New-York tribune., 1874-10-26
CHEAP TRANSPORTATION VS.. INFLATED
RAILROAD CAPITAL.
Editor Of The Tribune.

TO The E ditor of The Tribune.
SIR: The tone of the present discussion
relative to cheap transportation perhaps suited 10
period twenty years at this late DAY seems very
much like locking of the stable door after the morse
has been stolen. This subject should have been ataed
and have received attention of our people at the
time when the first proposition was made 10 increase inc
capital of railroads process now known as watehg
Few persons probably realize the extent to which ths
process has been carried have any adequate dea OF
the burdens which have thus been imposed upon our
internal commerce. The plan of creating fictitious capi
tai or water upon railroads, appears 10 have been h
tated with the formation Of the NewYork Central hal'-
road Company in 1863 by the consolidation OF the ten
separate corporations then owning the roads between
the Hudson River and the lakes The combined
amount of share capital and convertible oonds OF
these separate organizations was then ss236oc The
eouaizing process OF the consolidation was that the
schenectady and Troy COmDany-that being the least
productive of all-should come in at par while the
holders of stock convertible bonds OF the oher ro
received premium consolidated Elk cent debt GER
tcates ranging from II TO IS per cent MAKING an ISSUE
of these certificates amounting % or over 80 per
cent on the true share capital OF the Company From
this time down 10 1867 here had been no material
change in the total of stock and debt OF the NewYork
Central Company other than what could be nearly ac-
counted for by actual value received and It's capta ac
count was then represented by s255O0 of stock and
si2O6s $40 of bonds, total Qncludng the water OF
1881 of $4,000, 800 The Hudson Rlver haroau Noh-
many at the same time had share capital OF s1oVooO
and bonded debt OF 81 0Jo-otal sl4227coo making
these two Companies which III 1869 were consolidated
stand in 1867 as follows Stock, s553OOO and BONDS,
SO 296 s20 or total capital account OF sj4S35,S2O
During 1867 the Hudson River Company presented Its
stockholders with stock, or dividend OF 80 per
cent and again. at time OF consolidation, another
one OF s5 per cent the then outstanding stock OF
$4,000 OOO making Issue OF s13,625OO The Ncw-1orK
Central Company had in 1865 presented It's stocKhod-
ers with the small crumb of S2306OOO or 80 per cent
followed by one Of q per cent S75OO at the time oi
consolidation Thus in the space OF two years he now
New York Central and Hudson River Railroad Company
added TO its capital small OF s79360O, created
ont of nothing but the will Of its directors and the mix
ture of paper and printers ink From 1870 to 1872 the
bopded debt was increased each by from one TO Two
,niions of dollars since which 1t has been increased
some for purposes Of construction Who shall
say IL any or how much OF this has been additional
water" to make up the necessary amount OF ssOooU
for annual dividends 1t will be seen by the foregoing
that the known fictitious capital OF this Company lh-
cludio the issue is sooooooo greater than
,be real which had been invested down to 1852
Ia cheap transportation possible under such conditions
Continuing the line west, over the Lake Snore ana
Michigan Southern Company's road to CAcaSo' VIC hnu
addtopal water" which has been added between 1901
and 1911 AS folOWs