The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1913-05-06

ON WATERED CAPITAL
S22,0OO,OOO WASTED
Thirty-six Millions in Business and
Bonuses to Stockholders
and Underwriting Sydicates an I'M
portant Factor in the Business.

WASHINGTON, May 6.-That the
New Haven railroad has lost during
the decade 1900 to 1910, S24. OOO.OO0
through its issue of security for cash:
that, through its methods of floating
stock it has lost the use of 81 900. 900
worth of capital during the period
from 1SS9-19ll; and that the interest
and dividend charges upon watered
capitalization have already amounted
to about So, 100000, and continue to
drain the resources of the company, are
some of the conclusions drawn from an
examination of the reports of this
company on file at the Interstate com
merce commission s offices in Washing
ton. review of these facts, pending
closing arguments of the inquiry here
on Wednesday, is interesting as show
ing why 1t is that the commission has
heen going ahead on such seemingly
secure ground.
In the course of the recent sessions
in Boston relative to the financial his
tory of the New Haven, chief empha-
SIS was placed upon the losses that had
resulted to this property through ex-
change of its own securities for those
of other properties, which it had alb
sorbed in recent years. But the phase
muses. to stockholders and underwrit-
| ing syndicates is no less important, for
! by various means the system has ap-
parently lost the use of immense
amounts of capital upon which inter
est payments have to be met at the
| present time from operating revenues
During the past ten years, for in
| stance, as the analysis of the figures
| shows, the New Haven has issued new
| capital stock to the par value of $SS,-
/ 977 ,325. Of this amount, $50, 100000
in round figures was issued for cash
/ The market value of these securities
was in round number $54, 100000, but
through granting the privilege to
stockholders to subscribe for these is
sues at par, or through commissions to
underwriting syndicates the New Ha-
ven, it is reckoned, received only S45,-
100000 in cash proceeds. The loss TO
the company therefore was approx
mately $9,000,000. During the same pc
riod $l5,00O,0OO the calculation shows,
was lost through the issue of deben-
lures, or, in other words, an estimated
total of $24, 100000 was lost through
4 the issue of securities for cash during
the decade 1900-l910.
During the period 1899-191l it is
shown by an examination of the rec
ords, capital stock to the par value of
$71 100000 was issued for cash by the
New Haven. Had the company re-
ceived the full market values of these
securities, it would only have been
necessary to have issued $54 100000 in
order to obtain the cash proceeds
! which it derived from the issue of 81,
100000; or, in other words, the com
pany through its methods of floating
stock apparently lost the use of $l7,-
100000 worth of capital. On this
amount dividends have been paid up
to date amounting to more than $l4,-
100000.
Considering the funded debt and the
stock issues of the New Haven tOgeth
err. it is found that the bonuses grant
ed to stockholders or to underwriting
svndicates have amounted to about
$36 900, 600 The interest and dividend
charges which have been paid on this
watered capitalization have already
according to reckoning, amounted tC
: about $50, O0O,O 900.