The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1885-03-20

The Need OF Better Management-Why Our
Stocks Are Discredited Abroad.

Stocks Are DisCredited Abroad.
New York Special.
Mr. James McHenry, the well-known English
railway negotiator, and the hero of q hundred
legal fights with the Erie railroad rave his views
on the need of reform in the management of
American railways this afternoon, to your cor
respondent. Mr.. McHenry gave it as his opinion
that the credit Of American railway securities
abroad was very much impaired by their bad
management in this country.
How can they be otherwise than Stunned by
every sensible man. who has been deceived by
investments heretofore, snd thus lost confidence
in the whole American system2 There is a uni
versal paralysis of American railway credit
This is the more extraordinary because through
ont the world railways are considered the safest
of investments The wide discredit which ex-
lists has arisen from the general corruption or
general ignorance of management During
my stay here last year. denounced the system
of American railway management and attacked
the pools as being merely phrase used as dis
guise Of fraud. also created great deal of ill
will toward myself by stating that most of the
trains, meaning that vast quantities Of produce
were transported over the leading lines without
remuncration-the tonnage not being reported
in regular way, and the earnings being divided
among the confederates. The present position
OF American discredit throughout the whole
country justi6es all L said.
Il am largely interested in Western railway"
continued Mr.. McHenry, and under the autocratic
governments so popular In this democracy, the
managers create indebtedness in any way they
please, without the consent as the proprietors.
They show considerable profits after debiting
earnings, with about so per cent as expenses
which is about 20 per cent more than can be jus
titled. Even this matter of percentage of profit
left, however is seized and appropriated for
what are called betterments' This is the sort
Of thing that has destroyed the confidence Of
investors both here and abroad. Reorganization
IS another rather popular theme in the. United
States, and profitable to those concerned in 1t,
but fear it is like the Roman fever--if com
pany ever catches it, it is liable to return to it
periodically"
How do you restore the credit of American
railways abroad?' was asked.
1T is not dficult,' Mr.. McHenry replied.
"First-The past must be- explained, and the mis-
appropriations of capital Investigated and pun
ished. Second-there must be some security
that all issues have been made with the know[
edge OF the proprietors, as to the disposition of
funds. Thlrd-There should be absolute Sc
curity against therecurrence of disasters against
the whole systems of sinking funds. car trusts,
collateral trusts, freezings out and other in
genious inventions for confiscating the property
invested by its managers
What security would you have the managers
givel"
Absolute publicity declared Mr. McHenry
THAT is the only security that can be given.
There should not be a wheelbarrow bought
without due notice to the proprietors. It is the
nounced and floating debts discovered that inn
pairs the confidence of investors. In short, an
annual report OF an American railway is re-
ceived with tho greatest doubt as to its sincerity
and truth. This can be met only by an indie
pendent audit, which will ~countersign the re-
ports. the auditors to be appointed by the pro-
prietors at public meeting
when an inquiry was made about the advisa
bility of limiting the construction Of competing
lines, Mr.. McHenry replied:
1.-The Midland railway Of England has CAPT
taization greater than that of the Erie the Balti
more g. Ohio. the Pennsylvania and the New
York Central combined; it is competing line
from England to Scotland, against three other
established routes, and yet its common stock is
selling at 125. When the Atlantic & Great
Western was built by me, every dollar of capital
furnished by me, took the first train from New
York to st, Louis that accomplished the run
There were then less than one hundred miles of
railroad west of the Mississippi, while there are
now nearly fifty thousand, and yet we are asked
to believe that there is no room for new rail
road ike the West Shore. The truth is business
grows faster than railroad facilities possibly
can"
country"
II am here to serve the interests of the Erie,
the Atlantic q Great Western. and the c., G.,
q. u l. roads, in all of which am more or less
interested. While here / shall endeavor to in
duce their managers to make such changes in
their administration as will lead to the recovery
to their intrinsic value of these great properties
IS well-known that the $50. 600 900 negotiated
for Erie was applied to other matters have a
suspicion where IL has gone, and think it the
interest of the Erie to have it made known
B1r. McHenry declined to talk in detail about
his movements, because 1.-THE time for it was
not ripe. AS he left the reporter he said that
he was going to fill an engagement with Mr..