New-York tribune., 1875-01-26

81, 800 900 to S2,dO0,000, an enormous dividend OF
IS per cent of stock and 20 per cent of bonds having
been made under pretense of equalizng capitals
between this road cleveland Panesville and Ash
tabula and the Cleveland and Toledo, in view OF
the consolidation Of their earnings
g. The Cleveland and Toledo-another road en-
braced in the consoldation-just previous to the
execution Of its lease to the Cleveland, Painesvile
and Ashtabula made stock dividend of rs per cent
g. The Buffalo and Erie Road formed by conso-
dation of the Buffalo and State Line, and the Erie
and NORTHEAST COmpanies). yet another road IN
cluded in the Lake Shore consolidation, had in
1sG7-s g. 600 of stock, and 100000 of bonde
and in that year, made stock dividend OF 146 per
cent, and bond dividend of Is per cent. Later 1t
made further stock dividend of 20 per cent, and
bond distribution of 45 per cent only per cent
being called up the latter Finally this road was
mt into the Lake Shore consolidation at $10009OC,
and all its assets previously distributed among
its stockholders, including about 40 per cent OF
Erie and Pittsburgh stock and bond aud other secur
ties Thus, Lake Shore took three-millions road
into the consolidation at valuation OF Sl0,oOOVOO
I should have stated aise, that the Buffalo and
State Line, before consolidation with the Buffalo and
Erie. made two bond dividends Of Is per cent each.
4. Another limb of the consolidation, the Michigan
Southern and Northern Indiana had in 1862 a share
capital of S9O1S 900 which, in the year of amagama-
ton 1862 had been increased to Sl2 l256OO by the
" watering" process.
5. As though this reckless creation of stock and
bonds was not sufficient to satisfy the successive
speculative manipulatlons of these companies when
the roads came 20 be consolidated as the Lake Shore
and Michigan Southern, that Company made a still
further dividend of Sl5OSCyG00 of stock, on which
only S5,0O0,O00 was paid up.
@. Following this increase OF stock, the road in
1873 increased its bonded debt S. 000 for which
it received only S4325 25a rate Of discount which
needs some explanation at the hands of the managers
Is it to be expected that dividends can be made
mon stock issued thus recklessly and without re-
gard to an equivalent actual investment in the
roadf Can such dividends by any possibility be
made without the neglect of other and prior claims,
especially those of the Sinking Fund.- The vast
construction of new road during late years has
introduced a competition between the differ
emf lines which will cut down rates to the
lowest possbe point. The Lake Shore felt the
effect of this last year, and Judging from the fierce
war in rates that is now going on among Western
roads its experience this year promises to be still
more severe As your correspondent, An Old kali
roaderr has shown, the Company is already in debt
over two millions to the Sinking Fund, and yet II
has to pay next;year $976000 OF Detroit Monroe and
Toledo bonds and in 1871 S2,692,OOO of the second
Michigan Southern and Northern Indiana mortgage.
cannot but think, Sir, that any sober-minded
railroad man will conclude that it will require very
extraordinary management for this Company to
protect itself against its bondhOlders for the next
few years. and that as to its capital stock the only
really wise thing that can be done IS to let out
good deal of the water" with which 1t has been so
excessively and dangerously inflated, and reduce its
capital down to the earning capacity of the road.
Netp- York Jan. 25, 1875. HARD PAN