St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1885-03-21
AMERICAN RAILWAYS.
The Interesting Views of James McHenry,
an English Investor.
People Abroad Have Lost Confidence in Our
Great System.
AIismanagement of American Railways
Unnecessary Extravaganza.
New York Correspondence.

James McHenrY. the EDSilSn TdILToau mug
nate, sat in his rooms at the Victoria hotel
yesterday when your correspondent called
upon him to get something of his views
upon railroad matters here, as viewed from
the standpoint of the English investor. The
initial question of the reporter, How DO
American railroad securities stand in Great
Britain!'' was sufficient to bring sharp
CLEAN into the eve of the old fnancier.
GLOW do American railroad securities
stand?'' said McHenry in reply. GLOW can
they stand other than be Stunned By every
sensible man who has been deceived by in
yestments heretofore, and has lost confidence
in The whole American system! A year ago
took occasion to demonstrate as early as
possible the American system Of railroad man
agement, and especially did 1 attack
the pooling system as being dis
guised fraud. l also created a great
deal of i'll will against myself by saying that
the great lines of the country were losing
money by ghost trains, meaning the vast
quantity which is transported over some Of
the leading lines without any remuneration
for the lines themselves; that the tonnage
not being reported in the legitimate way, II
could, all the more readily be divided among
The canfederates of those in control OF the
roads. The present position of the roads,
bringing discredit upon the whole country,
justifies what I then said and all that l
prophesied. There is a universal
PARALYSIS OF RAILWAY CREDIT,
and this is the more ordinary, as throughout
the world the railway investments have been
considered the safest Of all. Just think of
what you have, population of CO. 000 900 of
people, the most industrious and ingenius
ever known, speaking one language, with
out any barriers between the states, without
any standing army, every man doing his
very best and generally with success, to in
sure his own prosperity. Therefore l have
ALWAYS maintained that railways in America,
no matter where situated, after reasonable
time for ripeuing into profit, should give the
safest Investments and the surest returns,
and yet this rich placer Of legitimate profit
has been ruined in the eve Of the investing
world through general corruption Of manage
ment, or the general ignorance Of railway
matters. have learned great deal, per-
haps more than most people, of the
ways ard methods of the management
Of railways in America, and ! have
paid very dearly for my education, but my
confidence in the reward for a good man
aged railroad has not been in the slightest
degree shattered. The most practical and
successful manager that l know is Mr.. J. G.
Clarke Of the Illinois Central, and to him |
owe my first lesson in uucorering the mys-
teries of American management. The ra-
tionale Of railway is simple indeed. 1t Is
constructed 70 transport goods and passen-
gers. and the single thing the railway has 10
90 wen is the transportation. To arrive at
the profits you have but to strike the differ
ence between the cost Of doing this work and
what is paid Tor it. Now, a full train can be
run between this city and Chicago at cost
not exceeding $500, including depreciation
of stock and all expenses Of litigation, taxes,
etc. The present rates on grain, which are
about the lowest that are ever charged, are
equal to about 81 per ton, and at this rate
the managers of the different roads have
brought about
DEcLENsIoN OF ALL DIVIDENDS.
Now, Il train carries about four hundred
tons, OF 4 total income of 81, 900, and
don't think there is any business that can
show such a large interest on investments as
this. When low rates are more profitable
than high rates, why not boldly follow theml
Directors here don't direct, but leave
everything to the president, and he devotes
his time mainly 10 the dicker, and, incident
ally, 10 the control and business of the road
A road Is put down as using up above so per
cent. of It's income for expense, which is
about % per cent. more than can be iusti-
fed, and the remainder of the income
which ought to 90 to the stockholders as div
bends, is seized and appropriated to what
Is called 'bettermcuts' The result Of all
this is that no man looks upon the report OF
an American road as anything more than a
fairy tale in figures. railway officer should
have no more right 10 create an Indebtedness
or assist himself TO the earnings of the road
than the manager Of this hotel would have TO
puta mortgage of several hundred thousand
dollars ON it, You might fancy the astoni3h-
mcut of Mrs. Paran Stevens to find a debt Of
this sort created by the lessee, and vet that is
just what is doing every day by railroad man
ayers in this country. Reorganization is
rather popular scheme in the United States
and u very profitable one What is wanted
and what must be had, ifcoufdence is TO be
restored, is an absolute security against the
recurrence of such n system as now prevails, !
as sinking funds. ear trusts, collateral trusts,
freezing out and other ingenious contrivancrs
for the coudscation of the property entrusted
10 The managers. The only security is
Is ABSOLUTE PUBLICITY.
would have Il bid ior even the purchase of
a single wheebarrow, after due notice to the
proprietors OF the company and consent as
surcd. 1t is the suddenness with which the
new debts are announced which knocks the
whole present system iuto pi. The annual
reports should be made valuable By inspec- /
lion by an independent auditor appointed bv
the people interested at a public meeting |
Then aud only then will the reports have the |
least worth or tile TO respect
"Whst then IS your special object in COM
inE here al this timei'
My particular object is to serve the In |
forests of Erie, Cleveland, Columbus, Cinciu- !
uau X In annapolis and the Great Western
roads, i'm all of which have more or less in
terest. No one has invested or caused 10 be
Invested so much money In any one railroad
in America as l have provided for these
three. and they are all of them practically
unstable. l shall Cndeayor to bring about
such changes as will put back these roads
into something like their intrinsic value. Il /
shall not be my fault IL the litigation over the
Erie is not ended at once, and on basis AZ
prodtable 20 Erie As myself II is well kuowu
that tbc $50 goo, GOO that | sent over for the /
Erie was appropriated by tae Erie managers
- other matters. " bat those other matters
sre bayc more than I suspicion, aui pro
pose that Toe interests Of Erie in all these
outside s2"1a'aitous aud appropriations shall
o. mate known. have the highest regard
for Mt, hiuS. 4ti have never met him
think he Is doing all that can be doue for tie
Erie AZ present.
FIFTY CHARMING FRIENDS