New-York tribune., 1874-09-07

paid to this road for service in Wisconsin had to be
used by the Company toward paying the interest on
the bonds and dividends on the stock of the Com
pany's Iowa and Minnesota lines.
THE THEORY OF THE PEOPLE.
Now the theory of the people of this State who
have studied this railroad question carefully is
that if Iowa aud Minnesota roads cannot earn
enough net income to meet their interest accounts,
one of two things ought to be done. The roads
ought either to be sold under foreclosure of the
mortgages that are on them. and the nominal capital
in this way reduced, new bonds ought to be
issued to meet the annual deficiency which would
thus be added to the stock of the road The present
system of making the prosperous roads OF TINS state
carry those of Iowa and Minnesota, is,
the people of Wisconsin think. alike
unjust to the people of this State who
have TO use the roads and have made great sacrifices
to their construction and to the Eastern and
foreign capitalists who invested their money in the
railroads of this State before these Western roads
were bought or leased The railroad managers reply
that these new roads will sometime become profit
able. and that in the meantime they contribute to
the prosperity of the Wisconsin lines by being feed
ers to them so that while they may not be able to
earn enough TO pay their interest they really in
crease the income of the older roads That
is very true. but it would be true just
the same if these Western roads were
owned by separate companies. The beneht
is mutual the Western roads need outlets as well
as the Eastern ones need feeders and in order for the
latter to secure this benefit it is not necessary for
them to swallow up the former All the roads in the
Northwest are feeders to the lines east of Chicago
but the managers of the latter never thought 1t
necessary to buy up the former when they were not
paying expenses.
AN ALLEGED RING SPECULATION.
1t is asserted here that this whole acquisition of
outlying roads by the large corporations is generally
a Credit Mobilier or Ring" speculation. For in
stance the managers of one of these lead
ing roads, with few friends, obtain a
charter and the franchises for a new road
in Minnesota. They contract with them
selves for the construction of the line and agree to
give themselves for this construction all the bonds
stock, and land granted to the road. They sell 75
or 80 per cent of the bonds to pay for the actual
cost of building the road and then own the land,
the stock of the Company and the remainder OF the
bonds The next step is to sell or lease the new
road to the Wisconsin Company which they con-
troll and by this operation get their bonds guaran-
teed and perhaps some interest on their stock. If
this operation be carried out successfully, the
men who are in it make two profits without putting
much of any capital into the scheme They realize
handsomely on the construction and the sale OF
land and town Sites and again on the sale or lease
of the road.
These are some of the reasons why the people of
Wisconsin think that wise supervision of the rail-
roads of the State like the supervision of banks by
the States before the war; will be equally protective
of the interests of capital invested in railroads in
this State and of the interests of the people,