resorted to at time by
one company at least.
have seen sucb.a scrip which was issued by the
Petersburg Railroad Company, and | give you 3
copy below. have no evidence to what extent the
practice has rum hope it has ceased This in-
stance is given a warning against the pernicioas
example.
Copy (e1cept tho Of the payee) of promissory
note or scrip issued to d stockholder, and noso
held. 49, sss4.tt@l
OFFICE PETERSBURG RAILROAD COMPANY. .
Petersburg, July l, ls54.}
On the first day Of July, 1864. the Petersburg
Railroad Company promiseato pay---or order
seventeen dollars fifty cents, with interest from date,
| payable semi annually the first day Of January
and July in each year until the principal is paid It
being the dividend due him on five shares Of stock
| out Of the profits of the last months
/ Petersburg Railroad Co.,
ALSO. By Fl. D. BIRD, Pres't
II this be lawful mode Of declaring dividends,
what would prevent corporation. heavily bnrthen.
ed with debt, from declaring dividend Of the full
value of the road and its property, issuing scrip
therefor, and mortgaging the entire property Of
the company to secure it's payment A ready mode
of ndemnfying the unfortunate but patriotic stock.
holders Of an insolvent company this would be, in.
deed, by handing over to the stranger credtsft me
marrowless skeleton of the corporation ster the mem.
| bers had sucked out all the fat themselves
- A LARGE STOCKHOLDER