Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1893-07-13
vol. XVII NO 2s9


deeply Those who control corporation
"A are Interested. directly or indirectly,
IN the stock Of corporation ~. In
slch cast, there Is no actual watering
OF securities, and got the payment OF
tnc dividend ON the stock Of corporation
Is, winch was previously optional, has
now become AZ obligation or debt upon
corporation N ~ the same way that
the payment OF interest on It's bonds
and ON the bonds OF corporation "B' In
deht
The hSod charges OF the two corpora
tons have, therefore, been Increased liy
the amount OF rental or dividend agreed
70 10 paid ON the stock of corporation
~
lie also says:
The second form OF watering occurs
unhcr cover Of construction companies.
II the charter authorizes the Issue Of
capital stock aud bonds 20. an amount
which is IN excess OF the actual cost OF
CONSTRUCTION AMI equipment, ana the or
EaliHors OF The corporation are unscru.
nulous, they are apt to seek for some
way NJ which they cnn appropriate to
themselves such excess OF bonds or stocks
ny may not be- needed 10 raise the amount
necessary TO BAY construction aud equip
ment expenses.
"a simple way TO accomplish this emit
is 10 organize q construction co.npany,
and then ~ ~ and U under the
name of the railroad, street railway,
water or gas company, make contract
with themselves under the name OF the
construction company, by which the con-
struciinn company agrees tn do the work,
aud the railrond or other company agrees
TO pay therefor IN stocks aud bonds.
the par value of such stock aud bonds
bong perhaps double the actual, reason.
able cash cost OF the work; "A ~ aud
C. under the cover Of the construction
company, negotiate as much of the So
ouritirs as may he necessary 10 pny
the expense of doing the work. and d.
vide the balance of the securities among
Themselves
'"rhls Indirect method Of misawropriat.
Ing the securities IN regarded ns much
more safe than more direct methods,
which would accomplish the same ends"
Aud copy two other paragraphs
from this able address lilo says.
VI nm also informed TINT there Il ON
file at the state house the returns Of at
least one CORPORATION organized q year
or two ago under special act simllur TO
tlosr now pending. In which the stool,
il returned ns Of No value. lnusmuch
as tho compnny claims to have been
opernted az a profit tbn natural inference
* that tho nctunl cost nf the road was
not the sum total nf the pnr value 81
thp stock and honds issued but only
enualled the fncr value Of the bonds"
And thnt.
'Frhp hoard of railroad commits sinncrs.
and NOT Tho legislature, IL the proper
authority 10 determine whit amount nf
securities shnll be- nuthorlged.n
regret that | cannot quote his en-
tire address, Ii is a lucid exposition ~
the manner IA which the more accom-
pIishod class Of plundcrcrs rob the peo-
Me Thev do not a,lnpt tho more common
and prossor method Of swindliug. by sim
piy printing stocks and honds for which
nothing ls mid or eNpMitcd TO be paid.
md nppropiInting them or their proceeds
fn th1lr avn Individual use.
1 also gnoie whit tho railroad COM
missioner Of the state of Georgia says on
this subject In It's annual report for tho
wear 1882
"Rnlroad companies ought to have the
opnortunity of earning n reasonable re-
ward unon a fair and lust ynlnaticr of
their property. On a lust basis they
ought 10 b. aide 10 onrn dividend. In
terest and dividends ought not to be-
computed on ovcr-ssucs ~ stocks md
bonds. nor On floating debts thai result
from e.trayaganoc mud acknowledgement,
nor for the purnose of speculation.
"a grave public wrong cOnfrohts the
country in the use of railroads IA
a. ,..aut. mud .sufAah TIM unuNulufnr4