Audubon County Republican. [volume] (Audubon, Audubon Co., Iowa) 1885-1894, 1889-11-28
a Gigantic Wrong.


The people OF various municipalities
in Kansas are resisting the cOnsumma-
ton of gigantic robbery, which the
Chicago Rock Island and Pacific Rail
road company, or Il ring of men behind
. it. has devised And the litigation
WHICH grQWS out of this attempt exposes
a most glariRg abuse ip the way of
watering stock and plundGring the pub
| lic-an abuse which is the more alarm
ing because it does not belong to the re-
mote past when such OutrageS were SO
notorious and universal, but to the i'm
mediate present.
Tie kaEsas municipalities in interest
are those that becQdle 'sHbsgrI bers to the
stock of the Chicago, KANSAS and Ne
braSka railroad, a company which is, in
fact. a part of the Rock Island system,
and which has been manipulated by
men inside the Rock Island system In
the interest of the latter, it is now sought
to copsqmWate an elaborate fraud by
forecloSing the ut1lgages Oh the prop
erty. thus cutting OIL ar stofknoiders,
except those inside the deal and who are
not only stockholders tut also bond
holders. The victimiZed municipalities
are trying to save their rights, and they
have at least succeeded in exposing to
public view an extraordinary situation.
1t is si,Gwn that the Chicago, Kansas
and Nebraska Aue was tQ;lt Pt total
cost not exceeding at the almost SO,
100000. This was every cent of actual
investment that went into the prop
erty. 1t is all the "bIQRCrty that
there is. And yet the records show that
the company issued OH this slO,OOOOO
! of value stock to the amount of $50
OOO,OOO. and sold first mortgage bonds to
the ani0uHt OF f295 ,Q4DuOn.
In fine, the situation is s.lIpiN this ::
that out of S55UUUD Of securities OH
this road, Sl5.UOO,OUO is water.
| The Kansas municipalities that paid
4 for their stock at par demand an ac-
counting Of tue pf0rendS of all the stock
and bonds. But THAT is ntlIilGr here
nor there so far as the essential fact of
public Interest is concerned. That fact
| is the prodigiOuS and continuing fraud
upon the public which such basis OF
valuation involves. TO maintain re-
! turns on such fictitious value the public
| is compelled to pay four or five times as
high as the legitirat2 investment war
rants. 1t is perpetual eS toItiOn, for
the companies maintain 1t from year to
year and seek TO maintain it forever.
And the trouble is that this evil of
fictitious valuation is well nigh universal
in the railroad system of this country.
| And tbs flesh example of the inveter-
ate abuse SHOWS tiita- .aFis i. no dispo-
sition on the part of railroad lllanpiers
to correct the evil or to amend their
ways.
The facts are of the most alarming
charactet. ftagAaDt as is the OffenSe in
this newly constructed fDad ~ tue west,
: it is not so bad as is the situation from
which the people of Iowa are today
suffering on account of the same abuse
| The total capitalization of the Chicago
:, Kansas end Nebraska is So, l33 pei
, mile, WHEREAS the uuIu&l value is not
over $4,000 per mile. ''".
Now, take the stocks and bonds pei
mile of leading railroad corporations
doing bqgiHesS in Iowa. The official
and certified hgNfes IA 1855 show for the
Chicago and Northwestern sI2S72.2l
for the Chicago, Rock Island aud Pa
citic, S56,6l4.SO; the Chicago, st. Paul
Minneapolis and Omaha, S44,S709l
Sioux City and FaGiHc, S69333.S7.
The comparison Is to the disads aatags
of the Chicago Kansas and Nebraska
because in addition to stocks and bonds
there Is included "other forms of in
debtedness," Wlefeas IN the Iowa road.
there is included only st6cKs ana bonds
making a difference in the favor o.
the latter of about $4,000 per mile.
Well, what does it all mean? Making
every allowance on the side of the cor
poratiOns, 1t means simply that from
One-half to two-thirds of the so-eallet
capital of western railroads are water
no actual value or capital or Investment
at all, but sheer fiction. What doe
this mean? Simply that out of every :
taxed by the railroads upon the peopl
80 cents 70 ~ cspts is pure extortion
Or, TO put it in another form, IL presen
rates pay returns on the present capital
izatiOn, then those rates are 90 to IS pc
cent. higher than Is necessary TO pa,
fair returns on the actual capital In
vested in railroads.
This is the situation today, and it i
4 one u most ominous menance. 1t is
| gigantic Wong, Which the people of thi
country, when they come TO lulIy i'm
derstand the facts, will not much longe
endure.