Morning journal and courier., 1883-07-24
csournaI anS Gorrier.
Tuesday, July 24s 1883.

THE ssxVATER" IN WESTERN UNION.
 The strike of the telegraph operators has forcibly called the attention of the public to one of the great evils of the times, namely. enormous watering of capital stock. The Western Union telegraph company furnishes one of the most notable illustrations of this evil.
 The Western Union began with 8 paid-in capital of less than $4o0, 900. On August 19, 1858, the first scrip dividend was declared being 33 per cent. on $369, 700, the amount of outstanding stock. On September 22 of the same year, after the amount of the aathoriz. ed capital had been increased. scAp divi- dend of only IA 40 100 per cent. on the cap ital stock of $4s5, TOO was issued. Three more scrip dividends were issued previous to the purchase of other lines by issuing stock. They were as follows July 16, 1862, 27 26 100 per cent. on the capital stock outstanding of g., ,355. GOO March 16, 1863, 100 per cent. on the capital stock outstanding of $2,979, 300, and December 23, 1863, B 1-3 per cent. on the capital of 8, 962, 600, increasing the capital stock to $7,95o, 700. In five years, therefore, the company had paid all expen-
 
 divided, over and above the ordinary divi- dends, over $7, 500, 900, nearly twenty times it's original capital. This was quite as good for the stockholders as telephone" has been.
 But this is not all Since it's establish nent the Western Union company has issued, for the purchase of the Pacific Tele graph company's franchises, stock to the amount of $1 ,279, 26O; for ths United States company, $7,216, 300; for the Ameri- can company, $11, S33, 100; for the American Union company, $15, 1000, ,OO0; for the Allan tic and Pacific, $S, 100000 and in it's recent transactions, for which the courts are trying to call it to account $15, 5OO.OOO. A writer in the New York Herald some time ago said of these performances: It is nowhere said that the Pacific telegraph company owned any wires or had any line actually built, though they received over $1,250, ,OOo for their charter and supposed property. Jn the purchase of the United States telegraph stock the $7, ,226, 300 paid for it was, according to good authority, fully five times it's true value. The capital of the American telegraph when it was absorbed was almost as much inflated as that of the Western Union and amounted to $3, ,S33, 100; yet $11, 1883. 100, or a bonus of $S, COG, 1000 in Western Union stock, was issued in exchange for it's property. In these ways the stock was watered to $41,- 000,O00 In January, 1881, this prodigious ''water" was again wa tered, and the capital of Western Union was increased from $41, 1000, GOO to $50, ,OOO,- 900, by the payment of 5000, 900 in stock for the property and franchises of the American Union telegraph company, not worth then more than $3, ,oOO, ,OOO. At the same time the Atlantic and Pacific telegraph company was absorbed by Western Union at the expense of $S, 400, ,Ooo more of stock for property also worth about $3, 1000, 900, and then a scrip dividend was issued to the stock holders of the Western Union on top of all this of over $15, 800, 900 more.
 This is, or ought to be, an instructive record. It is believed that all the Western Unions property to day could be duplicated for. at most, twenty-five millions of dollars The New York Times is not too severe when it says: That company thus managed should infiict incalculable injury on the busi- ness of the country in order to keep it's em ployes in absolute servitude to it's arbitrary dictation is simply monstrous, and the un- checked psrpetration of such an outrage is serious stain upon the justice of the gov ernment under which we live"