, 1874-12-01
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RDNnH0TDER AND GRANGER


The New York Nation, which is nothing
unless it bo roolslessly abusive or supercil-
iously oracular, hns m article on the subject
Of the railroad companies which have de-
faulted in the payment Of interest on their
bonds, and takes occasion to abuse the peo-
plo of the State Of Illinois therefor. The al
legation is TINT there are $500, COO, 900 in
vested in railroads, upon which interest has
been defaulted during tho past year, and TINT
of this sum 9i5, 900, 900 are invested in the
railroads Of Illinois aud it is added TINT, s'nt
tho lowest conceivable estimate, these rop-
resent at leastsso, 900, ,0oo Of real wea1th, for
tho full enjoyment Of which the people Of
Illinois at present pay no consideration what
over"
We have not at this moment list Of tho
Illinois railroads which aro IN default, but
they aro largely, it not exclusively, Of that
class which were built before there was any
need of them, built mainly without any cash
capital, and whose construction cost in the
way Of debt is far in excess Of the real value
Of the work dono and material furnished.
| These railroads were largely speculative.
| They we're constructed in districts which in
| time will furnish business sufficient to pay
| reasonable income on the actunl cash in
| yestment. In nearly MI these railroads
| there was sort Of Crodit-Mobilier
arrangement, a construction company, and q
friendly Board of Directors. For every dol
lar invested in tho railroads there was a
bond or capital stock issued for So or 81. It
| was speculation MI round The construction
companies got whatever they asked for build
| ing tho road; the Directors pnia them in
bonds. The bonds were made to pay interest
at the ratio Of s, Q, or 10 por cent the bonds
were purchased on speculation in Wall street
mud elsewhere at from 10 to 60 cents on the
dollar. The roads, when completed, Ind but
little business-thero wero neither passengers
nor freight offered in quantities sufficient to
pay moro than operating expenses, aud in
Bomo cases not that. The few people resi-
dent along tho routes who sought to use t4o
roads wore offered the opportunity Of so do
ing upon giving tho company the grain, and
paying something beside in cash for its trans.
portation.
Nor is this all. The willy spectators whc
built these railways appealed to the
| pEopl3 ~ AlA III LAo HVAha AoHAs
cities, and counties were wlleeil1ed into sub
scription to the capital stock. The munich
palities Of this State voted no less thur
10000, 900 Of their own bonds, bearing ar
average interest of 9 per cent, to help tt
build these roads, These bonds wero con
verted into cash, md III minority Of caseE
this WAS the only actual cash capital Of tht
companies building the roads. AL else wa!
raised by the sale Of bonds to spec
ulatora ut nominal rates. The nlunsci
1nlitics which were entitled to holt
S1C,00O,0oO Of the capital stock OF thes
roads have seen that whole amount swep
away. Road after road thus in part built b,
them has passed into the hands Of the bond
holders, to tho extinction Of al this stock 0
; the municipalities.
We do not believe thoro is railroad in Il
1jnois in which huff the cost Of construction
: was derived from cash subscriptions to til
, capital sioux which is IN default. It is on1
J the wild-oat roads which fail to pay interes
on their bonds.
Wo do not boliovo thore is road il 11inoi
whose liabilities do not exceed twico tue at
tual cost Of tho road TINT il in default for il
\ forest. The roatts that are in default III
those whose management has been dishonoa
t or which woro built with the proceeds
+ bonds which were sold for whatever could L
t rot for them, and which were bought I
t i speculation. just as tho capitalists. OF 1t
J, gland during tho War bought Confedera1
t bonds, or as somo Of the bankers OF Nc
d York have bought South Carolina carpot-ba
bonds.
va have the result; The roads were bni
= too soon, and on an average at three tim
,, their actual and proper cost They were p'
g in operation before there way any conape1
}. eating business for them to do, and the
. cost Of construction. as Represented by the
/, outstanding bonds, callod tor m income tn
t. or three times rs great "a would haya BET
!, necessary had they beon built tn q legl
% mate inaunof. The honda wers aold u