The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-09-10
Mr.. Hartman Abroad.

Southern Pacific makes extremely I'M
pleasant reading. Various theories are
put forward in explanation, some OF
which are wide Of the mark, but all OF
them are discreditable and distinctly
Injurious. The implied reflection is not
confined 10 what is known " the Harri-
man mapaSsment, but includes indi-
rectly all american railroad administra-
ton. THIS, we are glad to say, is unjust
and unfounded. The management Of
the Union Pacific and Southern Pacific
railroads is sui 0eneris, just as the man.
agement Of the Philadelphia Real Estate
Trust Company Is happily not charac-
teristic Of other American banking in
stitutions. When boards of directors
do not direct, but concentrate all their
duties and moral responsibilities in a
single individual Of known, or unknown,
disreputable proclivities, they must be
prepared for embarrassing consequences.
Tho theory which finds expression in
the London Times that the dividends
were declared for the purpose Of making
q market to sell on a market in which
not only Union and Southern Pacific
shares would be in strong demand, but
in which many other securities would
be salable," while affording the least
~discreditable hypothesis, would be re-
garded here in. New York as unnecessarily
far fetched. Familiar as we are with
the d~isgraceful history Of the Equitable
Life disclosures, our public is not slow
70 recognize the persons and practices
which are identical in the railroads in
question, the hdute finance of the one
being undistinguishable from the bdsse
finance Of the other.
1In the United States" observes the
Times, -the fear of not making money
which CARLYLE in his haste said was the
he'll Of the English, il, no doubt, a more
potent stimulus to INSCRIPTIONS BUSH
ness tactics than it is here, and these
dividend declarations were in excess Of
what was thought probable, but we have
often heard criticisms of a quite oppo-
site character upon American railway
finance, namely, that those who control
the lines are in the habit OF not distribut-
ing to the shareholders what has been
fairly earned"
This is an accusation TO which, when
we understand 1t, we can afford TO be
relatively Indifferent. American rail-
roads in respect 10 dividends are the
very antithesis Of English railroads. In
England everything that is earned above
the cost Of operation is conceded to be
tho property Of the shareholders. In
America we insist that the road shall
earn something for itself. During the
Last twenty years Of the constructive ad-
ministration Of our railroad properties
the most salient feature Of the business
has been the '~ploughing in Of earnings.
Dividends were withheld from the share
holders in order to devote the money to
the improvement OF the property. Mill
ions which an English administration
would have distributed among its share
holders have been devoted by us TO bet
terments of one kind or another, and
have been charged, not to capital ac-
count, but to operating expenses. The
result is that while the dividend history
OF our railroads Is not very flattering,
they stand to-day, as a class, at the very
head Of all corporations In the world.
English railroads, tested by the standard
of financial condition and resource that
we apply to our railroads, are all practi-
cally bankrupt.
To raise the standard Of efficiency
and economy in English r~ailroading IL
practically impossible. Only new capt.
tai can effect it, and no new capital can
be had under the conditions which have
been established, With the Board Of
Trade on the n hand and the ~inexora-
bic necessities OF the English share
holder on the other, the railroads Of that
country are between the devil and the
deep sea. It is something we have got
to face in our own country, where Gov
eminent regulation and Government
interference are beginning to be felt,
and where the same unfortunate results
that have been reached in England
and everywhere else in Europe-wilI
inevitably supervene.
However, so far az the immediate fu-
ture is concerned, our railroads present
q most creditable financial aspect and
n that is going to improve before 1t
AgbCA aNCo II "O haNC hCpl Jul budEb-
holders out Of dividends we have only
deferred their participation in the eff
cheney and profitableness Of the prop
erty. Their due has been sooner or
later returned TO them, and returned
with compound interest, in the shane
Of new certificates Of capital interest or
larger dividends, that would never have
been available otherwise. DO,
The Times, like most Of our trans
atlantic critics, judges us by the stand
ards Of corporate management as they
are understood and practised abroad;
and, al we have said, we can afford to
be relatively Indifferent to its censure
In view Of the substantial advantages
Of the conditions to which we have at
tanned. Our corporate shortcomings
have been many, and we humbly confess
that anna ~ thar ho,,o 49, l2-----