Fort Worth daily gazette. (Fort Worth, Tex.) 1882-1891, 1890-04-12
Watered Stock and Watered BOnds-HRrd II
Tell Who the Injured Party Is Where
There are no Dividends.
BY AN OUTSIDER.
No. II.

greater degree of forbearance. I do not
pretend that this is all that can be said
against the management of the railways.
Instances might be multiplied indefi-
nitely, but l have sand enough to cause
railway managers to reflect, if, indeed +,
they ever reflect, upon the relations be-
tween the corporations and the public
they serve and from whom they receive
their patronage and support.
What have written will be applauded
and approved by the people and
Will, doubtless, be criticised and
condemned by the corporations. But
the latter will have the consolation of
knowing that the situation will be re-
versed from what follows, and they are
to have their innings, and that the dear
people VIII upbraid and condemn, now
that few words is to be spoken in be-
half of the corporations, and in criti-
cism of the actions of the people both IN
their individual and public treatment of
the corporations. 1t should be remem-
bered in the outset that these thoughts
are not presented with the faintest hope
that they will exert any influence upon
that class of the public who are running
for office upon anti corporation plat
forms, or who consider it no offense to
but that they are addressed to the sober
right-thinking class, who are willing to
accord the same rights to unnatural
persons' that they do to nat
ural persons, and who are willing TO
do justice to all.
Much of the clamor against corpora
tfons is but the vapid frOthings Of politi-
cal mountebanks, whose mission in life
seems to be to create strife and conten-
ton, and who fatten and thrive on the
misfortunes of their fellow man. From
this class it is futile to even hope for
patient hearing. or to receive credit for
honesty or sincerity of purpose. They
condemn without hearing every effort to
present the issue fairly, or word spoken
sin opposition TO their expressed opinions.
No newspaper controversy is sought in
preparing these papers. None VIII be
INDUCED in. Any misstatement of fact
will be conceded when the proof is pre-
sented, and any unjust conclusion will
be corrected when convinced of its
falsity.
In the first place, few words will be
said about ''watered stock, theme
upon which the changes are rung
with great unanimity upon every ros-
trum. A few 60 so far as to accuse the
corporation of watering their bonds, -
but none, to the knowledge of the writer,
has ever had the temerity to explain the
modus operandi of Watering bonds.
Watering stock is a simple process, but
watering bonds is known only to the i'm
aginGtion of the financiers who pirate
upon the hastings against the heartless
corporations. They have never divulged
the process by which this is done, and
the secret will probably die with them,
if they ever ''shuffie off this mortal
coil -
If stock is "watered. - it will puzzle
the most adroit manipulation of the Ian
guage TO explain who Is injured by the
process, so long as the condition of the
railways is such that they do not earn
fixed charges-interest and operating ex-
penses-and make no pretense of paying
any dividend on the stock, whether arid
or irrigated. Not a single mile of rail-
way in Texas has ever been in condition
teSRay a cent dividend, and 1t is hardly
SpF6bable that any of them ever will, I'M
less there is a great and radical improve
ment in the volume of business done.
This may be dismissed with the state
ment of facts, until some one points out
the injury done to the state, to the pub
lie, or to an individual. Why the stock
is watered will be considered later on.
Another great cause of complaint is
that the roads are bonded for more than
their actual cost, and therefore increased
tariff on the transportation of freight
ard passengers is essential in order to
enable the roads to pay dividends. Is
this true? Is it 8 fact that the roads are
bonded for more money than is neces-
sary to construct them from the pro-
ceeds of the bonds? At the first blush,
-
when disseoted and analysed, it may
prove to be fallacious. From the comp
troIler's reports, made up from the
sworn statements of the managers of the
thirty-seven roads doing business in
Texas, it would appear that there are
1859 miles of road in the state, the bond
ed Indebtedness of which is S233 ,SII ,272,
or an average of $50 $50 per mile. Now,
it viii not De coutended that every mile
of road in Texas cost $50 $50 per mile,
nor will it be said that there are not
many miles that cost thrice and four
times this sum. A company cannot put q
bond of $40, 900 on one or more miles of it's
road and SIS, 900 on another that actually
cost this sum to construct. The bond andg3
mortgage to secure it must be for a GER
tain sum per mile sufficient TO cover cost
of construction Of its entire line.
but Lne discrepancy. between the
bonded Indebtedness and the average cost
of construction of the railroads in Texas
is not accounted for alone by the differ
ence in the cost of the road and the
amount Of the bonded Indebtedness. In
the first place the bonds do not sell for
their face value. Eighty cents on the
dollar is the maximum at which these
bonds are marketed which accounts for
20 per cent. of the difference. Again |
the constitution and laws fortunately |
for the railroads) authorize the corpora
tions to borrow money for the construc-
ton and operation of the railroads. |
But for this, every road in the |
state would have been foreclosed, if not |
wiped out OF existence, long ago. There |
is no road that has paid its fixed. charges |
for the period of its construction, when |
the interest and expenses are going on, |
or for a number of years thereafter The