Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1884-01-21
jLunraster !9ntelligenccr.
MONDAY EVENING, JAN. 81. 1884.
RniIrnad Mrecks.

Il
commenting upon the fall OF Vliiaru'
and the Northern Pacific STOCK says
oItisa vice OF tho American system oil
building railways that tho stocks arc
isaned without benefit to tho property
while tho roads arc built upon the proceeds
~ tbe bonds. The ninety millions oil
Nortbern Pacific stocks, for example, do
moi represent tho money that built the
road. bnt only bonus which the original
owners of tho franchise divided among
tbemselyes. Ronds ought to be built on
tbe proceeds of their stock. But instead
of this the stock is distributed among the
nar,ies ION the inside" and then the
road and all its property are mortgagcd to
secnre tho sums borrowed to build. Thus
the Northern Pacific having incurred
debt for construction equal to the entire
cost of the property-a debt when was
first lien on the road and the land grant
was loaded besides with vast amount
OF stock and as the road cannot earn at
once greater sum than will pay tho OK
penses Of operating and meet tho charges
on tho bonds, the stock is in condition to
be raided by Its enemies"
That is the simple and true explanation
OF the great depreciation which has come
upon the market value of not only the
Northern Pacific stock, but that Of the
many other new railroad enterprises OF
the day. They have been started to make
money for their projectors, not in the
working Of the roads, but in the man
ipulation OF the stock. Mr.. Gould
started into this line of money making
when he seized upon the Erie
railroad, and he has passed swiftly from
one enterprise to another, sucking each
dry ere he abandoned it for a fresh teat,
until year ago be had achieved posi-
tion in the top rank of the country
millionaires. Foreseelng the disaster
that would inevitably follow the under.
taking to put the value of railroad stocks
above their earning capacity, Mr.. Gould
last spring had yacht built in which he
promised to HE himself away on tour
of the world while the financial storm
ragged at home and the wrecks s;rewed
its markets.
He was not, however, quite quick
enough. The gale came Oh before be
had his affairs arranged. HIS yacht did
not start on the advertised time and is
not likely to start very soon, since its
owner is reported in dire financial dis.
tress. It will not be doubted that il IS a
Just re.ribution which has visited with
ruin the men who have undertaken to
palm eff worthless railroad stocks upon
the people. But it will not be denied
that the innocent sufferers By their act!
should have had protection from then
in tie laws of their country. Il shoulN
not be possible to bond railroads 70
more than their cost, and for their orig
nators to receive an unknown profit on
of the construction of the road and
free gift to themselves Of its stock. Tt
projectors of a railroad are justly eutitle
to reward for their enterprise an
hazard, but that reward they should fin
in the appreciation of the stock 70
which they have subscribed and paiG
an appreciation which is sure 10 come !
they have made judicious venture.
Tie laws of many of the states hay
attempted to provide against the issuiu
of stock for which value las no. bee
paid, but they have proved wholly us(
less in obtaining the end they seek. II
convenient intervention Of a Constru
ticn company, cOmposedo. men buildil
the road has enabled them to contra
with themselves and Uurthen the IA
road company with the profits they IN
not directly seize. 1t is a remarkab
thing that the courts permit such
patent evasion of the law 10 suCcee
and it can hardly be explained except
the theory of the decentralization Of q
judiciary. Certainly, law which r.
quires cash payment for sock should |
beyond the possibility of successful ev
sion, when it is interpreted by an hone
and able judiciary.
But perhaps the chief difficulty in pr
tecting the people against these railTo
sharks lies In the fact that the subject
controlled by state laws which a
of variable character, some giY.l
degree of license which othe
refuse and the proper restraint beil
imposed by none for fear Of dscol
aging the railroad building viii
all desire to promote. Perha
the only remedy for the evil is
be found in submitting its control
Congress , and this is a question of SUI
Importance as to claim the attention
Congress at this session. 1t should il
quire whether there is any constitution
or other sufficient objection to its a
sumption of the duty Of Cslablishir
the provisions under which railroad
may be stocked and bonded. 1t ce
tainly cannot be disputed that i.
wrong to permit individuals to misrepr
sent to the public the cost Of rallroa
and to sell its shares and seCuriti
without disclosing the actual expend
ture they represent. II roads may
built on the bonds, or on portion
them, while the stock is gift to t
bond subscribers, that fact should
published. Those who keep themsely
Informed, and are in the current of
formation, generally find out Just III
much is really paid to build q railroa
but the mass of investors are not tt
fortunate.
Moreover, the state has motive, OF
side of the protection due from it to
bond and stock buying citizens, in Z
covering the real cost of railroad
Is not to its interest to permit an in