Year: 1868

million dollars liabilities. The main item in
these assets is the sum of forty-six million
eight hundred thousand dollars, which the
Executive Committee calculate as the value
Of the telegraph lines and equipments. The
balance Is composed of such unsubstantial
property as stock in their own company,
doubtful debts and bills receivable, with the
exception Of one hundred and forty thousand
dollars worth of real estate-mortgaged for
fifteen thousand dollars-and one hundred and
fifty thousand dollars cash. We have already
shown that the value Of nearly forty-seven
million dollars placed upon the property
Of the company is altogether fictitious, and
that on liberal calculation the whole Of the
lines, equipments and franchises owned by the


Western Union are in fact worth less than
thirteen million dollars.


These statements do not rest upon mere as
sertion. The estimate Of the company is based
on the amount of the capital stock, which is
forty-one millions, represented by four hun
dred and ten thousand shares of one hundred
dollars each. This amount has been reached,
not in legitimate manner, but by repeated
waterings OF the stock and the purchase and
consolidation Of other lines, sometimes con-
meet ng and sometimes competing, on terms
enormously above their actual value. The
company commenced in 1851 with three hun
dred and sixty thousand dollars capital and
six hundred miles Of telegraph line from Buf-
falo to Louisville, by way Of Cleveland, Colum-
bus and Cincinnati The stock was watered
on two occasions between that time and May,
1864, by doubling it up from three to six mil
lions and from eleven to twenty-five million
dollars, the directors own statement being
that this questionable policy was adopted to
lower the then high value Of the stock.
Between March. 1868, and May, 1864, the
capital stock was increased five mil
lion dollars by the purchase and con-
solidation Of the New York and Mississippi
Printing line, which embraced the Erie and


Michigan route, the Atlantic and Ohio, and the
New York, Albany and Buffalo lines, consist
ing Of less than two thousand miles Of route.
The stock of the Western Union, when this
additional five millions was issued, sold at one


hundred and fifty to two hundred and the
| price paid for the New York and Mississippi
| line was, therefore, equal to seven millions and
q half in cash at the minimum price Of the
stock The real value Of the line was
less than one million and half dollars on
liberal calculation.


Instances of similar purchase Of lines at
prices enormously above their actual value are
numerous all through the history Of the COM
pany, but we need only refer to one or two
more. The recent report Of the Executive
Committee shows that in 1865 the capital stock
of the Western Union was increased nearly
twenty million dollars by the following three
operations =


BY issue for United States Pacific nes... 1888 800
BY consolidation VITA United States Telegraph


By consodaton with American Telegraph
Company ......................... H,SlS,SO0
The issue Of thlr.y-thrce thousand three
hundred and thirty hrec shares Of new Western
! Union stock 10 buy the United States Pacific


lines was gross fraud upon the stockholders
Of the former company. Little or no work had
been done upon the Pacific line, and very little
money had been spent by those interested in
the project. 1t was simply voting away so
much Of the property of the Western Union
stockholders for the privilege Of con
structng line The consolidation of
the American Telegraph Company was equally
improvident The nominal capital of the
American was tour million dollars having been
watered from two millions in 1860. When con.
solidated with the Western Union it operated
in all eight thousand seven hundred miles of
route and thirteen thousand miles Of wire,
large proportion Of which was only leased, and
not owned by the company. The actual value
Of its lines, owned and leased, at the time Of
| consolidation was less than two million dol
| lars. For that amount new lines throughout
the companys routes could have been con-
structed and equipped, and yet to absorb the
old lines the stockholders of the Western Union
had to issue and pay out nearly twelve million
| dollars Of their own took.


| These facts are suffi ,ient to show how it is
that tho capital stock Of the Western Union
has been inflated to forty-one million dollars
and to prove that the asset Of forty-seven mil
lion dollars, based upon the pretended value of
the lines equipments AMI franchises owned by
the company, is altogether fictitious. 1t has
| nothing TO substantiate it and no foundation in
| fact Upon any such valuation the company
! is the merest bubble, and nothing but


the most reckless management would


ever have suffered an enterprise which


could be completed and operated with twelve
or fifteen million dollars capital to be inflated


to the extent Of forty-one millions. II is ques-
tionable whether the officers OF the company
had any legal right to make these consolida-


tions, and their action certainly affords ground


for searching investigation. That the stock


holders--every one Of whom is personally
| liable for all the debts and liabilities Of the


company to the extent Of onc-fourth Of the


stock he holds in bis possession--h derived


no benefit, but only injury from the policy


pursued by the management is evident. That