The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1877-09-19

securities being bought without fenr
Of subsequent discoveries affecting their
legality. or Of rspudintion under any
It is the secrecy and
mystery connected with the Issue Of So
eurities and expenditure Of proceeds,
and the readiness with which contracts
are made and rspudiated, and the syg-
tom of favoritism In arranging for
freights and tho use Of the railroads
generally, which hayo shaken the whole
American system"
1t is only within tho last few years.
however, that English railroad admin
istration has been placed upon this set
isfactory footing. There used to be
just as much "hole and corner busi-
ness In thiF country as can be charged
to-day in connection with any American
line. But Parliament interfsfed and
compelled the companies to render n
strict account Of every detail OF their
management. Until ten years ago as O.
much Information on the subiect, writes
to me-and beg particular attention
to this quotation from his letter. for 1t
is very important:
The English railways had issued obli-
cations maturing at nx6d and irregular
dates, and as these natured the compa-
nies found great difficulty In renewing
them, even at high rates. In soms cases
renewals were impracticable, leading to
reeeiverships and thrsatenipgs Of "Wip-
ing out" the common shareholdersAttie
common custom in America even yet,
Parliament here interfeTed. declared
that the debentiires OF o railway we're
merely secured on the earnings, and
not on tho property itself, which gave q
substantially TO tho shares never be-
fore possessed, rs 1t was distinctly laid
down that the shareholders possessed
the right OF reversion which could not
be destroyed whatever ID might be
worth. Debentures were then made
perpetual so long as the interest was
paid, and as the rights OF debenture and
shareholders were deferred they became
D favorite means Of investment, Par-
lament authorizing trustees to take
them up. They have consequently been
issued at reducing rates OF interest, ua-
til now there ore very few paying higher
than 4 per cent, and some even less.
The extra interest formerly paid to them
now belongs TO tho shareholders, and
the shares Of oil English railroads have
become solid securities, most leading
lines being above par.
II similar changes could be made
where they are needed in American rail-
road management, ean ID be- doubted
that the result would be immensely
beneficial, not only to the great body OF
proprietors and investors. but to the
managers themselves IL itwere known
that the common stock could never be
wiped out, the tremendous depreeiations
which have been Witnessed In the Anne
riean market during tho last four or five
years, to the ruin OF 80 many private
families, would not have occurred and
never could occur again, For people
would hold on to their stock, even IL
| temporary default became inevitable, in
the hope OF better times-just as they
| buy London, Chatham and Dover or
Metropolitan Extension stock here, on
which no dividend 10 paid. but which IL
strongly held on the chance Of good di-
vidends In the future. Would Erie
shares have sunk TO 81, at which price
only few weeks ago. but for the fear
that some OF these days they would be
repudiated Would Central OF New Jer-
sey have fallen over 100 per cent IL peo-
| pie everywhere had felt quite sure that
although dividends might cease for O
time. the shares would always represent
O. certain claim upon the property?
Millions Of capital have gone from this
country TO the United States, and quite
as much more 10 ready to follow it, Ii
/ you can only guarantee investors in
| your railroads honest management and
no reputation. II man here buys
stocks, or even bonds, now in any Amer
iean railroads, he never feels safe. Very
often his uneasiness may be quite su-
perfiuous, but we all know thatin too
many cases there is good CAUSE for it.
With the extent OF country still left to
be developed, with the traffic which is
still waiting for proper encouragement,
the exceptional advantages OF your
position in constantly being called upon
to supply the deficient harvests Of the
rest Of the world-as at this very mo-
ment-and with the splendid energy
and perseverance, OF your people, Amer
ican railroad property ought to be the
finest In the whole world, and a source
Of investment second to nothing but
government securities In public favor.
1t is In the hope of assisting to make it
80, by calling attention to the defects Of
the present method OF managing 1T, that
/ have addressed this letter to you.