New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1877-03-15
RAILROADS..

The RGiIrnv A1e OF Chicago, in an elaborate
review of changes i'm railway condition during
1876, presents some gloomy facts. 1t gives a
list of ten roads which defaulted during that
year. and these operated 1851 miles of road,
and their stock and bonds were OF the nOml-
nal value of $15G,661 900. 1t also gives a
list Of forty-six roads which either passed into
the hands of receivers during the year, or
against which proceedings for foreclosure were
commenced. These operated 1876 miles of
road and their stock and bonds were Of the
nominal value of 1888, 900, 900. Finally, thirty
roads were sold under foreclosure during the
year, and these operated 3,S4G miles, and their
stock and bonds represented T217,S4S,OOO
One stage or another in The dark and down
ward road toward bankruptcy was reached,
during a single year. by eighty six CORPORA
tons. operating 14,179 miles of road, about
one-ifth of the whole railway mileage in the
country, and having a nominal capita invested
of $912, $685. 900, nearly onc-ilth of all the
capital nominally invested in railways in the
United States.
II is not claimed by The Age that these fig
ures are entirely accurate. Indeed, 1t Is 80
difficult to obtain correct information rs TO all
changes of this nature that the statement,
though prepared with care, may reasonably be
supposed to fall below the truth. Moreover,
if so large a proportion of the railways appear
in default or have been sold under foreclosure
in a single year, what shall we suppose has
been the proportion of roads which have de-
faulted since September, 1873 As early rs
January, 1874, the bonds alone then in default
amounted to 1856, 900 During 1874, the
number of companies in default at one time
was said to be 122, and their bonds amounted
TO $557, 100000. The magnitude of the losses
sustained, by bondhOldcrs and by stockholders,
during these trying years, it is utterly impossi-
Die to estimate indeed, in very many cases,
the bOndholdcrs who have been compelled to
buy i'm roads for satisfaction of their claims,
can as yet form no idea what part of those
claims they have thus secured. A very large
proportion of the stock of dcfaulting roads
mas proved a total loss, but a considerable part
of it never had any value. Under the Credit
Mobilier system Of railway building, the bonds
have often represented more than the whole
actual cost of the road-namcly, the cost and
the profits of contractors, mOney-b0rl0wers, and
money -lendcrs-wlile the stock WAS left to
represent the possible profits to be realized.
OF the roads built on this unsafe basis. wholly
on borrowed capital, very large proportion
have failed or have been absorbed or leased
by other roads on terms which differ from
absolute failure only in name.
Among the roads defautinS during the year
the largest in capital was the st. Louis, Iron
Mountain and Southern, but the Ohio and Mis-
sissppi and Kansas Pacific closely approached
it in mileage. OF the roads ordered for fore
closure, or placed in hands of receivers, the
most important were the Atlantic and Great
Western Chesapeake and Ohio, and Columbus,
Chicago and Indiana Central. OF the roads
sold under foreclosure the Atlantic and Pacific
Toledo and Wabash, Burlington, Cedar Rapids
and Northern, and Pacific Of Missouri, each repre-
scented of nominal capital 800 000, 900 or mOre
and the four named represented 21,00O,OOO.
Since Jan. L, other companies OF importance
have been added to the swelling list. The
Central of NewJersey, it is not improbable,
will soon be joined by other coal companies.
Nor do the extraordinary movements III the
stock market indicate great faith in the future
of several other railways of the first import
ance. In fact, il seems not unlikely that the year
1877 will see quite as many important railway
failures as any other year since the panic. The
fact is that the whole railway system, SO far az
it has been created or extended since the issue
of paper money needs reorganization. Roads
built when iron cost fancy prices when labor
and materials were worth more than twice
what they are now, when capital cOuld not be
borrowed at less than 7 per cent, and when
30 cents per 100 ib for grain from Chicago to
New-York was IA low rate-what chance have
they to earn interest on such IA cost at existing
rates I