, 1873-07-15


Of Watering Btook, and will bo oontont II they
shall aucccod III reducing tho 1ntoa Of trnnspor-
tation in proportion to this reduction Of oapital
entitled to diyidonds. Tho great bulk Of tho rail
roatlB constructed iii tho WcHt within tho past
ton yoarH llayo boon b,tilt OH tho Credit hfobler
can bo found In nonrly overy caae OF
a construction ring, tho poopo will not
mood to poshor with figures. They know that
tho actual cost Of tho roads constructed on this
plan iB represented by tho bontlB md tho Bubsi-
dtos, and TINT tho stock, taken by tho construc-
tion ring aa their profits, is over and above tho
amount Of money actually invested. It will bo
mattcr Of no difficulty whateyor to determine
In those inBtances what amount Of capital iB OIL
titled to oarn divldonis, and whnt proportion OF
capital etook must DO wipod ont-as fiction.
There aro othor mcans Of asccrtaining noarly
enough for al1 practical purposes tho amount Of
watered or fictitious oapital stock III tho various
railroad companies Taho tho Now York
Contrnl and Eric Railroads, which ore oitod In
tho Times problem. THO Erie Isailroad oper-
ntos Oh milos of railroad, only 459 miles Of
which belongs to Its main limo. a 1argo propor-
tion OF It's branch lines being Leased. The total
amount Of capital stock, bonds, and floating
dobt Of tho Eric Road in 1879 waa e112,095,7 ,710.
The number OF mi1osnotually owned by the Com
pany WIS about 590, at which rate tho entire
capital represents value OF noarly 100000
milo OF, allowing tho road h representation In
itu capital stock for all its leased branohos
cost of s129, ,6G1 d milo. Tho Now York Oontral
Railroad operates 81 miles, 104 milos Of which
arc loasod Allowing thorn, also, d full repre-
aontation for their loaacd roads IN thoir capital
Ito which they aro not entitled, sinco they Mother
bui]t nor bought tho lonsod linos), and thoir
road is represented to have cost 8124.008 per
milo, since tho ontiro capital, including intlebt
ednosB, is a104, ,Go1, ,2l5. Now tho avcrago cost
Of railroads throughout the country-according
to Poor's statement just iasued- s55, por
mile. 1.-Two allow thoso two roads 30 per cent each
above tho average cost Of roadH In the country,
which would appoar to DO liberal estimate, thoy
should not hnvo cost moro than 482,075
tGA AA441 4QI LIZ MLOAd 8ASGLt VI EUAA Aul4t
and leased. At this ratio, the Now York Central
has capital Of s41 1851 por mile, or s94 883, ,sG4
In all, oyor and above the cost Of all tho road 1t
oporates aud tho Eric Company has D capital
Of $40, 1856 por mile, or s37, ,9e9,80A altogothor in
o1coss of tho legitimate cost. This makes q
fictitious capital Of s72,263,1o8 for those two
roads alono Oh which the Central declares per
cont dividcnds.
But there arc alAo other obvious Indications OF
watorod stock, to arrive at which will bo d rnt-
tor Of no great difficulty. In tho case Of tho
Now York Central, q stock dividend Of 80 por
cont Of tho entire capitnl wns declared ut ono
Bwoop. The Company took M inventory Of all
ita real estate along tho line, its depots, eido-
trucks, otc., all Of which Ind either boon given
to them or paid for out Of tho current
earnings Of tho road; and, estimating this prop
orty at its prosont largoly-onhancod value, found
it to DO equivalent to so per cont OF it's capital
stock, md thoroupon Increased itB capital stock
just TINT amount. This was palpablo fraud
upon the public. In regard to the Western rail
roads, enough watored stock can be tracod out
to mako vory matorial reductions on the present
ratoa. Stock dividends can easily bo found
wherever they havo beon declared. In the caso
Of tho Chicago d Alton and tho Illinois Central
Roads, it is claimed that there was a, loas
in operating thom for several yoars; that
both roads went through bankruptcy and.
aftor they became profitable, the owners
insisted that now stock should be Issued to some
oxtont to represent old 1osscs. Whothor thoso
Claims are woll founded, We do not undertake to
soy. othor instances Of watored stock will DO
READILY discovered when sought for, We have
already expressed tho opinion that this waterod
stock ia tho real grourd on which tho farmers
should make their light against tho railroads.
It accounts fot any excessive dividends
which may bc n1aio up from excessive ohargos
Tho demand of tho farmers will DO entirely
justifablo on this ground. It will attract tho
active co-oIuration Of al men who aro opposed
to giving monopolios something for nothing,
ard it VII not drive OF those who bclioyo that
the ta1roads ought to Darn reasonable interest
on tho capital actually invested. Enough llas
boon said to Indicate TINT the approximate pro-
portion Of waterod stock In the railroad compa-
niea can bo nscertained without much difficulty.
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'-'"- THE SHAH AND THE SN0BB