, 1873-07-21
THE "NATI0N" ON WATERED BT0CKs


Tho Nation appears to hive discovered an
immoral tendency in THE Chicago Tn1BuNE's
views in reference to squeezing the water out
Of inflated railroad stocks. It says:
Under this theory Of railroad property, all stock
which docs not represent money actually invested IL
treated ns "actltioue," and all attempts to diy-
dends on such atock as attempts ut extortion. For
tnHtance-to put Of frequent occurrcnco-a
poration obtains charor for road which It will cost
to build It accordingly borrow8 the 81 900
mortgage bonds aud constructs tho roa while the
members divide among themselves $4,000 600 Of stock
more, md they work tho road IS 10 make 1t ra5
interest the 81 900. Tie farmers say that
road shal be worked to pay interest On any
thing but the proceeds Of the bondB In other Words
tho actual cost Of construction aud equipment This,
stripped Of details, is tho plan, gravcly pro-
pounded in The CHICAGO TRIBUNE.
Tho Credit Mobilier system Of railway con-
struetion could not bo stated moro fairly, wo
admit. It ia stripped Of details to tho last pin
feathers. The Nation then goes on to say:
Nov, anybody will get up md propose general Rail-
road act Of this naturo applicable to all roas hereafter
to be built, think promise that he Will havo tho
hearty support Of everybody who has seriously roect-
cd on tho railroad problem. Forbid tho construction
OF any road except with tho procoeda Of padup Stock
and forbid my higher dividends thnn certain n1sd
percentage this amount and shall have rule Of
which nobody eau complain.
Tho immortality Of our position then consists
In what2 Tho Nation tolls us that 1t is like
Bon Dutlor's plan for paying tho Government
bondholdors; also that It ia ''sharp practice !"
also that it is "ninple swindlipg." These DO
very convenient phrases, and tho odium of Ben
putler is sufficiently national" to point moral
even at this distance from the Hcene Of lis
| actiyo operations. But tho Nation's argument
is altogether too 1lippory for us to lay hold Of
A fair inforouce from 1t would bo that railroad
| companies, in tho absence of positive prohibi-
tion, hayo tho right to issuo ns much stock thoy
| pleaae without roferonce to tho amount Of capi-
| tai actually invested In tho roads. Our UNDER
is precisely the opposite Of this, viz. That rail-
road companies cannot Issue either stock or
bonds except for money or property actually re-
| cciyed mud invested in their roads and equip
monts unless expressly authorized by their
cllnrtora 80 to do. Wo-do not know OF any ohar-
tors Which have authorized tho issue Of stock in
e1coss Of the money received and applied for tho
purposes aforesaid. Thoro may bo such, but, au
general thing, 1t will be found that stock water
ing has boeu accomplished without legal Au-
thority,-that ia, in detauco Of It and that Tho
o1tra stock has been predicated first upon the
plentiful existence Of ounces who wore willing
to pny good money for 1t, and, second. upon the
,nertia Of the public, who woro too mucl,
cpero8ged with their own affairs ia
pay any heed to 1t. In my oaso where
tho law has expressly authorized the issue
OF stock in excosa OF paid-up capital, we admit
that tho mistako cannot now 10 corrected. We
believe that tho basis Of tho present suit Of the
Government againHt tho Union Pacific lsailroad
il to compel tho stockholders to pay up thei1
stook,-or, In oshor wortls to squeoze tho wato1
out of 1t. Will tho Nation toll ua whether tlis
Ii moral lawsuit, or othorwiuo
If the Nation means TINT tho public hayo al.
lowed tho Credit Mobilior syHsom OF railroad.
building to 60 on 80 long Tint 1t laf
erootod itsolf into INV, and suspovactot
tho common law, which restricts corporations tt
tint which is expressly granted in their charters
and forbids TINT thoy shall take anything by iu,
plication, We deny that also. Non tempus oc
ourrit rcqi. Timo does not run against thu
whole people. Tho Crodlt Mobilior syntom Ia Vi
very recont dsto. 1t Ind it's origin among tut
hr1fa md hasra ~ Wall efroat Ten mr. fHelvt