New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1871-01-30

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RUFUS HATCH's CIRCULAR. No. 3-FRAUDs IN
RAILROAD MANAGEMENT-CmCAG0 AND NORTH
WESTERN RAuRoAD.-The waterings in this great
concern have been equally excessive, though OF a
different character from those described in the pre-
yious circulars direct one, however, of S60306OO
was made at the time Of its consolidation with the
Gaena and Chicago, the holders OF stock IN the lat
ter being allowed two shares for one previously nelu
"to equaze values "a phrase greatly III vogue
with the selfconsttuted tax-gatherers who now
control and levy their contributions upon an our
great avenues of trade The natural ana equltaoie
mode would have been TO e4uaIlze doWn insteaa ! o.
up as the shares Of the Northwestern at the time
were comparatively worthless, while those OF
tho Galena and Chicago commanded only
mar. But square consolidation would nave
left no plumber, the sole inducement thereto,
in the hands Of the parties manipulating 1t. =.
The great wateTings IN this road have been ehected
through leases of,Other lines. The most important
of these was that Of the road from the Mississippi TO
the Missouri River, through Iowa, distance of 353
miles and owned by two c0rpOratiOns-the Chicago,
Iowa and Nebraska owning the link of 81 miles from
the Mississippi River to Cedar Rapids and the Cedar
Rapids aud Missouri River Company owning that nat
from Cedar RAPIDS to the Missouri, distance OF 2'2
miles This line had land grant OF LIZ log acres
A party of shrewd operators got hold OF tins line,
and set themselves at work to get tins magnilceht
domain into their own hands and, at me same tlme,
10 act rid of the road that had to be built 10 secure a.
This interesting problem was solved IN the
following manner The managers OF the CRlcago anu
Northwestern agreed to take lease OF the, Two
roads, rihOut the land. paying AZ per cent Oh .ne
gross earnings afterwards reduced TO ~ per cent? OF
the Chicago, Iowa and Nebraska Road anc ,'oO
Der mile upon the Cedar Rapids ana missouri hlFeI
Road M TO LIST of January 1871, and thereafter at
the following rate: To pay 500 per mlle Ol tne
81 800 per mile first earned 335 per cent OF the S5OW
next earned, and 20 per cent upon all earnings III
excess of $500 per mile The rental OF the nisr
named road the past year was S9214D the pIopoI-
on of gross earnings paid being 42 per CENT she re-
ductiOn from Al to 81 per cent. taxing ehect Io 81
months of the fiscal year only AT the saue Iate VI
gross earnings the rental 3s per cent? INC t
year will be S4922i0 the gross earnings OF Ihe pas
year being 81 3l2 40 The gross earnings Oh ele
Cedar Rapids and Missouri River Road 1Qf lhe Paso
wear were - iOG4;6 The total for both lines were
S3,49ls6. The earnings per mile oil Ine C 'ear
RAPIDS and Missouri River Road, the past year,
were S7744 At this rate the rental for the present.
wear will he S234S per mile, or gross sum ao' VI
SG:S 6j6 The total rental of the two INES, con
ncnfiv will be 81 1896 The capital OF this rem
raj at Der cent is S161j7,375. This transaction Is
known ms the Blair and Ames grdo. III. l,o
Now the cost of this line 10 the parties hOding VIC
game could not have exceeded S2OtNO per mile, OF
gross sum of S7GG0O00. The rails were laid, ana
bridges bnlt-this il about all. There were no
equipments and no ACCOMMODATIONS i9r Dushes.'
eScept those supplied by the lessces. The 1as iad
on the greater portion of 1t were only - pouus W
the yard, aud had 10 be replaced soon after tiie
essecs had come into possession OF 1t. Inc pf1ne
maid 10 the parties constructing 1t, consequently,
was 50 3j. The cost OF this road 10 the leSseeS
that il, the capitalized RENTALS SOL per lniIe'
Ii would require expenditure OF @@UUO per hilie
in addition, upon it, i'll construction ana equipment
since they into possession OF II, TO Drlng the
road TO it's present condition. This sum brings up
the cost to $50 III per mile or up to total OF S23-
l151G3 The interest on this sum- at per cent Is
S1,GlS.0Gl.
by retrospective companies, amount to S4l3iO,jVt-
that of the Chicago, Iowa, and Nebraska being 81
72G 3U0- made up of S39l6,3W of stock, and YoiOOU
of Bonds that of the Cedar Rapids and Missouri
River being $500 600 and made up of :3SOU0OC0 OF
Stock and S7,620,OO0 of Bonds. ,oo
The land grant to the Iowa lines was 1,42,lG
acres. OF this quantity certificates for l,AU,pO
acres had been issued more than year ago. These
lands the low valuation of 81 per acre, are worth
SS4o000 The value OF these lands, added TO t me
unquestoned profit from the construction OF the
road make a total Of $l7G97,275. This sum meas
ures the profit that party made out OF this affair
in the course of a very few years.
Another example, OF the same kind was that Of the
Win0na and st. Peters Railroad of Minnesota. A
party got hold Of this line, built the road took the
land aud then turned over the road rihOut me lands
to the Chicago and NOrth-N cstcn, at about $4,000
per mile. nearly twice Its cost. The road had no
connection whatever with the Chicago ana North
Western. 1t did not, in fact. come within 100 miles
of any portion of the road of the latter company
lease might just as well hays been taken OF a road
upon the Pacific coast. The WinOna and ST, Peters
a
not, for years Ire expected 10 pay remuneratlre
return on its cost. In addition To the rental paid
the North Western had to complete and equip IT, car
rying the cost Of the line to this company up proba-
bly to $1,000 per mile. The land-grant TO the
Winona and st. Peters Company was l,4l0000 acres:
OF this vast grant 1916 acres had been confirmed
lands acquired equals S2,39 ,G2. Assuming the pro-
tits of construction 10 have been $1,000 per mile for
l26 miles, the aggregate was Slo"DVD' Inc tol;I
profit, both from lands and construction was 4,-oo-
i.}2. This affair is known as the Barney Qrd9;
Another example in kind was that OF the PenlnSu;
la Railroad of Michigan land grant ro3d entitled
titled Ia the Company on the hIst Gay of Jnly, 1872
This road was bnil and consolidated in the North
Western ,rthOat the lands at rate of about $1,000
per mile The length of this road Is 10 miles lis
cost to its projectors about S1,UU per mile ne
profit Oh construction was about 81 ,i'D,tW. me
value of its land grant at 81 per acre, was q 55 100
The profits of the transaction, consequently, were
- gg2 100 The Peninsula Road had no connection
whatever with the NOrth-W estern, nor dld IL come
within 80 miles of any portion OF the line OF the lat
FER This is known as the Ogden & rilden grab.
The total amount of lands already coded 10 the
three companies whose roads are leased TO the North
Western amounted on the lst day OF July, 1903 to
, 7GG 9i6 acres Their value, at 81 per acre, il
,;I23JS. 1872 Large additions are TO be made to the
present cesSons. The profits arising from the con
struction of the roads could not have been es than
SI24413i5 The profits, far, TO outsiders: on the
three lines have been $4, 1919. The lsde profits
have been s. StO.il-to wit the waterings In favor
of the Galena aud Chicago Of S6,9e, $40 1T the time
of The consultations and 81 $40 10 OF scrip dividends
paid in 1858 The total profits have been S2I6l6,0,
rs shown ia the following tabular statement