Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1883-04-28
Aancaster fntellige1Ger.
sATURpAY EVENING. APRIL %. 1883

SATURDAY EVENING. APRIL %. 1883.
A Subject for Legislation.
Nothing of greater Importance can
engage the attention OF the Legislature
than an eadeayor to make fruitful the
intent of tho constitution, that no cor
poration shall issue stocks or bonds ex-
cept for value received. It is known to
every one that many of the great rail-
roads of the country have issued stocks
and bonds to an amount far exceeding
the actual cost OF the roads; with the
result that tho, public are taxed unduly
for transportation that dividends may
be earned upon the magnifed cost of
the enterprises. The Pacific railroads
are familiar instances of this un-
Just burthening of the people. They
were built with the money realized from
the United States bonds given them,
their own bonds and stocks, now selling
at high figures, being a clear profit to
the projectors, who collect from the
community large dividends upon the in
flated cost of the roads. The elevated
railroad in New York city is another
illustration familiar to every we'll in
formed person of the injury done
a community by failing to re-
strain carrying companies from cap.
italizing their roads above their cost.
These things, indeed, are so COM
mon that it. has almost come to be
matter of course that the cost of rail
road should not be represented in its
bonds and shares. The company which
uses all its bonds in the construction of
its road and keeps only its stock as
profit is deemed moderate in its exac
tions. Customarily there is an inside
ring in the shape of construction com
pany; or there is a favored contractor
for the whole job, who divides his profits
with those who give him the contract.
The estate Of the late Patrick McEvoy,
of this city, who was building the low
grade division of the Pennsylvania rail-
road when he died, was largely aug
mented by the fact OF his death occur
ring before he had an opportunity to
divide his profits, his partners not being
in position to demand their share from
his executors.
Now, clearly, these things should not
be. The capital of a road should repre-
sent its actual cost, and should not Garry
in its belly an undue profit to contrac
tor who builds it or to the projectors who
put it afoOt. These men may be entitled
to be paid for their idea and the energy
with which they secure its fruition but
their compensation should not be
q secret one. There should be no
imposition practiced upon the pub
lie. The road should not be held
out as costing what it has not cost.
Those who lend money on its bonds with
the belief that they have the security of
the paid.up stock behind them should
have that security IN fact. If all the
money that is to build the road is to be
obtained on the bonds alone, that fact
should be known to the subscribers.
This is but common honesty. The road
may, when built, be worth all it is capi
talized at, but that is no reason why it
should be falsely stated that it has cost
the amount of its capital.
But the state is even more interested
in protecting those who are to use the
railroad than those who lend it their
money or invest in its stock. 1t is TO
the interest of the state that tranSpOr-
tation should be as cheap as possible.
Freight charges are a very great element
in the cost of every article of com
merce. The cheaper the cost of carry :
ing the farmers grain to market, the
greater will be the sum he realizes from
its sales and the cheaper the cost to the
manufacturer of the carriage of his ma
terials and product, the cheaper he Can
make them, and the greater, therefore,
will be the number Of factories in a
state that duly protects its industry from
undue tax by the common carrier.
Now is the time for the Legislature TO
consider this matter. The constitution
declares that every corporation shall give
value for its stock and bonds in labor,
materials or money. But this mandate
needs to be formulated in a law which
shall secure it's execution according to
its spirit. 1t will he a difficult one per-
haps to frame, so many are the ways in
which false statement may be made
of cost, and so great are the inducements
to make it.. But it needs to be framed
without delay. A great railroad is pro-
jected across our state as rival to the
Pennsylvania. 1t will be welcomed !;
but to be of due benefit to the state it
must not be permitted to issue stock or
bonds above its actual cost. The Senate
has just repealed the limitation upon
railroad capitalization in its behalf and
upon the statement that it cQnld not build
and equip the line it wants to lay, as Il
proper rival for it's great competitor, for
the $40, 600 per mile to which the general
railroad law limits the stock and bonds
of railroads built under it. $12O,OOO
is a great deal of money to expend
per mile on three hundred miles of rail-
read. The intent of Mr.. Vanderbilt
may be to level the mountains and make
a grade as level as race course. The
great estimated cost of his road indicates
such purpose as the rails, cross ties
and fastenings for mile of double track
railroad, such as the Pennsylvania, will