Eagle River review. [volume] (Eagle River, Wis.) 1890-1927, 1923-10-25
How Water is Pumped
Into Railroad Stocks
PUBLIC AT LARGE SHOULD LOOK
INTO BOOKS TO LEARN OF
HIGH FINANCE
By WILLIAM B. sHEARER

is that their credit has been exhaust
by excessive issues of liabilities, the
proceeds from which have been misap
propriated or diverted to the continue
ton of the payment of unwarranted
dividends and are but little reflected
if at all, in additions, betterments and
improvements.
Samuel Sloan, of the Delaware,
Lackawanna & Western, was one of
the honest, sturdy pioneers who help
ed to create this country. He was
born in 1917, and died in 1907 at the
age of ninety. During his tenure of
office as President of the Delaware,
Lackawanna & Western he permitted
the operation of no Sunday trains.
That road was created by him for
the sum of $42,277 ,O0O for which was
issued the capital stock of theasame'
amount fully paid. It's funded debt is
only $4,000. The $42,277, 900 cost in
cluded the purchase and development
of anthracite coal lands in Lackawan-
ma and Lucerne counties, Pennsylvan
ia, estimated in 1904 to contain 400,
100000 ton of unmined anthracite
coal
The company, beginning in 1854,
up to date, has paid dividends on it's
capital stock of from 8 to 20 per
cent per annum, besides extra divi-
dends of from 10 to IS per cent, and
a dividend, August 20, 1921, of 100
per cent in it's stock, doubling the
same by authority of the present in
terstate Commerce Commission.
The company has never had to is
sue securities to obtain capital be-
cause of its reasonable capitalization
1t is the short line from New York
City to Buffalo, and probably the best
built and equipped railroad in the
world. 1t emphasizes the fact by its
history that railroads in the United
States, when reasonably and honestly
capitalized, have no credit difficulties
and do not lack funds at any or all
times to make betterments and i'm
provements, and do not require gross
Iy excessive rates at the expense of
the public at large.
The hardest boiled railroad ex-
ploiter or official would not have the
temerity to claim that the Erie or
the New York, New Haven and Hart
ford Railroad was the equal of the
Lackawanna from any point of view.
The Delaware, Lackawanna & West
ern is a monument to Samuel Sloan
and honesty.
The Erie Railroad, like the Boston
& Maine, the New York, New Haven
& Hartford, and the majority of our
other railroads, is monument to
greed and unscrupulousness in COM
pIete disregard of the public at large
99.S per cent of our population the
producers and consumers.
HOW THE ERIE WORKS
The Erie Railroad also owns and
operates railroad from New York
City to Buffalo. 1t also operates vari-
GUS railroads to Chicago and other
points, with a total of 1907 miles.
Four hundred and three of this total
are operated through the ownership
of the capital stock only of the COM
pany owning the same. The rest is
operated through leases. Each of the
companies so operated has separate
issues of capital stock and bonds out
standing, not included in the Fries
capitalization
The Fries capital stock outstand-
ing December 81, 1921, was $685.
SOO and its funded debt $222,291, O20.
The total of both was therefore 1898,
1920. whereas the total of the Della
ware. Lackawanna & Western of the
same date was $S4,541, 700, or $314,195
$40 less than that of the Erie.
The gross earnings of the Erie for
the year ending December 81, 1921,
were $1O2,8S5,5O whereas those of
the Delaware, Lackawanna & Western
were $S5,977,Si5, or $16,S57692 less
Despite less earning capacity, the
Delaware, Lackawanna & Western
has paid the enormous annual divi-
dends enumerated above because OF
its honest capitalization, whereas the
Erie, due to overcapitalization, is con!
tinually struggling to pay interest on
it's outstanding bonded indebtedness
The company has never paid divi
dend on it's common stock, and none
since 1907 on it's preferred stock is
sues.
THE NEW HAVEN METHOD
The values of the New Haven Rail
road and equipment Q916) was fixed
by the company at $199, ,446. This
was done by deducting its assets
other than the item of road and equiv
ments amounting to $262,S44,591, from
its total liabilities, listed at par
amounting to $462,213,O S7.
The value of the New Haven Rail
road and equipment (192D was fixed
by the company at $27S,955, 456. Thi'
was done by deducting its assets
other than the item of road and equil