Idaho semi-weekly world. [volume] (Idaho City, Idaho Territory) 1875-1908, 1889-06-21
RAILROAD BUILDING.
How 1t Il Made an instrumentahty io'
kobbing the People.


Kobbing the People
The need OF the country Tor IN
creased railway facilities is not the
reason why l4.Sl8 miles OF new roso
have been placed under construction
or contracted for in the first three
months OF the present year. Inc IN
cilitles which the issue OF new bonds
and stocks offers TO spectators 10
make money easily is the true explain
alton OF this large increase In mile
age. For every thousand dollars IN
vested In one OF these enterprises, on
an average. bonds and stocks are is-
sued representing three times that
amount. These are noated by banking
houses, and then follows u struggle 10
make the roads earn the fixed charges
and nav q dividend. This effort Is
rarely successful. and If 1t does sue
coed it is at the expense of fairness
and honesty. Shippers and passen'
gers are charged excessive rates 60
nav interest on bonds that do not rep
resent an actual outlay or DIVIDENDS
on watered stock. But the projectors
of the road reaped their harvest when
these bonds and stocks were marketed
and they are ready to go on repeating
these tactics rs long as they can mar
ket their goods.
The people who are misled into In
vesting their money in these enter
prises are not the only ones to suffer.
The stockholders in old established
lines are injured by the cut-throa'
competition of these speculative roads.
The railroads of the country are now
! experiencing the disastrous effects OF
this kind of business. 1t was thought
few months ago that 1t had beer
checked by the promise of reputable
bankers to discountenance the efforts
to market the securities of new enter
prises of this character. But this
proves not to be the case
as during the first three
months of this year 666 new
lines have been chartered, with II con
templated mileage of SO. 436 miles, o
which nearly $4,000 miles are under
contract. Probably the greater par
OF this mileage will return fair In
terest on the actual investment Wha
is needed more than any thing else il
legislation to prevent the issue o
bonds and stocks above the actual cos
Of constructing and equipping II rail
road. This is where the trouble come
In.
Few persons realize the enormou
and perpetual burden imposed on tn
people of this country by this system
OF "overcapitalization Mr.. Henri
V. Poor, recognized authority o.
railroad statistics, estimated that O
the capital stock, bonds and other evl
dences of Indebtedness issued by til
railroads of this country, amountin
at the close of 1888 to 81, 495. 47l,3l1, "a
least 81, 900, 900. 900 represented what
known rs "watered stock" Anothe
estimate based on the returns up to 1888
placed this watered stock at 50, 900, 900
900. The people of this country al
paying hundreds Of millions OF dollar
, in the way of dividends and intere'
on these fictitious securities. And We
, instead of this species of fraud havin
suffered a check, it seems to be on tn
increase. Pennsylvania is one OF tt
few States that have legislatod wisel
on this subject. 1t is shameful TIL;
{ a vital necessity to the whole countr
= like railroads should be made an il
: strumentality in the hands of fe
Q persons for the systematic robbery {
o the people. Philadelphia Press.