Middletown transcript., 1875-07-10
By j. N. BARR.

Il is the boast Of the modern railwa,
director that be is the friend of tn
public and especially Of the farmer, ant
his work is entirely for the good Of th'
community. He modestly keeps him
self in the back ground and speaks 0
his road only, and Of the immense ad
vantage that it will bestow upon th'
regions through which it is to pass
and, so plausible and we'll delivered arr
his words that be succeeds in making
the public believe that he is really
working for the good Of others. and in.
vesting his own capital for the benefi
Of the community without thought fol
himself. Thus influenced, the confidine
people grant, unhesitatingly. all the
privileges asked for. The right of way
is given, lands are donated BY Con.
gress, money is subscribed by cities,
towns and counties, and the inhabitants
of the region through which the road il
to be built imagine themselves on the
high road to wealth and prosperity.
Trade, they are told. is to come pour
ing over the new route direct market
is to be provided for the products Of the
region. and an era Of general prosperity
is to be inaugursted.
"A little reflection would cause the
con6ding public to be suspicious Of the
men who profess to have its interests so
much at heart Capitalists do not nm
dsrtake railway enterprises from snch
benevolent motives. They expect to
receive ample dividends and are care
less Of the thanks Of a grateful country.
The corporation owns the thorough
fare and IS the whole basis Of the rail-
way system. In thus surrendering the
control Of this system out Of its hands.
the community, as a general rule. made
one, and but one, reservation in its own
favor. 1t was almost universally stip-
ulated that the rate Of profit upon the
capital invested in the work Of con-
struction should not exceed a certain
annual per centage. With this limit
the corporations were free to earn and
divide all they could. But having
made this limit the community allowed
the corporations to retain the exclusive
Of their roads. No pro-
vision was made for ascertaining the
real as contra-distinguished from the
nominal cost Of the roads; nor, was
arranged in regard to arrears
Of unpaid dividends. iaf i1a1 sG
Funds must necessarily be procured
before the work can be begun and the
manner in which they are, as general
thing. obtained, reveals. at once, a mys-
terry Of the science of railroad fnancier-
ing. The road for which aid is sought;
promises we'll, but it does not yet exist.
Il is to be constructed. Yet in spite
II this the directors proceed to pledge
he road for the cost Of its construction !;
n other words, they mortgage pro-
,erty that does not exist. The stock
5 worth nothing but there are other
means at hand. Bends are created and
,ut upon the market at certain stated
rice. These bonds are usually placed
q the hands Of some leading banking |
louse in the principal financial centres
# the country, to be sold. As these
,onds are sold the work Of constructing
be road goes on with the money OBJ
aimed from them The stock itself
,asses into the hands of those who are
dvancing money on the bonds, as a
,ratuity The result Is. that by this
Ingenious expedient the capitalist holds
mortgage, paying secured and
iberal interest on his own property
Ihich has been conveyed to him for
yer. free gratis. for nothing. The
took is at once everything and moth
ng. Given away, the donees own and
manage the road, and receiving fixed
nd assured interest on their bonds,
njoy further right to exact an ad-
itional sum; and one as large as they
re able to make it, from the develop
1g businers Of the country through
1hich. the road passes, as dividends on
heir stock. s
Perhaps, the best instance on record
+ the manner in which ekilful directors
railroad can procure Cat the cost of
ther parties) and secure to themselves
le profits thereof is afforded by the
istory Of the notorious Credit Mobilier
ompany. which constructed the Union
acifc Railway The story is too long
} relate at this time; but, reduced to
lain English it is simply, like this :
he men entrusted with the ccnstruc-
on and management Of the Pacific
abroad made bargain with them
Ives to build the road for sumsequal
about twice it's actual cost and
,cketed the profits which have been /
timated at thirty millions of dollars
Of which immense sum came ont Of
Q pockets Of the Taxpayers. (for the
ost part. farmers) Of the republic.
/ will now consider no = the opera
N Of ..stock- watering" Of road is
rformed. The Pittsburg. Fort Wayne 4
d Chicago Railroad furnishes very {
II illustration thereof There the
occss Of watering" was early COM
snced as simple and desperate ex-
dient for raising money at an enor- =
ous discount, for the purpose Of COM
citing an enterprise Of doubtful sue Q
IS, The stock subscriptions in cash 9
re very small-less than three per b
ut. Of the 6nal cost OF building and G
uipping the road. The subscriptions f
ire mostly paid for in uncultivated Il
ads, farms. town-lots, and labor upon q
Q road OF the whole amount of the :.
neteen millions Of dollars represent q
3 the cost Of the road only about ten b
+ cent, or less than two millions of D
liars were contributed in cash by the v
are-holders; whilst the contributions Il
bonds. notes, lands, personal pre- 0
rty and labor were less than four
llIons Of dollars; or about twenty
! cent. of the cost of the work. The
ference between these Sly millions of n