The Portland daily press., 1894-11-20
FEARED IN GERMANY.
American Railroad Securities Dis
trusted in the Frankfort Market.

Investments Formerly Sought for Are Now
Considered Dangerous.
Frank H. Mason, United States consul
general at Frankfort, in a special report
to the State Department, states That
American railway securities have tallen
into bad odor in Germany, and he en-
deavors to point out the reasons THEREFOR
and suggests measures for rehapllltatlnS
them in the financial world.
He says that in Frankfort, which was
the first European money market to &C
cept United States bonds during the dark
days of our war, and where American
investments had been popular, not only
are our new securities refused because Of
American origin, but those railroad
bonds and stocks held for years have been
returned to America and their proceeds
invested in less remunerative Prussian
consols and their standard securities
backed by government credit and super
vision. The consul general says:
"The cloud which overshadows Ameri-
can railway securities in Germany has
been raised mainly by the revelations of
the past two years concerning the man
agement of several leading railway
properties. German investors were
heavy losers, and their losses served to
call the attention of the people and press
more sharply than ever before to the
usurpaGions of power and evasions OF the
responsibility, which, it is claimed,
have become so freq uent in American
railway management. European bond
and shareholders have been informed
that the power of the president end d.
rectors of many important railway
companies has become practically ON
nipotent and irresponsible.
"They have sent over protests and
proxies to be used at elections for the
purpose of wrestling the contro. OF cor
porate properties from the hands OF
officers who were said to be abusing
their trusts, and they have seen these
and every other effort toward change
easily aud hopelessly defeated.
"That railway presidents and directors
enjoyed large prerogatives and lmmunl-
ties, and that the rights of security hold
ers were but partly protected by Ameri-
can laws has been, of course, well known
to European investors for years, but
that president or director who has
abused his trust may be appointed as
receiver of the same property, and, un-
der such new mandate, continue his pre-
vious course, and that the accounts of
an entire railway syvstem may be falsi-
lied and it's securities sustained in the
market by fictitious statements OF earn
ing and cUncealment of rebates--all
of which is believed here-are discover
les Of recent date" The consul general
cDoo1yo opprovipoIv af an ab1a mOnO-
graph by DR.. Alfred Won der Leyden,
an expert official of high rank, on the
financial and operative management
of American railways, N which the de-
fects and weaknesses of the present sys-
tenn are probed with skilful hand, and
says it would be national misfortune
to further deprive our legitimate enter
prises of the aid of foreign capital.
which is likely to happen unless re-
NEEDY is applied. Continuing he says:
The Uniform reply of German fnanciers
when asked what is requisite to restore
European confidence in American rail-
way securities, is that such corporations
Mould be brought under the control of
! comprehensive federal law. Tradition,
,ducation and experience have alike
aught the German that, whatever may
De the existing form of government in
my country, the one sure source OF pro-
lection and safety in the presence OF DAN
yer or conflicting interests is the supreme
authority of national CONTROL"
Consul General Mason says that the
German railroad license system is not ap
plica BILE in it's en- tirety to America, but
ldds in conplusion:
cit is believed by many, whose ex-
perience and interests in both countries
Bntitle their opinions to respect, that it
a statute applicable to at least all rail-
way companies of the class now subject
to the Interstate commerce law, and
which shall be clear, precise and inxor-
able upon the following topics:
Il. Regulations of the elections of
railway officers SO that such elections
shall be free and open, and represent Hdi-
rectly and fairly the wishes and interests
of security holders.
g. Creation of national bureau OF
publicity, inspection and control, provid-
ing for the regular publication at stated
periods of certified reports, showing
fully and accurately the earnings, ex-
penses, act of directors and all business
results which affect the value OF COR
porate property.
"3. Making each violation of the law
by any act Of usurpation or willful mis-
management crime, entaillng imprls.
onment, and requiring federal prosecut-
ing officers to institute and conduct
prosecutions for such offences.
t. PfoVlu1ng thorough Ie'islol VI
the system of proceedings under which
courts of justice now appoint receivers
to manage railroads, aud making the
president or director of a defaulting cor
poraton ineligible for appointment rs
receiver of the same property.
Until some general measure can be
adopted and enforced, and foreign in
vestors can have the assurance they ask
for that the published statements of
American railway companies are correct
and true, and that such maladmin:s-
tration as has been revealed in the affairs
of certain systems is no longer possible,
all such investments in United States
securities will De more or less discredited.
securities Of American origin will
suffer-"