The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1859-02-16
FINANCIAL AND COMMERCIAL.
TuMAY, Feb. l5-6P. n


IA few days the legislature Of this State will be called
~ "A take M the recommendations contained in the Co.
ro,,s nesssee with regard 10 the railroads OF New
Work II will be remembered that the Governor stated
that out of sevenyfour railroads in this State sixty
Maid NO interest their cost He suggested that the Le
sla,ure should inquire how all this property had become
uuproductive and neither il did not fall within the pro-
vince the State authorities TO protect the parties whose
means had thus been dispersed
The members of the Legislature will discover, at very
early stage their inquiries that the comparative failure
Of the railway system in this country may be
traced to three causes. First, most Of the Anne
riean railways were, In the origin, less intend
Cd 70 pay interest their cost than to develope new
country hence, they have almost always been
below reasonable and remuneratve rates Secondly,
most roads having been built for this proper and wise
purpose fell shortly after their construction, into the
hands SPECTATORS who sacrificed the true interests of
the property to the payment Of large and unearncd dvi
dends And thirdly these spectators, being con-
cerned exclusively about stock operations and the pay
men Of dividends in most instances neglected repairs
which essential for the preservation Of the property
The first these three Of ruin is beyond the reach
Of the Legislature any other authority Whatever the
purpose with which the roads built there they are
they cannot be pulled up and rebuilt on some new
principle the fares the existing state of
petition be raised materially above the present rates
But the two of mischer-the payment of
earned dividends and the neglect OF necessary repairs
be probably examined by legislative committee,
and sound principles elected for the future guidance of
railway people.
the committee will take the history of the six eight
most prominent Northern roads the past three
I'VE years. they will lind in every instance that in the
origin unduly large and unearned dividends paid TO
stockholders. Abroad in England for instance, where
railroad fares nordnately high, road which pays
three per is considered TO be doing remarkably we'll
Here, road worth touching unless it paid
eight per cent annually and roads actually divided
thirty per cent in single year. or coursethough for
few weeks owing to extraordinary combination Of
circumstances profits Of this magnitude may have been
made-no such dividends as these were legitmately
earned. To pay them, in the first place, money which
should have been expended in repairs was exhausted,
and next this resource proving inadequate recourse was
had TO money lenders, and large sums borrowed
This policy led TO two results. Roads allowed
10 fan into decay, tracks were washed away
for want of sleepers proper earth work,
cars roted for want OF paint or fell to
pieces for want Of homework; all kinds of accidents
occurred and when business came the roads had neither
track roadbed cars, engines TO do it with.
This consequence of neglectng repairs Another
was when the want Of them became urgent that
they could longer be delayed they naturally very
costy and-there being money to defray their cost
(every dollar having been paid away in dividends)-
money borrowed to make them. Thus the debt
originally incurred for the payment of unearned divi.
dends sweed by further creations Of Indebtedness to
pay for REPAIRS and between the two nearly every North
en road that managed by spectators the system
We have ment oned cane in course Of tme to have that
fatal disease, floating and concealed debt, which ii
red along at charge for interest greater than the whole
profits of the road, and which, or later,
rally certain TO break out into absolute bankruptcy
The Legislative Committee easily verify the truth Of
the above history by reference for example, to the records
ofthe New York and Erie the Reading the Michigan South
ern, the Cleveland and Toledo and the Illinois Central All
these companies brought DEATH door by the
ment Of unearned neres, dividends by the neglect of
REPAIRS and, consequently By the creation of floating
debts, which always kept hidden from the stock
holders and the public. If the committee desire to study
the disease at earlier sagebefore the discovery Of the
floating debt before the collapse of the bubblehey need
20 further than the of1ce of the New York Central
Railroad at Albany That road pursuing the very
which ruined the Erie the Michigan Southern, Reading
and many other roads spaying dividends that
earned and it is negecng repairs which are necessary
This made obvious by the figures published by tn
Central ITSELF in which, for many reasons most persons
place little reliance. The business of the road as shown
by the reports of the company has been follows for
the past thirty months