The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-03-21
VETO MESSAGE OF GOV. GEARY.
Increase of the Capital Stock Of the Penn
sylVania Railroad Company.

Executive CHAMBER, HARRISBURG, March 90
1s67.-To the Senate and House of Representative
OF the Common wealth of Pennsylvania-Centle
The act entitled can act to repeal an act en-
titled further supplement to the act incorpo-
rating the Pennsylvania Railroad Company, au
thorizing increase of capital stock and 10
borrow money, approved the 2lst day of March,
1866 to authorize the Pennsylvan Railroad Com
pany to In ncrease It's capital stock to issue bonds,
and TO secure the same by mortgages" has rece we'd
that careful consideration from me which the i'm
portance of the subject seemed to demand, and,
notwiths landing the high respect 1 entertain for
the two branches of the Legislature, and the ex- .
treme reluctance have at any time to differ with
them, am induced by my convictions of duty to
dissent from the propriey Of the provisions of the
bill, and to return II with my objections to the
Senate in which IL originated.
Lest my opinions should be misconceived and
misrepresented, deem IL due to myself TO make "a
briet exposition of some OF the enaStments of the
Legislature for the benefit OF the Pennsylvania
Railroad COmpany&ince the original act for its
incorporation, approved April 18th, l5i6, so far
BY the first section of the act of incorporation,
the capital stock was fixed at seven millions five
Hundred thousand dollars.
The twentieth section is as tolloWs "Thattf any
increase of the capital stock shall be deemed ne
cpssary, in order TO complete or improve the said
railroad or rappuTtenances, U shall be lawful for
tbe stock holders Of said company, at any annual
meeting, or at any special meeting convened for
that purpose, in manner as aforesaid, 70 increase
and dispose Of any additional number OF shares
not exceeding fifty thousand, so that the whole
amount of said capital stock shall not exceed ten
millions Of dollars, and receive and demand the
subject to the same conditions heretofore provided
for the original subscriptions, or shall be provided
for IN the bylaws of said company"
The manner prescribed for the increase and dis
position Of the stock IN the foregoing lection is
certainly most unexcepuonable it being under the
direction OF the stockholders and not at the option
of the directors, as is provided in the bill under
consideration, and which Is deemed Objectionable.
The twenty second section imposed a tonnage
tax as one of the conditions upon which the origi-
nal charter was obtained, which has since been
repealed by statute, and the accumulated tax re-
leased.
By act approved April %, 1852, the capital stock
was increased to thirteen million dollars; May 6,
1852 to fourteen million dollars; March 23 1853 to
eighteen million dollars; May ?, 1865, to twenty
million dollars, and March ,, 1866, to thirty mil
lion dollars.
With no other objects on my part than to be SER
viceable to my countrymen, to preserve and trans
init unsulled the great principles and true policy
OF our government, and honorably to perform the
trusts, duties, obligations and responsibilities
committed to my charge, proceed in the perform
ance of these objects as understand them. am
sincerely friendly to all the railroads and other
companies that have aided in the development Of
the wealth and resources of the State, and While
cheertully accord the same sentiment 10 your nom
OTable bodies but regret that there should be
any difference of opinion between us on the pro-
posed enactment And if in stating the objections
shall use expressions which may be regarded as
too strong, my apology Will, l trust be found in
the importance of the subject. will state them
frankly, and with as much breyity as possible
Waving objections to the first secuon OF the bill
under consideration, and waving also an inquiry
as to the legal rights TO thus authorize the change
u
the stockholders, proceed to the consideration of
the second which confers powers of the most eX-
traordinary character upon the directors OF the
company: "providing fur
ther facilities required by the increase of the busi-
ness upon the road and its connections, and for
such other purposes connected with the business
as the board of directors of said company may
deem expedient, 1t shall be lawful for the said
board of directors, from time to time, to ad-
ditional shares of capital stock of said company,
to such amount as they may determine, and TO ap-
portion dispose of the said shares in such man
md mn GTHh m n has
and also, for either all of the SAID purposes, to
issue, from time to time, bonds of the said COM
pany, payable at such time as they may appoint.
One of the objects of this bill is, for its further
increase of the capital stock to retire its present
indebtedness, which, according TO the president
and directors last annual report to the company,
is upwards of twenty-six million dollars. Thus,
in this way alone, increasing the stock over one
hundred and thirty per centum, and makes it
amount to over forty-six million dollars But
this is not all tits further intended to increase
the business facilities upon its roads and connec-
tions, "and for such other purposes connected
with ITS business as the directors may deem expe-
dent"
Were this bill to became law, to what amount
may not the directors extend the capital stock,
with such unlimited prlvileges| To what branches
of business shall it be confined, and to what may
it not be extended And where is the power TO
keep it within its legitimate functions if 1t should
deem IL proper to depart from them! Its tremen-
dous power, in irresponsible hands, would be un-
limited and uncomfortable by any other power
short of revolution. 1t has already obtained, in
the various chartered privileges, the preoccupancy
of nearly every possible railroad route in Penn
sylvania, with the privilege OF branches and lat
eral roads in large majority of the counties.
As shown by official reports, it has besides
nearly eleven hundred miles of roads in Pennsyl-
yania, its extensions to Marietta, Columbus and
Cincinnati, Ohio, and to Chicago, Illinois, and
holds large and, in some instances, controlling
amounts of stock in other railroad companies.
When such extraordinary powers are attempted TO
be granted for an unlimited period, consider it
palpably contrary TO the spirit and intention OF
our institutions. The present directors, it may be
M ppn for fhayy aprt
they have good intentions for the public interests
well as for those of the company but time may
effect change, and a new Board, that may not
recognize Its duty to the stockholders and to the
rights and interests of the people, and forgetting
its patriotism might be found arrayed against the
country when its services were required. 1t is
not impossible hypothesis that its capital stock
might be extended TO one thousand millions of dol
lars, or even to an smount equal to the present ma
Jional indebtedness.
The whole control of the institution, and of the
issue of its bonds, necessarily lie in the hands of
few directors, and in those of the stockholders
whose real interests should be represented, The
facilities by which any board of directors could
perpetuate power in its own hands might be an in
Viting temptation TO monopoliZe or engross q suti
cient number of shares of stock by purchase, and
proxies from non-residents too contidIngly given
or perhaps by fraudulent issue, TO control the vote
of the stockholders. The same board might by fail
means thus be perpetuated, or by a dexterous mix
ing or misrepresenting ofaccounts, with not mucl
risk or responsibility their part, might fraudu
Iently control forever the affairs of the company
In my opinion the stockholders themselves, who
like the people in our form of government are thu
true source of power, should closely examine intC
the responsibilities just presented If they woulC
preserve and perpetuate their own rights within
the corporation.
I am not aware of any instance where a com
pGny has been destroyed by the immediate actor
OF its stockholders, but where TOO much power ma
been placed in the hands of directors ana othcers
Reckless, speculative and adventurous character
the instances of failures and disgrace are amos
innumerable. In all the bearings WRieh can ,l o
tory of the road passing into the hands OF ambl