Savannah morning news. [volume] (Savannah) 1868-1887, 1885-05-20
Modern Railroad Organization.

The organization of modern railroad
syndicates is a financial curiosity. The
underlying purpose seems to be, by a
cOmpleXity of corporations, to so shift
and shuttle the actual responsibility that
it can only be nosed out and run down by
the keenest legal sleuth-hound. Well
conducted railroad affairs, as well as those
of the shakiest character, are now put
into the hands of these massive cOrpO-
rations; the great Pennsylvania Company
with only $40, 600, 900 stock and balance
sheet of less than $47, 100000, operates be-
tween 5000 and 1000 miles of
road, and operates it well. The
Huntington systems are hereafter
to be operated by two such COM
panies, Incorporated one in Kentucky, the
other in ecticut-the latter, the New
port n, and Mississippi Company,
will opaI. . the line east of the Missis-
sippi river.
The Southern Pacific Company, the
Kentucky affair, has 500, 100000 stock,
and will operate the lines west of the
Mississippi. The reader VIII observe
that the charter is not taken out In a
State where any part of the road lies.
The road to be operated has been acquired
by the company, partly by system of
stock ownership and partly by leasing.
The face value of the stock which the
company owns is $100,927, $50, made up
as follows: stock of tue Southern Pacific
Railroad Company, of California. $43,-
1854 $50, of the Southern Pacific Railroad
Company, of Arizona, $19,990, 600; of the
Southern Pacific Railroad Company, of
New Mexico, $6,69S, 800; of Morgans
Louisiana Railroad and Steamship Com
Dany, 81 1862, 700; of the Galveston, Har-
rishurG and San Antonio Railway Com
pany, S25, $4,000; OF the Texas and New
Orleans Railroad Company, $685., 900; Of
the Louisiana Western Railroad Com
pany, $2,6SS, 600; of the Mexican Interna-
tional Railway Company, $3,337. 400.
These are not by any means all the roads
controlled by the new Southern Pacific
Company. Other roads are held in an
ingenious variety OF ways. For instance,
the Morgan Company owns nearly the
entire capital stock OF the Gulf, Western
Texas and Pacific, the Texas TranspOrta-
ton Company, the Buffalo Bayou Ship
Canal Company, and majority OF that of
the Houston and Texas Central; all these
therefore pass to the Southern Pacific, be-
cause il now controls the Morgan Com
pany. The Houston and Texas Central
owns a majority of the stock Of the Texas
Central; this road also. therefore, goes
with the other through the Morgan to the
Southern Pacific. The Southern Pacific
leases the great Central Pacific system
the California Pacific, Stockton and Cop
peropOlis, etc, being under lease to the
Central, 90 indirectly 10 the Southern.
The net result is that the Southern will
control about 5,715 miles o. road, worth
5000, 100000, and carrying 800, 100000
stocks and bonds although its own stock
is but S100.O00,0 600. This is about as
ingenious as the Wall street way ofcarry-
ing stocks on a % per cent. margin, but is
not the best that could have been done.
The company could have been made TO
control that mileage on capital Of $780,
coo, 600, or even less. It Is easy when you
know how 10 do IL. The stock which il
owns is not in any case the entire stock Of
the controlled company, but in several
cases il is nearly all Of it, while for the
purpose Of control a majority is sufficient.
Il owns some bonds, but they give no
control, the stock alone doing that. We
had occasion less than two years ago to
point out how the East Tennessee syndi-
cate had bought for 81, 500, 600 about %. 600
shares Of the Danyile's 80, 0l0 and there
bv obtained control Of the DanYile sys-
ten, although twelve Of the companies
composing that system had outstanding
stocks and bonds aggregating $4,000, 900
and more. This was buying the control
Of SSj,0O0,00O Of property for $2,S00,0O0,
and was therefore equivalent 10 carrying
LNt DlUDtiAl uu a SAil VI et9 per-
centum. With the same ingenuity, the
Southern Pacific syndicate could have
controlled their $500, 100000 on a capital
Of 100000. They have actually In
vested, or pretend u have invested, $780,
100000, and doubtless have so secure a
grip en- every part OF their system that
not mile Of il will ever be wrenched
from them.
This matter constitutes an Important
study for the political economist. Politics
can not be Kept clear 0f the question,
wrlggle as we may. Not merely the
question OF legislative regulation Of rail-
roads is thrust upon US. but the whole
question OF the future relations Of capital
and labor looms up behind the subject
The railway properties Of the United
States are nominally worth $1,000, 900. 900;
the entire wealth Of tho country Is, say,
$50, 00O, 900, 900. But the tendencies Of
modern corporate management are such
that the control or this $4,000. 100000 can
ultimately be- vested 10 the owners Of one
quarter Of Il, or possibly no more than
0ne-tanth Of IL. This vastly complexities
the dispute between capital and labor;
the controlling fraction OF capital takes
on the aspect OF a ruling oligarchy, a
plutocracy IN The most Objectionable
sense. In this way there 10 real danger
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