The weekly standard. [volume] (Raleigh, N.C.) 1869-18??, 1869-12-22
CHARLOTTE, Dec. 10th, 1869

CHARLOTTE, Dec 10th, 1869.
Col. JAMES SINCLAIR,
House of Rep, Raleigh, N. C.
Dear Sir Il have yours of the 14tl
inst, asking my views in regard to the bill
offered by you to convert the million q
preferred stock owned by the State in tn,
N. c. r. r. Company, into common stock
!. e. putting it on the same footing, as to
dividends, with the other two millions held
BY the State and the one million held by in.
dividuals have not seen your bill, but |
strongly approve its object
have very closely watched the opera
lions OF this Company. 1 have been for
several years member of its Finance Com
mittee, and am certain there has been no
one year since the completion of the Road
In 1866, when its receipts did not Justify
a bona tide cash dividend of from to 6 per
cent-if it could have been declared in
seml-annual payments of only 2 or 3 Der
cent This the act of 1915, making the
additional subscription of one million to
complete the work, seems to forbid. 1t is
construed to mean that per cent per an
mum must be paid to the State on this one
million "before any dividends shall be paid
on any other stock in the Company"
| Tins construction results either in bogus
dividends or in seeming injustice to the pri.
yate stockholders. As, in 1859, the diyi
| dend was per cent. to the State on its pre-
TERED stock, and only 2 per cent on all other
stock. In 1869, 6 per cent was declared
In SCRIP which, in plain English, means
oo'7o'ced 'aoney-costing the Company Der
cent. and yielding the State and stockhoid
ers not exceeding per cent!
To declare per cent on the whole capi
tai ga 900 ,0O0) is the only way, as fhc law
stands, to do full justice to all parties. This
requires S240,OOo in ready money.
or this sum $3.50, 900 goes to the State. and
$6O, 1000 to individuals 1t is no easy matter
for this or any other Southern Railroad to
raise at any one time for dividends the large
sum OF $1,000 Nor will corporation
study economy or efficient management
when its earnings have to go pretty much
all to the public, rather than to its private
members.
The officers of this Road are thus, on the
one hand, restrained in declaring dividends
OF Its surplus profits; and, on the other. thew
are tempted to waste and extravegance, by
the very fact of their often having larCe
amounts of money in their Treasury, which
they have no use for, and which they would
declare as dividends but for this provision
true pellcy requires that every dolor not
needed Tor the just wants of the Road
should be promptly paid out to the State
ana the stockholders as dividends, whether |
II ne Z, or per cent. This would keen
omclals and employees up to rigid econ |
omy and strict accountability, and lessen
the chances OF loss, stealage and extraye. |
gance. Both the public and the stockhold. |
ers would then learn to expect good man.
agement. They would interest themselves
In the success of the Road, and any failure
to declare q reasonable dividend would cy-
cite and demand enquiry. At present the
very difficulties in the way of SO DECLARING
dividends is made their excuse for declar;nS
none at all. and all parties acouiesce in tbe
stupid policy of operating one OF the Longest
and best railroads in the country. almost
entirely for the benefit of money Lenders
contractors, officials and EMPLOYEES.
This provision in the Act of 1888 was
mistake Actual experience has shown II
to be such, and it should be promptly re
pealed. 1t has added neither n dollar IN
the Treasury of the State nor cent 70 tho
value OF its stock. Indeed, it has had the
opposite effect, as all capitalists and shrewd
business men readily see. 1t was an honest
mistake, or it was intended as blind for
those who favored the subscription, vet who
lacked the nerve to vote for it as such. They
sought to deceive the people by giving it
the color of loan, when in fact 1t was no
such thing.
I, From my knowledge of the prcsent con.
high opinion of the future prosnects ~
Ibis road feel fullv ;uot;6o,, -