Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1893-07-13

trusted: but Il is strange that another
period Of crcdnliy should come. allow
Ing new mutations and fresh issues OF
fictitious capitalization. Suspicion u the
natural aud legitimate condition while
such practices are possible The gigantic
wrong upon investors, nefpetrnted "
the creation Of this SiIOu, OrOOOO of
fictitious railway Investments, Is Que .
the most serious and unanswvrahlt
counts In the indictment against the
railway kings. Besides this Imposition
On the confidence OF the public, the prnc.
ticc OF stock initiation reacts disastrously
upon legitimate railway interests. The
loss which this wanton violation of public
confidence inticts upon the railways
themselves. Is apparent In the rate Of
interest which they must pay Oh their
bonded debt II the bonds " the rail
ways were confined tn onc-hhlt the act
ual and honest cost Of construction, they
would he eagerly sought for AZ 4 per
cent, aud In that ease, St2,Wh,oOh would
have sutliccd to pay the interest charges
IN 1854. This should have left from
the net earnings OF that year SlsbOON-
600 as net profits, instead of SoluOh-
600 realized under the rule 0t Initiation:
81 that the socont count In the indictment
against stock initiation * that IL has for
several years inflicted an annual loss
upon the honest shareholders of the rail.
Ways exceeding hundred million a
year"
After recitlng other evil effects Of
stock aud boud watering, the author
saws
"Our last charge against the practice
Of over-canitnlzation Is that II assists
railway managers TO manipulate the H.
nancul markets. II Is unfortunate that
the railway men. who have lainentcd,
before investigating committees, the nm
remuncratiyc character Of railway invest
~. Il - INtn In
remarkable increase of personal wealth
among railway mnnngois, which has
taken place during years Improbable
for shareholders Of the seven great
fortunes Of the East, five have been made
In railway management; of the eight On
the Pacific coast four are the result of
the same business. of these nine great
railway capitalists, eight have been con
ncctcl with the creation Of fictitious
securities and excessive capitalization, de-
scrlhcd IN the preceding pages. l.nscru-
pulnus management can not only impose
fictitious securities upon the public, but
II can make enormous profits, by arliii-
cally causing vast fluctuations In prices,
To the hurt aud decentralization of the
financial world. BY their agreement or
their disrorl the munaprrs can pr0dnce
large advances In the market value of
railway securities. When the New Norl,
Central and the PENNSYLVANIA railroads
nopolies In New York and PENNSYLVANIA,
the gain to the Vanderbilt interest, by
the advance IN stocks, was greater than
It's entire investment in the properly which
Il sold out, This IL hut one Instance.
The advance un railway Investments
succeeding the formation Of the pool,
from 1876 To 1879. has been estimated
Ia exceed thousand million Of dollars;
the gain In the dividends from that cause
has nut Amounted to q tenth OF that
sum In all the succeeding years. The
depreciation In railway values brought
about by rivalry, by the ,wcakhcfs Of
watered capital, and by the efforts iu
enforce the combination policy has been
more than i've hundred mllliuns, the de-
crease In profits t0 shareholders Inns
been less thnn . per cent VI that amount.
| Can there be a doubt IN the pfescnce
Of such vnst changes In iprkcl values,
and such comparatively slight fluctuations
/ In the actual results OF railway opera
| lions. that q large share Of the railway
management Of The Atlinn has consoled
1 itaelf for The miAiurtuues Of stockholders,
| by accommodating private fortunes, thc
( speculntiOns heing made safe aud ensy
by prior knowledge Of the combinations
| on qlinrrcls which produce these results
"1he financial frrohuOting which rail-
/ way managers have the power TO practice
I ~ a vast subject Even the practice "
/ atocli-watcring aud pooling seems 10 be
] SURPASSED hy the achievement al a
| prominent railway adventurer, who,
/ practically confcssing The betrayal Of
! his trust Us president Of the Erie rail.
way. restored SN,VlO,OM of the diverted
/ securities, and then made profit Of
I his shame. realizing 10y the advance Ia
/ Erie share more than the value OF the
| stocks and bonds which he had returned
| To the corporation II this l. part of the
| history of the second railway shnn'.
| holder nf the nation, whit doubt re-
mains that many mothpla Of cnhnnciup
their fortunes ~ the expense Of the public
/ and Of their own shareholders are hn.
/ btually practiced by railway managers
! who value great wealth more than oh,
scurc intcgrityg They have the power
10 tranufcr the money of Investors 20
tllir own pockets by the sale Of inflated
stocks aud bonds, by contracts with
/ themselves Us constructions companies,
| by forming combinations or declaring
/ wars Of rates TO produce wide nuci,in.
I lions In the stock mnrket, by running
subsidiary or rival lines, aud by such
| practices MS were described IN former
chapters DETERMINATIONS. contracts with
! fast freight lines, with eyenOrs, stock
| yards transfer companies and warehouse
men; aud whether the exercise OF these