Morning journal and courier. [volume] (New Haven [Conn.]) 1848-1894, 1882-02-18
Saturday Morning, Feb. IS. 1882.
THE s'PARALLEL" ROAD SCHEME.
Thara is nna mint in nnnnactinn with thI

There is one point in connection with the
Parallel road scheme that has not received
the attention it deserves, and that is that a
special charter is asked for.
Prior to 1871 all of the railroads in this
State were organized under special charters,
and those charters always prescribed the
route over which the road was to go, the
method of subscribing for the capital stock:
and contained clause compelling the COM
pany to actually expend within one or two
years substantial sum of money upon the
construction of the road. Further, in order
to guard persons who might purchase bonds
from being imposed upon and to secure
substantial backing of property for the
bonds, the Legislature in 1912 passed gen
eral law authorizing railroad companies to
borrow money upon bond and mortgage, but
forbidding any company having bonds out
standing at any one time to greater amount
than one-third of the sum which the presi-
dent and chief engineer of the road should
certify under oath to the Controller had been
actually expended upon the road, and false
swearing upon this subject was made per-
Jury This law required two dollars of stock
to be paid in for every one dollar of bonds
But even under this careful system the first
mortgage bondholders of some of the rail-
roads organized under it never received the
full amount of their principal and interest
In 1871, in order to obviate the necessity
of asking for special charters general rail-
road law was passed under which twenty-five
persons may organize company and build
railroad anywhere in the State, provided that
they cannot bridge a navigable stream with
out special permission of the General AS
sembly. This provision was, of course,
necessary in order to enable the State to pro-
tect its large navigable streams. The gen.
eral railroad law requires the persons who
propose to build railroad under it to sign
articles of association, giving their names,
principal place of business, the route and
length of the road approximately, the
amount of the capital stock, and the names
and residence of not less than nine directors
of the company. This useful information is
to be filed in the Office of the Secretary of
State. The articles of association must also
be accompanied with the report of an engi
neer showing the surveys, profles and prob
able cost of the road. In addition, the CAPT
tai stock cannot be less than $4,000 for
every mile of road, but no road can pos
sibly be built in Connecticut for less than
$50, 700 mile this is no hardship. 1t is also
necessary before organizing for work that at
least So, 900 of stock for every mile must be
subscribed, and ten per cent. of this must be
paid in in cash. AS this requires only $500
on every mile to be paid in advance, it is no
hardship if the company is organized in good
faith. Further, majority of the directors
must always be residents of this State, which
is certainly a proper provision for the inter
ests of the Connecticut public. A majority
of the directors of all the principal railroads
in the State except the New York and New
England live in the State, and it will be a
bad day for Connecticut when the
directors of its railroads are beyond
the reach of the State authorities except by
special legislation. Another provision of
this law is that the amount of the funded
and floating debt of railroad corporation or
ganized under it can at no time exceed the
amount of cash actually paid in upon the
capital stock. This only requires one dollar
Of stock behind every dollar of debt, and is
road schemes than the similar provision I'M
der which the old railroads were constructed.
Further, corporations organized under this
act are obliged to expend at least ten per
cent. of the amount of their subscribed cap
ital in construction within one year after the
organization is.perfected, and the road must
be completed in five years. This provision
protects landowners against long delays in
getting pay for land damages, etc.
This law was approved by Governor jew
ell, who is now one of the foremost in the
'Parallel" scheme, and who testified the other
day that he read the law at the time he ap-
proved it, and he did not discover or know
of any impracticabIe provision in it. There
is no difficulty under this law in building
railroad honestly, but it does prevent the
construction of railroad with bonds alone
SO that the stock can be given away to an in
side ring. A road constructed by bonds
alone is pretty sure to ultimately dsfraud the
innocent bondholders. Under the operations
of loose system Credit Mobilier and con-
struction companies are formed, and the pnb-
lie is in some way defrauded And if the
road proves success, travellers and freight
ers are compelled to pay dividends on an
amount equal to twice or more than twice
the cost of, construction, as is the case with
the Union Pacific and other roads which
might be mentioned
OF course in asking for special charter
the promoters of the Parallel" scheme ask
for special privileges. Before these privi-
leges are granted, the Legislature should dis
cover, if it can, whether OF not the public
will be at all benefited by them.