Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1885-06-22
dbe Ca,,faster 1ntclliael,fer.
LANCASTER, JUNE %, 1886.
Mortgaged Expectations.

The legal assault made against the South
Pennsylvania railroad in New York, is met
by the company with denial that the New
York judge has jurisdiction of the matter.
They say that their principal office and that
of the American construction company is
in Harrisburg, where the third story of a
Market street building is occupied by a few
clerks and draughtsmen. They further say
that it is not true that all of the 100000
600 of stock and bonds of their road are
water except the fifteen millions for which
they have contracted to have it built and |
furthermore, they declare generally that |
they have done nothing wrong and every |
thing right.
AS there is no denial of the fact that they |
have given their $40, 900 600 of stock and |
bonds for els 900 900 in cash, though they
have given it to themselves there does not
seem to be any escape from their ad-
mission that they do not expect this road
to cost more than ola, 600 900; else they GER
tainly would not have resolved all its possi-
BILE assets into that sum Of money. For
the other twenty-five millions of the stock
and bonds, no value will be given outside
the value of the project. In saying that
this sum is not all water, they say that the
"good will" of the enterprise is valuable.
Nodoubt they think so, and very probably
it is SO. Every railroad protector thinks
his project valuable; and it has been the
habit of these enterprfsing men to base
their mortgage bonds largely upon the
-SsMf1e Of the project. If it is a good one, the
! fa1 Hy,,ox ho oh IN, n Hiyi
,dend upon the capital with which it is heav-
lily laden; and if it is bad one the bond
holders soon find it out. Their late expe-
rence teaches them that mortgage on a
railroad project is not very well secured.
The law in fact says that the project shall
not be mortgaged the road has to be built
before the bonds are issued upon it. The
Pennsylvania law furthermore says
that the road shall be loaded with
capital only to the amount Of its cost.
So that there is good deal of en-
barrassment now about using the value of
a railroad project as the basis Of a railroad
bond; as the South Pennsylvania people
now are finding out. 1t is all lovely so
long as nobody makes trouble about it !;
Ind bondholdels are a long suffering people
who never make trouble and can be
itrampled on with impunity. There is
: Emusic, however, when rival railroad
where conductors know all about the way
Of raising the wind on raw railroad pro-
jects, finds it to be to its interest to disturb
pleasant little arrangement to make
twenty-five millions out Of fifteen.
1t is very likely that the South Pennsyl-
vania railroad will he worth forty millions
when it is done if it is not worth that it is
probable that it will not be worth fifteen.
The bonds of the new road may float gayly
of at par when put upon the market,
and be worth it. The last road finished
around these parts was Mr.. Scott's
and Mr.. Cassatt's Philadelphia & Nor
folk, whose bonds are at par, though they
amount to more than the road cost large
value Of their project, however, was in its
traffic contract with the Pennsylvania rail-
road. There is no doubt that the value of
the scheme itself is large part of the
value of new railroad, which will be valu-
able according to the business it can CON-
mand. 1t may be that the sagacious men
who see future business in railroad en-
terprise should be allowed to bond that ex-
pectation as assets, equally with the iron of
the track. But the trouble is that there
are many men, who are not saga
cibus, who think they see such things
and we have found to our cost that it does
not do to let every Tom, Dick and Harry,
build and bond a railroad on great expec-
tations and so our constitution forbds it,
Weare heartily sorry for Mr.. Vanderbilt
and his sagacious partners; but we see
nothing for them but to drop s25, ,OOO, 900 of
their capital and trust to the appreciation
Of the solid $4,000 900 for their reward.