The record-union., 1895-05-15
A LESSON IN RAILROAD BUILDING.

A LESSON In RA1LROAD BOILDlNOs
If our esteemed contemporary. the San
Francisco Examiner. were given to
thoughtful or reasonable contemplation
of any subject, and if as result of calm
and judicial consideration it wrote about
it would not have charged upon c. 2.
Huntington the statements made in the
Val Street Journal relating to the pro-
jected San Joaquin Valley Railroad. The
financial journal had the following:
"a gentleman VINO has just returned
from an extended trip over the Southern
Pacific says. referring to the San Joa-
quin Valley Railroad: THE whole busi-
ness has an opera bouffe aspect. Sub
scriptions are being solicited from people
in small amounts, of a dollar at time,
with the ladies' club actively canvassing
for them.'"
The clesrest views are often obtained at
prominent features alone manifest them-
selves. One Of the characteristic efforts
to build the San Joaquin Valley Railroad
was the effort made by the Examiner. 1t
took up the subject with the statement
that the capitalists had exhausted them
selves in their efforts; that no more as
sistance could be expected at the hands
of the moneyed men Of the country;
that the success of the project was de-
pendent upon the common people. They
therefore offered gold watch to the per-
son who would form the first club to
take ten shares of Sl0o each. They
printed coupons-blank subscription
forms. and asked that they should be
filled out and sent to the office Is sent
special train through the valley. intend
ing to go as far as Los Angeles, soliciting
subscriptions to the road. The train did
indeed go as far as Fresno. and then re-
turned home, having scored a conspicu-
Gus failure. We speak of these things
dispassionately; not with any view OF
criticising our contemporary. but for the
purpose of Interpreting the lesson which
this species of newspaper interference
with commercial undertaking teaches.
A railroad is built with money. The
stockholders may not OWN the money;
they may borrow it, and the mortgage
they put upon the property to secure the
repayment of the money they borrowed
is usually in the form of bonds of 81, 600
each. A railroad which is demanded by
the commercial interests of any country
can make showing to that effect. ana if
1t can the money is not difficult to obtain.
Men loan money on reasonably good
security. There are money markets in
the world where vast accumulations OF
capital are idle, where it is with the ut
most difficulty that one and q half or even
two per cent. can be obtained. Railroad
bonds bearing six per cent, payable
eemi-annually, where there is reason
able probability that the interest will
be paid for twenty-five years, are
excellent securities, because, if the
coupons are met promptly for twenty
five years, the principal is returned as
against any rate of interest which can be
had in the home market. In market
where the current rate is per cent, a
rate of per cent. practically returns
per cent of the principal each year; and
in twenty-five years, therefore, the in
yestor in railroad bonds has received his
principal back, and has had per cent.
upon his money. Railroad bonds cannot
be fioated in q money market like that of
San Francisco, where the rate Of interest
is6. and per cent. on approved secu-
rites. There is not sufficient volume of
idle capitaI to take the extra hazardous
risk of bond investments of this kind.
Hence it is that foreign money markets,
where there is a large amount OF Idle cap
ital. must be appealed TO.
Now. our contemporary will bear with
us in patience while we say to it that
nothing has so signally discredited the
San JOAQUIN Valley Railroad as its own
coupon device IL was an appear from
the profitable commercial aspect OF the
enterprise to its charitable or eleemosy-
nary aide. 1t was confession as broad