The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-03-02

The Hannibal and -. Joseph Railroad
steckjssbsrs-The Five Million Over
Issue.
The sharp practice of the old stockholders
OF the Erie Ring in the matter of the Hannibal
and st. Joseph five million over-issue has
already been exposed in the HERALD. It will
be remembered that combination of New
York operators, the same men who control
the Erie Ring, obtained possession last fall
of majority of the stock of the Hannibal
and St. Joseph Railroad and elected them
selves directors AS soon as they obtained
control they removed the offices and the books
of the company to New York and commenced
system of sharp practice similar to that
which has enabled them to plumber the stock
holders of the Erie road out of millions of dol
lars and to break down the credit and stain
the reputation of the country in every foreign
market. Before the new directors had been
four months in Office they secretly raised tho
capital stock of the road more than one
hundred per cent-from four millions, at
which 1t originally stood, to nine millions-and
before any person outside their own 'ring"
knew anything of the matter endeavored
to put the over-issue of five millions upon the
market. The rascality of the proceeding was
so apparent that the New York Stock Ex-
change put in force the rule which requires
thirty days notice of the intended issue of
new stock, and for that space of time stopped
the further operations of the INSCRIPTIONS
jobbers.
Under existing laws, however, there is ne
power to prevent the contamination of this
plot. In ten or twelve days, when the author
ity of the Stock Exchange will be exhausted,
the five million new issue will be put on tho
market. It is the old Erie infamy over again.
The directors, elected through successful
combination, although standing in the posi-
ton of trustees for the stockholders
and bound to act for their interest, set
to work secretly to destroy or at least to Sc
riously decrease the value of their property
by more than doubling the stock without their
knowledge or consent A stakeholder holding
interest In the road. He will now have only
one-ninth interest, and the value of his prop
erty is destroyed in that degree. Innocent
purchasers of the stock for investment sup
posed they were buying into q road whose
capital stock was four millions only, when
it to nine millions. The stockholders will
have no control over the expenditure of the
amount raised from the over-issue of five mil
lions. The directors who have resorted to
this sharp practice will have the handling Of
the funds, and, as in Erie, under the same
operators, out of twenty millions realized from
an over-issue of sixty-one millions only Eve
millions have been expended on the road, while
the balance is unaccounted for, so in Hannibal
and st. Joseph, the stockholders will be for
tunate if one million out of FIVE, or an amount
in that proportion, finds its way into the
Golfers of the company.
These bold acts of INSCRIPTIONS men should
receive the attention of Congress-, and some
restraint should at once be put upon them.
Such rascalities, If suffered to be perpetrated
much longer without the interference of the
law, will break down the character and the
creQlL OF Tie udtiOHs IL IL Uo PosSiuic lux
railroad directors who are the trustees of the
stockholders, to enter into conspiracies to de-
fraud, rob and ruin them without restraint Of
law or fear of punishment, then all conf
dence in such securities will be destroyed aud
the iron arteries of commerce will cease to
spread through the country. We need COM
prehensive general railroad law of the
United States, under the provisions of which
these fraudulent operations shall be no longer
possible. The States themselves are power
less except over their own corporations. Con-
gress should prohibit, by general law, the
increase Of the stock of any railroad corpora
ton In the United States until the over-issue
has been approved by, or first offered to, the
original stockholders. No reform is more
urgently needed for the protection of the
most important interests of the whole country
than one which shall place the entire railroad
system under law of the United States, 30
framed as to enforce striugently the RESPONSE
bility of directors and to encourage invest
ment in the great undertakings necessary to
develop the resources and increase the wealth
and power of the nation.
France and the War Indemnity.