The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1871-02-22
THE SUBSIDY QUESTION.
How Subsidies Built a California Rni,w

How Subsidies Built a California Railway
Henry George, of San Francisco, in pam
phlet entitled "The Subsidy Question and the
Democratic party" tells the following amusing
story
''In November. 1865. thirteen citizens of Los
Angeles associated themselves to build an eigh-
teen-mile railroad, under the title of the "Los
Angeles and San Pedro Railroad Company"
The capital stock was fixed at $500, ,000 each of
the original thirteen subscribing $500 in gold
coin 1t does not seem that any of these stock
holders paid in single cent, though some of
them advanced little money for printing, ad-
vertising, and lobbying at Sacramento, etc.
why should they have paid a cent? Their
object was to owna railroad, not to pay for one,
and to own a railroad nowadays it is not at all
necessary to pay for one all that is necessary to
do is to get the people to pay for building it for
you. SO these gentlemen, instead of putting in
their own money, went to the Legislature and
got through a bill authorizing the city of Los
Angeles to subscribe S75 600 to their stock, aud
the county of Los Angeles to subscribe $3.50 006.
Both city and county voted to subscribe, for it
was proved to the people very clearly by the
advocates of the road not only that it would
cause great increase of taxable property, and
all that sort of thing, but that they would not
be called upon to pay the interest on the bonds,
as the road could not fail to pay, and the divi-
dends accruiDg on the stock of the city and
county were to be paid into fund to meet the
interest on the bonds.
$50 our railroad builders, the directors of the
Los Angeles and San Pedro Railroad Company,
went TO work And now Phneas Banning APP
pears on the scene, though it is probable that
he had been behind the scenes from the be-
ginning. The bids came In the lowest from
Mr.. Ives, being for $342 900; the highest, from
Mr.. Phineas Banning, being for $467, 900. OF
course, Mr.. Banning got the contract, for it is
an invariable rule with railroads to be built by
the peoples money that the highest bidder gets
the contract. Having let this contract the next
step of the directors was to buy piece of land
and lot of lighters and other things that Mr..
Banning had lying around, for the sum of $70 600.
Then these directors mortgaged the whole road
all its property and franchises, and issued first
mortgage bonds to the amount of $500 600 to
help to pay Mr.. Banning. And the building of
the road commenced, and the city and the
county were called upon to issue their bonds
and did iseue them, though none of the other
stockholders paid in O cent; and before the road
had been completed Mr.. Banning had all the
county bonds and all the first mortgage bonds,
and his partner had all the stock, and things
went along beautifully.
And now the people of Los Angeles have got
little one-horse local road, which their money,
and nobody else's has built, for witch they
must pay as much as they used to pay the
stages. And they have a debt of 1926, 000 the
interest of which they have to pay every year,
and the principal of which it is certain they
must ultimately pay. They can't sell their
stock, for the road is heavily mortgaged, and
they fear they can't assess other stockholders
who have never paid anything without assessing
themselves"