The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1870-01-11

L.
managers have negotiated, at par, without com
missions, loan of $5,000,000 of seven per
cent. coupon bonds, dated January 1, 1870,
payable in twenty years, one-half convertible
at the option of the holder into stock at par at
any time after issue and the other half
convertible at par at any time after the LIST of
January, 1872. Of this loan the sum of
81 100000 will be issued to replace that amount
of the past years earnings used for construc-
tion of new work; So ,O00, 900 will be furnished
and expended during the year 1870, and the
remaining 81 100000 during the year 1871, for
new rolling stock and for the completion of
work now in progress or contemplated to
be placed under constructions and hereafter
the earnings of the Company can be appropri-
ated to the payment of semi-annual cash divi-
dends.
To any of the stockholders who may be dis
posed to complain OF the increase of the capt.
tai stock of the Company during the last seven
years, 1t will be sufficient answer to say that
the tonnage, gross receipts and net profits
have increased in far greater proportion than
the united capital and debt of the Company,
and that the result of the expenditures upon
which the increase Of capital was based has
been to secure perpetually great and ever
increasing tonnage for the road.
A railroad company owning properly-con-
structed and well-equipped line of road, con-
uSCIlDB IWO IdTBO ClIleS, anu relying 1US
business solely upon the traffic interchanged
between the termini of it's line, might reason
ably expect to earn enough money annually
not only to declare fair dividend to its stock
holders, but, in addition thereto, to enlarge its
supply of rolling stock, so as to meet the
wants Of its increasing business without add
ing to its debt or capital stock; and such
result would properly be accepted by its stock
holders as an evidence of prosperity and finan-
cial strength. But in the case of this Com
pany, engaged in developing an area of
territory embracing two distinct coal-felds-
one Of sixty miles and the other over thirty
miles in length-where every valley required
new railroad, and where the increase of ton
mage incident to the opening Of the new lat
erals has been so great as to require at times
an annual expenditure for additional rolling
stock of over a million of dollars, it was neces-
sary to resort to either of the following plans
in order to accomplish the desired result:
First. To charge such high rates for tolls
and transportation as would have enabled the
Company to earn money enough, after pay
ments of cash dividends, to supply the funds
required for improvements.
Second. To increase the debt of the Com
pany by loans made to finish the new work;
or, 4
Third. To increase the capital stock, either
by stock dividends paid in lieu of earnings
diverted to improvements, or by receiving
additional subscriptions to stock, issued to
furnish the necessary funds for new construc-
tion.
The first of these plans could not have been
seriously thought of for moment. Although
excessive rates of charges might result in
temporary advantage, they would not only
have proved in the end destructive to the
Company, but would have been manifestly
unjust to the public. OF the remaining two
plans the latter was thought the wiser, and it
was considered best to devote the earnings of
the Company to the construction of new i'm
provements and the building of new rolling
stock, and to issue to the shareholders stock
dividends in lieu of the money.
During the last seven years the capital of
the Company has been increased by stock di-
vidends, in all, $12,369,670 II
From the above deduct the
amounts based upon the
purchase of bonds by the
sinking funds, 1,685,811 II
Balance, $l0,683,859 06
This sum of $1O,683,859 06 of aggregate
stock dividends has, however, been issued as
the representative of SIT ,597 1858 "a of actual
net earnings invested in permanent improve
ments-the difference of $6,913, ,399 68 hav-
ing been, from time to time, charged to in
come account so that theincreased capital stock
should represent the property upon which it
was based at gold standard of value; and in
conformity to this conservative rule of the
Company, as five per cent. stock dividend
was paid last July, and an issue of $6O8 800 of
the plain six per cent bonds was made during
the year, there has been charged to income
account out of the net earnings of the past
year the sum of $569, Jos 78.
The managers regret to announce that the
health of Mr.. Charles E. Smith, the late presi-
dent Of the Company, became SO seriously
impaired that in April last he felt obliged to
resign his position, in order to visit Europe,
with the hope that years relaxation from
the cares of business would effect a cure.
During his absence, at his request and that of
the managers, Mr.. Franklin B. Gowen, who
has been for several years one of the counsel
of the Company, consented to accept the pre-
sidency, and was accordingly elected to that
Office by the Board upon the 28th of April
last.
BY order of the Board of Managers.
FRANKLIN B. GowEN, President.
Philadelphia, January 8, 1870.
At the annual meeting of the stockholders of
the Philadelphia and Reading Railroad Com
pany, held January 10, 1870, the following re-
solutions were adopted;
/. Resolved, That the report of the Board
of Managers, this day presented and read, be,
and the same is hereby approved, accepted and
adopted.
2. Resolved, That the Board of Managers
be, and they are hereby authorized, at their
discretion, to carry into effect any of the
measures proposed in their report, and, if in
their opinion needful, to enter into any con-
tracts or agreements for that purpose.
3. Resolved, That the powers and authori-
fiac ponfarrad nd fa1 30 tha I1a