New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-08-13
RAILROAD BUILDING AND BONDING.

THE Ner-Hacen Palladium in an article on
the modern style OF forming railroad companies ana
constructing railroads in Connecticut contrasts the old
method which was based upon sound business princi-
pies OF obtaining most Of the means OF construction
from cash Subscriptions and then boDdng the road for
not more than one-third the actual cost, with the
method now in vogue in that State OF depending al
most entirely upon the issue bonds and having but
small amount Of bona fde stock SUBSCRIPTIONS. ono
great difficulty with this plan Is that large amounts OF
interest must be paid ON before the road Ii
completed or can earn dollar. The Palladium says:
forcible illustration of the truth OF this IL found In
the history Of almost every railroad IN coz
structed commenced within the last SIX o. set years
All have commenced Win very sa soch ~
compared with the estimated cost OF their roads ana
some cases these small STOCK SUBSCRIPTIONS hs1o
been deceptive. The main reliance nas oeen In s"v %
OF first mortgage bonds Fist mortgage oonus ~ Ny
uecucut railroads had in former years, as eenera rio
proved safe and fayorte Investments frner'' nss
chancs, and others who had money 20 invest, neto
strongly preudiced their favor, ahd IOr soOu
For the days OF modern denoraiIlSS'on ~ ts
road building, first MORTGAGE D0po wac sTIon issued
To an amount which could not have been PAID on IN iu
If necessary. by the sale OF the Ton' ianas ana
railroad corporations have taken advantage of
this mania Of the public for hrst mortgage bonds anu
result this State has been Hooded win tue nrst
mortgage bonds OF uncompeted railroads and III many
cases. tho first mortgage has exceeded IN amount tns
entire value OF the road when completed Tue result OF
this state of Things has BEEN tat not SOLITARY railroad
realized sufficient actual net earnings 10 pay the interest
Oh OHe-ha OF the amount OF us DOhds ana ueot iVO
In rpO ID financial
ton Hartford aud Erie Railroad which has fosted moro
than $22 10000 OF bonds upon the PuDDc who are
ruling at about 81 cents on inc dola we nnu .'q
ing 10 be tie condition in the aggregate OF the otheI new
roads in Connecticut which are either wholly OF
partly completed and banded IN ppeIa.pn aoans SeSt
of these companies about sh,OovsU ass n.
companies over and laooVe opSfsnno % i ne
wear ending Sept 80 1872 about SlsO In Other Worus
madeira demoralzed plan are not earning Of
two per upon the amount OF their Indebtedness IL
would that 1t was about time Tor men OF Srdinsy
Judgment before they invest their money In the bonds
of new railroad to stop long enough TO ascertain what
proportion the amount OF bOnds 10 he Issued GEARS 70
the amount OF cash actually paid In ~ subscribers 70
the stock and invested In good falth IL the
and equipment VI the road No new railroad ID process
of construction contemplation In the State Of Con-
nectcu issue more t1an slOOO or Donus iot
every $4,000 OF cash paid n on the stock ana aetuay
expended on the ROAD. IL safe 10 assert that any man
VINO purchases the bonds OF any railroad IN TINS Sato
dollars of cash paid the stock 10 every dollar Oh
bonds issued will regret bis purchase ana wait IN
vain for the promised interest.
or the manner in which new railroads are ouiit In
that state the Palladium says:
Most OF the railroads started BY contractors
and speculatOrs moderate subscription 70 the capai
stock is by those within the ring Win an UNDER
standing that only small instaliment VIII Oe called M
that bonds enough VIII be put on the market anu SOFA 70
complete the road, and then stock al hoItnm WIZ 70
issued profit 10 the Original paIlss Ing as
are nretty sure sell out their STOCK IN tline LIZ tho
ic maj nercentage is lust SO much profit the Orgi
nails while the loss comes upon the purchasers Oh the
eeVed by the estimated which the proprietors OF
new railroads place upon the roads which are 10 Dc
constructed. new ROAD Is aDOuS " DO o-
A prospectus Is published giving an estimate
of the cost OF the road completed aud equipped On
the strength Of this estimate the work Is commenced
and the bonds issued Before the road is half finished
the estimates exceeded the funas provided are ex
bausted interest accumuates and bankruptcy follows
TIE cost of nearly every railroad built IN Connecout
during the i've years has exceeded the ougiDst
estimates nearly and IN some more than lO0 per
can't and it is safe 70 that OF them would
have been commenced II their projectors ana tho
hoders OF their bonds had known in advance what hey
learned at the end. would seem that IL was ABOUT
time for the Connecticut Legislature ~ take the matter
In hand and enforce the old plan OF prohibiting any
railroad company from creating bonded deOt DeyOha
one-thrd the actual bona nde cost Of their road.