The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1908-01-18
SATURDAY. JANUARY is. 1908.
As every thread of Gold Is Wilt
able. so 1. every minute of Iimc.--
Mason.
WHAT IS wArEnEp srocN.

In another column Will be found Il
letter from q correspondent, in which
he claims that the dividend obliga-
tions issued by the Richmond Fred
cricksburg and Potomac Railroad were
not "watered stock" He says that the
4 original issue of such scrip represented
money earned, which belonged TO the
stockholders, but was not distributed
being used instead for improvements
and betternents. Granting that to- be
true, and we do not dispute It, were
not the scrip, dividends OF the Atlantic
81 Coast Line declared upon precisely tn.
same principle? The only difference was
THAT the Coast Line added the new
stock TO the general capital stock OF
"a the company while the Fredericksburg
& road called its new stock "dividerd
obligations" without voting power.
+ Our correspondent further says that
s'as most people understand II, watered
stock means stock issued not represent
ing any actual money put in the cont
pany. On the contrary. We think that
most people understand that stock IS
watered when the number of shares Is
arbitrarily increased. From cold
hlooded point OF view this may or may
no, be justified by the earnings of the
company but In either event the stock
is watered. according to popular under
stunding.
The conservative directors of the
Coast Line felt that the earnings OF
that road warranted them in Issuing
scrip dividends to the stockholders
hut it was common talk at the tins
that the company had watercd IL.
stock.
Our correspondent says that tbs
fredericksburg road issued scrip divi
eIends in 1881 to reimburse the stock
holders for dividends earned, but no
distributed But what of the divden'
obligations issued in 1906? In tina
year the Sinking Fund Commissioner
asked for further scrip DIVIDEND
half of which was Issued. and no.
shey say that the condition OF til
company justifles a further Distribute
OF % per cent Does that official state
,nent refer TO earnings prior to ISIS,
which were used in Improving tn
property: No. The commissioners mea
that the present earnings are suii
+ cicntly large TO pay . per cent. ar
nua.iy upon double the original cap
talization. Fl plain. terms the con
,nissicners .sayy.tAat' the time has con
10 cut another melon, as the Wa
Street term goes; or. as the poop
say, to add little more water
the stock. Gentlemen may draw Il,
distinctions. but that Is the plain ia
of the case, and there Is no escape. II
commissioners have committed ther
selves to the proposition that the ear
ing capacity of railroad which
honestly operated and whose charS
are neither excessive nor discrimin
tory. furnishes the true basis of cal
tali2ation.
The Times-Dis patch does not disp,
that proposition. 1t agrees with
81 commissioners that the condition of I
4 fredericksburg road justfies anott
scrip dividend of rs per cent. We ha
rot condemned the officers of the co
rany for watering the stock" I
a. meant TO do so. But we hold that
does not lie with the State to prohi
other roads. similarly situated, fr
dning wha, its own road has done W
Its full consent and approval.
Railroads arc as much entitled
share in the prosperity of the coun
and increase in value as other ent
prises. Railroad investments are
titled to the same rights, priytlet
Dement'S and consideration OF COVE
,laent that other investments are
titled 10. And we believe that the p
pie at large are beginning TO ree'
that this principle is not only sou
4 but eminently wise and progressive.
AR{es4sl n