West Virginia Democrat. [volume] (Charles Town, W. Va.) 1885-1890, 1888-03-30

public had confidence in the good
faith of railroad managers, capital
readily responded if the road was
favorably located. But a change
has come. While it is true that
many gentlemen of the highest per-
sonal honor are in railroad employ
ment (and it is very far from our
purpose to suggest the least impu
tation as to them) yet it is public
knowledge that these corporations
are sometimes managed by men
who grievously lack personal integ-
rity and that the secret system has
we'll nigh destroyed confidence in
railroad securities. THERE'S wide
spread belief, which rapidly grows,
that railroad business is conducted
by sharpers; unwary investors have
so often been swindled that sensible
people (unless admitted to what is
called the ground floor" fight shy
of these securities.
1.-THE GROUND FLOOR"
The modern methods of corpora
ton management have introduced a
nomenclature unknown to us fifty
years ago and an explanation of the
phrase, 1.-The ground foor,' will clue
idate the chief cause which now re-
tards railroad building.
When few INSCRIPTIONS men of
superior shrewdness forecast poll
cy Incorporation management where
by they will obtain undue advantage
over their partners in the enterprise,
then such men are SAID to occupy
the "sround floor" Thus, for ex-
ample, they contract at a low price
for property that will be needed by
the corporation and t hen induce
their company to buy it at high
valuation; or methods are adopted
under which the interest will not be
paid on the securities and practices
are followed which dishearten dis
tant bondholders until they are will
ling to sell their bonds at price
below their real value, IN which
event number Of bonds are bought
at sacrifice; a receiver is then APP
pointed and when the property is
sold at receivers sale it is purchas-
ed by those on the ground floor call
freezing OUT" their original part
ners. The following quotation will
still further elucidate this subject:
I'm public estimation there are
two classes in railroad enterprises:
First, those who occupy the ground
floor, to-wit: few confederates who
occupy a position to freeze out the
others; who occupy a position that
enables them to manipulate the mar
ct value of such securities as may be
issued by the company; who occupy
position which enables them to
misuse the possession ola highway;
who occupy position to make
profit by becoming contractors for
the work and to make profit by
purchasing property at u low price
and selling it at high price. The
second class are the bondholders,
viz: such outsiders as have been
foolish enough to entrust their mon
ey to a set of sharpers."
This is bird's-eye-view of mod
ern railroad methods and things
have come to such a pass that no
sensible man dreams of investing in
railroad securities unless some trust
ed friend is a member of the secret
syndicate on the ground floor. tits
true, individual citizens sometimes
subscribe to the stock but they gen
orally own property along the line,
which justifies them in making what
they regard as gift to the corpora
ton.
Those who consider the foregoing
observations readily understand
that there will be but little activity
in legitimate railroad enterprise I'M
til some system is devised which
will compel the inside managers to
conduct the business of railroad
corporations openly and not secretly.