The daily gazette., 1881-10-06
THURBER ON MONOPOLY.
stock Watering,
Extract from his Address AT Tamnany
Hall.

[Extract from his Address .at Tamnlany
Hall.
Another of our specifications IS that
the public should not ba taxed to pay
dividends on watered stock. A single
Illustration of the effect of stock water.
ing will suffice in 1867 the New York
Central aud Hudson River Railroad OBJ
tanned, through It's creatures in the leg.
islature, permission to water its stock
under the guise of a consolidation, and
this was done TO the extent of S47,000,.
900. Regular per cent. dividends have
besn paid upon that watered stock, and
those dividends upon this waLcred stDck,
with interest compounded annually, al.
ready amount in thirteen years to over
| $4,000, 900. Elm other words, If instead of
watering its stock, that road had man
tanned its stock at the volume then out
standing and had reduced It's charges for
transportation, as II was in duty bohnd
to do, the public would have been s75,-
OOO, 900 better oil, and $4,000, 900 worth
ol stock, which only cost the paper and
ink with which IL was printed, wonld
not now be in existence, quoted at 140
to $50 In Wall street to-day, and form
perpetual preteXt for taxing your ch ID
rem and my children from all time TO
come, to pay dividends upon it.
This practice has obtained with almost
every railroad,in existence. The rel Tort
Of the Hepburn Committee showed that
the stock OF the Erie Railway bad been
watered to the extent Of some So, ,lDO,-
900. Stealings, even, have been mac g a
pretext for the increase of stock. Some
OF you, doubtless, remember the SCHUYLER
frauds Of the New York and New T. apen
Railroad. Mr.. Schuyler, as President ii
that road, issued securities without au-
thority of law, sold them aud app cd
the proceeds to his own use. The stock
| holders, Instead OF making up the lpss,
as the stockholders of bank would the
| defalcation OF an urfaithful servant, is
| sued and sold stock TO an amount ueEes-
sary tU cover this fraud, and maintained
their rates for transportation at a pbint
which has yielded large and regular div
idends upon the whole mass.
Now, if merchant should make abad
debt and say TO his paying customers
that they would have to make 1t q bod
it would doubtless by them very un.
reasonable proceeding, but ID would no,
be nearly as unreasonable as the issu.
ance Of stock to cover up stealings, fol
when the merchants customers hau
made up the loss, thai would end It, bnf
in the other case the stock remains
perpetual burden upon the community
so long as dividends are paid upon it.
The capitalization of surplus earnin Is i.
another form Of stock watering req ard.
ing which the legislative comm ttee
which Investigated the coal combination
before alluded to, said in their report:
"During the receipt of these enOrmou,
prohts many OF the coal corporations, as
was the case with railroads not engaged
III the coal carrying trade, unable, uIldel
their charters, or tor other reasons t(
declare dividends upon their stock thar
would absorb their unexpended surplus
issued additional stock to the stockhold
f ers, for which they paid nothing. Inau
gurated what is commonly known a
stock-waterlng, or capitalization 0
surplus esrnings, which IS in substanC,
exacting money from The people, cre
ating an Indebtedness representing tn
same, and making this the basis fo
forever asking the public to pay interes
upon their own money so exacted."
The members of the Anti. MoAopol,
League think that II the past cannot b.
remedied, that in the future, al least, /
ought to be made crime against th
community, as 1t Is in the State O
Massachusetts, where 1t is an indicIabl
oilense.