St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1885-06-20
NO DIVIDENDS.
Railroads All Over the Country Sympa-
thizing in the General Business
Depression.
Both Tariff and Traffic Have Been Reduced
to Their Lowest Possible
Figure.
Many of the Roads Operated at cost
and Some at Posi-
tive Loss.
The Eastern Lines Feel 1t the WORST
--Dire Predictions for
the Future.

rates. ON what there is have brought low the
earnings of all the principal railroads III the
country. To advance rates is to still fur
ther diminish the traffic. They are down
TO what it will bear, no more. Ihey VIII
rise as business increases, but IL is agalnsG
all experience that they should rise 10 the
como level as before Railroad history
shows a progressive movement, though not
a regular one. to minimizing rates. The
remuneration for doing the work and the
cost of doing it alike move inevitably to
lower level. but at this time it seems to
have reached its last possible minimum as
to cost. while the remuneration presses SO
close to this as to leave in most cases only
the smallest margin of profits, while IN
others the work is done at cost or positive
loss The through traffic between Chicago
and the seaboard is done at cost. 1t Is
so with the traffic on the lakes and canals.
There are no more canals and lakes than
there were last year, and most likely no
more boats: vet the rates by waterways are
down to bare cost. In short there is no
more profit in the transportation business
than there is in-say, the manufacture OF
print cloths, in the making OF steel rails, or
In the iron manufacture. This is an era OF
low rates. because it is an era OF small
profits in all departments OF industry.
THIS MATTER HAS BEEN DISCUSSED
more OF less from time to time, but never
more thoroughly than at the meeting OF the
trunk line presidents at New Y 0rk recently:
While the special causes of the different
troubles among the Western trunk lines,
Or. as they are Familiarity termed, the
granger roads, are of more or less tecnnl-
cal nature, the general causes are undoupt-
eddy the same as those trouDllng
the Eastern roads, The railroads west
of Chicago are not exempt from
the effects of the depression of business
and stagnation of trade common to the
whole country. Indeed, as much OF this is
due to the partial loss of the foreign grain
markets. making unremunerative prices for
articles of this country's largest export, and
as these Western and Eastern trunk lines
are the great grain carriers, they are right
in the line of getting full measure OF the
general losses. From sufficiently definite
causes the worst effects were felt first in
the East: but there is no setting a limit to
the movement of these great waves OF in
dustrial depression. The Western trunk
lines are beginning to feel their force, and
the usual results of quarrels about sharing
the diminished aggregate of traffic have
broken out, though the relations between
the roads are in better condition than
they were a few weeks ago. Probably the
most striking results of the industrial de-
preston are shown in the status OF the
Pennsylvania system, a system that has
stood at the head of Eastern rail-
roads. The last dividend paid
by that company was at the rate Of per
cent, but in the report it was stated that it
was not fully earned, and there seemed to
be a tacit understanding that unless bust
ness improved no more dividends at that
rate would be paid. Business has not inn
proved. On the contrary it has grown
worse, andsit will probably surprise some
people to learn that the net earnings of this
great system of roads for the first quarter
of this.year were about One-haf only OF
what they werein the same quarter OF 1880.
THE SURPRISING FEATURE
of thisis that 80 per cent. of the Pennsyl
yania,s business is local and non-cOmpeti-
tive, while for sound management and
thorough organization the road has no rival
in the country. The New York CentraFs
earnings have been known to drop to nom
dividend basis, and the competition of the
West Shore has been popularity assigned as
the cause. But the Pennsylvania has no
West Shore eating into it, and its competi-
tive traffic is only 40 percent OF its enormous
in half. This should be enough to dispel
the popular illusion that the whole trouble
with the trunk lines is owing to Mr.. Van
derbilts desire to crush the West Shore
road, whichjhas been a stumbling block to
the New York Central and in fact to the
whole lot of the Eastern trunk lines in the
matter of keeping rates at tariff, and If this
disturbing element could be bridged over
prosperity would soon return. 1t is strange
coincident that the Lackawanna road, itself
trunk line doing coal business like the
Pennsylvania, subject to all the competition
of other roads and the like depressing in
fluences on its non-competitive business, is
yet earning per cent. on its stock. The
past year has, indeed, been most dis
astrous one to the finances of the different
railroad companies throughout the country,
which accounts for the unprecedented
number of roads which have
gone into the hands of receivers.
Even Mr.. Goulds great Wabash
became almost insolvent, or at least it de-
fauIted in the payment of its first mortgage
bonds. and it was necessary to have its
rights protected to place it in the hands of
a receiver.
The public at large, perhaps, does not
fully understand exactly what or who re-
ceiver is, and yet have vital interest in the
question of receivers certificates and know
ing for certainty just what their status is.
When a railway or other property is placed
in the hands of a receiver, it is done in
order to protect the rights of those who
have liens on it. The costs incurred in this
action have priority over all such liens. A
receiver has the right, in order to prevent
undue depreciation in the value of the prop
erty and protecting it as it is, to use money
BEYOND ITS CURRENT INCOME;
this money may, under the authority of the
court, be borrowed on the security of the
property. The receiver has no right to Law
out money not essential to the preservation
of the property, although he may think that
its value will be thereby improved; nor can
he make expenditures for convenience,
or ornament. Still, in the case of railways
especially, it is often necessary to rebuild a
road, OF complete it, CT buy new equipment,
in which case the required funds may be
obtained by the Issue and sale of receivers
certificates The point is that the receiver
mustdo everything that can be done to
keep the property in safe condition and
protect the interests of the lienholders. The
receivers certificates, issued in conformity
with the preceding rules and after proper
notice to the interested parties, come in as
costs, and take precedence over all other
liens of every Sort Even where the re-
Ownership is on the application of the sec
ond mortgage bondholders, the certificates
issued by such receiver come in ahead of the
first mortgage. In the past there may have
been an abuse of this power, but there could
not have been if the parties interested had
been reasonably watchful of their rights.
There have been instances of great hard
ship where those who thought they had the
first lien have discovered that, when a sale
came. the proceeds didnot more than suffice