El Paso herald. (El Paso, Tex.) 1901-1931, 1911-03-21

canal or a turnpike, and the state
would acquire three-fifths of the
stock, permitting the highway to he
operated as a purely commercial Gu
terprise, with a ms jority of the board
of directors acting in behalf Of the
state. The difference lies in the fact
that the controlling interest in the
stock Of the railroad system was &C
quired in the process of reorsaniza
ton. and long after the roads were
built.
Started In 1902.
The story Of Mexico's launching into
railway finance begins with 1902 In
that year the Mexican National Rail-
road company was reorganized as the
National Railroad company Of Mexico,
under the auspices of the Speyer inter-
ests The chief object Of the reorgan-
ization was to convert the line from
narrow to standard gage. although
another aim was to offset the advan-
tage of the Mexican Central by reason
of its deepwater outlet at Tampico.
In carrying out this purpose the Spey-
er interests began quietly to acquire
control Of the Interoceanic Railway
company. controlled by British capital
up to that time. and operating a
through line between Mexico City and
Vera Cruz.
At this point president Diaz and his
minister Of finance were persuaded
that heroic measures must be taken
or American interests would dominate
the Mexican railroad situation. So
they decided to play the financial
game against the Speyers by buying
a controlling interest In the Interoce-
anic, which they did, buying on the
London market 5000, 900 worth OF
four and a half second debenture
stock
At this juncture minister Limantour
went to Europe, stopping IN New
York, Speyer, during an interview in
that city. offered to sell the Mexican
government Az percent Of the stock
Of the National Railroad of Mexico for
$4,000 600. accepting the debentures OF
the Interoceanic as half payment In
this way, owing to peculiar stock con-
ditions, the Mexican government got
controlling interest IN the National
although parting with its direct con-
troll of the Interoceanic- By this
transaction the Interoceanfc came I'M
der the control of the National and
as the National was controlled by the
government, it practically controlled
both nres
Mexican Central Merged.
In 1906 the Mexican Central, largely
became so poverty-stricken through
competition that it seemed as II a re-
ownership offered the only way out
OF its difficulties with acquisition by
American interests as practically fnev-
liable Diaz and Limantour together
worked out a scheme whereby the
government could effect a consolida-
ton Of the National and the Central
with itself IN possession OF a controll-
Ing interest in the merged lines, and
the new company a Mexican corpora
tion in the fullest sense of the word
They decided that they could effect the
consolidation and gain the control
without paying a single copper OF
government money in the transaction
The one consideration was the trans
ferring of the government holdings
OF the National stock to the new or
gaEization and the other that the gov
eminent should guarantee one Of the
issues of bonds Of the new company.
How well the merger has succeeded
from the standpoint of the Mexican
government is disclosed by the fact
that Of the $3.50. 900, 900 Of stock. Mex
lean currency, the government holds
controlling interest. secured practi-
cally on first Investment OF $4,000
600 Mexican currency The author
lied bond issue OF the National rail-
ways is SAT-, 900, 600. q. S. gold How
ever, only a part Of this has been is
sued to the present time. The remain
der will be issued in the future TO