The Portland daily press., 1873-09-12
Fictitious Stock.

Oneoftbe complaints ofthe anti-railroad mo-
nopolists in the West is that much of the capital
stock upon which the leading railroad corpor.
ations make dividends, is fictitious. In 9th
er words the stock has been ''watered,' or
the represented cost Of the roads as shown by
the stock is several times the actual cost.
For instance every mile OF the New York
Central Railroad, represents Sl1O,l45 of fic-
titious capital upon which dividends are made
and to get the funds to do it, the producers
and consumers of the country are obliged to
pay excessive tariffs. To fully appreciate the
extent of this extension of stock it is only
necessary to state that the original capital OF
this road which was less than $40, 900, has
been raised to nearly $100,000,000, simply bA
the watering process. This increase has been
accomplished by the means of stock divi-
dends and stock issued to stockholders on ac-
count of the increased value of the road. If
there had been no watering of stock and only
moderate cash dividends had been made, it is
fair to conclude that the road would be in
better condition and the public served at
greatly reduced rates of fare.
The New York Central is only an example
of what has been done to a greater or less
extent on all the principal through lines
throughout the country. IF it was not for
this weakening of the original stock the div
idends would be so large that the character of
the monopoly would become apparent. They
simply avoid The appearance OF having large
dividends by calling one dollar five or ten as
the case maybe and making the the dividends
on the larger sum. When the public com
plains of excessive tariffs, the railroad monop-
osts appeal to their low divi lends for
the justification of their exorbitant levy upon
the industry and business of the country
Time was when stalking stock" in rail-
road meant the actual payment of so much
money to build it. Now it means nothing of
the sort. Railroads are principally built upon
bonds based upon subsidies and the stock is
divided among the lucky men who are the
company as they see fit. The Pacific Rail-
way was built in this way, and many OF the
leading railways of the West are constructed
in the same way. In Maine one road has
been built largely by bonds and land subsidy
while the stock has been but partially paid
up if at all. Now any dividend made upon
such stock is gift to the stockholders, and
corporation that insists on high rates of
transportation until it can pay dividends upon
such stocks, is practising an extortion upon
honest industry and legitimate business that
plain, blunt men will characterize as theft.
But it is not railroads alone that water
their stock. Indeed all sorts of corporations
have fallen into the dsreputable habit. 1t is
asserte that one telegraph company aver
aged seyenty-two cents despatch in 1872 and
thereby paid dividend of six and half per
cent on its nominal capital when if its capital
stock hal not been watered. it could have
made the same dividend on its real stock by
charging twenty-four cents a message. In
another company each mile of wire is repre-.
sented by $500 when it cost but S10O and to
pay dividend on it, the public is burdened
with excessive rates. The same is true to
certain extent, of gas, water and other cor
porations that hold exclusive powers over the
supply of the actual necessaries of life.
The most alarming features about this stock
watering and its exactions, is that it is large
ly on rhe increase. It is true that the people
of Maine do not suffer directly to great ex-
tent at the present time from this evil, but
indirectly they must pay tribute to the few
monopolists who by a legalizad brigandage,
cause them to pay fifty cents or dollar on a
barrel of -four, that they may be enriched and
put similar exactious upon the products of
their factories that go to the West.
This is one of the questions Of the hour,
aad one hat b 'th political parties declare to
be within the power of Congress to settle.