The Rock Island Argus. (Rock Island, Ill.) 1877-1885, 1883-07-31
WESTERN UNION
How Capital of $685., 700 was Watered to
$40 GOO 600

From the Philadelphia Times.
The financial history Of the Western
Union Telegraph company presents the
most extraor binary instance Of stock in
1ation ever successfully combined with or
imposed upon legitimate business, and a
glance at the figures of this great specaia
ton Is sufficient to explain why the
Western Union, with all lis enormous in
come. higgles about paying living wages
to its employees: The huge monopoly
which now controls the telegraph business
of the country is the growth OF quarter
of a century. 1t started with an authorz-
ed capital of 100000 and an actual
capital of $500, ZOO which has gradually
been inflated to the enormous sum of
$50, 600, 600, two thirds of which at least
is nothing but water. 1t was in 1853
that the first scrip dividend vas declared
of 80 per cent. on the stock then outstand-
ing and Immediately after the stock thus
increased was swollen by further scrip
dividend of 414,4 per cent, bringing the
nominal capital above 100000 The
Western Union was comparatively small
affair at this time, being only one of
several competing lines, but scrip divi-
dends continued to be declared-of q, %
per cent. in 1862 and Of 100 per cent
and 33s per cent in 1S63-until the,
capital stock was swollen to s., $50, 200
At this point the Western Uuion began
buying or consolidating competing
lines, paying for them with watcred
stock at inflated prices. The Pacific
Telegraph company, which had a charter
to build line to San Francisco, receiv-
ed 81 $50, 900 in Western Union stock
for its franch SEES; it had no property
This was the beginning of system
of organizing companies for the
purpose of selling out TO the
Western Union that has been carried OF
as a successful business ever since. The
next two purchases were more important
The stock of the United States Telegraph
company was purchased for $7,2l6, 30(
in Western Union stock, which wa
generally said to be about five times it!
value, and the American Telegraph
whose stock had been inflated tC
So, 833 100, was absorbed at valuation
| of 81 1873, 100-a bonus of eight million
in Western Union stock. By these mean
the nominal capital had grown Il
| Sal, 900, 900 The company had larg
property and valuable franchises, Blu
rated at several times their cost Still
the watering process went on. Two year
ago $15, 000, 900 of additional stock wa
issued in exchange for the property AM
| the franchises Ell the American UnIol
Telegraph company worth prDbabl
SO, 600. 600, and IS, 100000 for the Al
lantic and Pacific, also worth not NOR
than SO 100000, and then scrip div
dend of $15,5o0, 600 was added on to
of all this, bringing the aggregate capits
of the Western Union up to $50, 100000
The last operation is still in dispute i
the courts.
1t is not necessary here to recount a
the minor purchase or INSCRIPTIONS {
opposition lines. For some years past
has been the regular. custom for me
who had dropped out of the directory {
the Western Union to unite with som
remaining in and form an opposite
telegraph company, for the stock of whic
in due time Western Union stock woul
1 NC lSSueu III CNSiAhhs5S dt q Lhi Sc oNNahS'
In the purchases related above there wf
an issue of some $58, 100000 of stock
exchange for property valued literally
$12, 000,000l As nearly as it is possib
to ascertain from the published repor
the whole actual investment in all the>
, consolidated lines. including the hume
Gus side speculations such as intere
in patent rights and the like, would
: estimated extravagantly at forty million
and telegraphic experts agree that Il
whole plant could be duplicated to-d'
for less than twenty millions. But Il
company is paying dividends on eigh
millions of stock Five per cent. {
i eighty millions is 20 per cent of TWEEN
2 millions, and if spectators insist {
Q getting 90 per cent. on their investmer
or even or 10 per cent. in these day
: it is not surprising to find them oppre:
e ing their servants and disregarding t
interests of the public.