Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1869-02-19

Watering stocks is no recent invention, but
in some recent cases. together with the secresy
and rascality which have masked them, is so
stupendous that it comes with almost the fresh
ness and surprise Of a new discovery.
A year ago the capital of the Erie road was
little more than S24 200, 0OO,-now it is S57,-
100, 800 The increase has been almost $50 per
cent, or $50, 800, 600, Of which no less than
1900, 900 was issued in the month Of Octo-
Der These additions to the capital were made
without the knowledge Of most Of the stockhold-
ers, under section of the general railroad law
Of New York, authorizing roads to borrow mon
ey on bonds which are made convertible into
stock, for the purpose Of completing and work
ing the line Mr. Jay Gould, President Of the
road. defended this operation in the following
manner, before the Railway Committee of the
New York Legislature;
"Jay Gould was called before the committee
and stated that but for the privilege Of issuing
convertible bonds the Erie road would have gone
into bankruptcy and been lost to its stockhold-
ers. lie said that when he became President Of
the road, obligations had Just been created to
the amount of nine millions Twenty millions
uf dollars Of bonds were issued to realize about
nine millions Of cash which were needed TO meet
these obligations. To comply, however, with
the letter Of the law, the money realized from
the sales Of bonds was used for constructing,
working and equippiug the road, while its earn
ings were applied to meet the obligations of the
company. Horace F. Clark also testified that at
one time the Harlem Railroad was saved to its
stockholders by the issue Of convertible bonds
Mr. Gould further stated that but for this
issue of bonds and conversion into stock, Mr..
Vanderbilt would have got hold Of the road; and
he considered that in keeping it out Of his hands
a great service was rendered to the public He
believed the repeal of the section of the general
railroad law giving power to issue convertible
bonds. would place the railroads of the state in
the power Of one man, and that it ould be i'm
possible to keep the Erie railway ont of the
hands of Vanderbilt.
So, when he buys up a majority Of the stock in
the market, Mr.. Jay Gould and company must
have power to make as much more as they
need to prevent his purchase from controlling
company owed more than it could pay, and fixed
things up by spending ten times more than it
had, and it must have this authority continued
to its managers to keep it out of the hands of
monopolist
Vanderbilt's operation in New York Central
was no more defensible. He called the directors
suddenly together. A calculation was made Of
the amount that had been put into depots, side
tracks, new rolling stock, &C., in ten years.
This was treated as 50 much newly discovered
property belonging to the road. A stock divi-
dend amounting to s0per cent. of the capital was
thereupon declared, and cash dividend of four
per cent was declared on the new scrip or certi-
fcates. The meeting then adjourned, and Mr..
Vanderbilt put into his pocket, as his share of
the new issue, sir millions in certificates
Il 10 no wonder that n committee Of investiga-