336 THE POPULAR SCIENCE MONTHLY. 



These administrative emoluments, in the case of railroads, accru- 

 ing to so few, may be briefly summarized as follows : 



1. The gratuitous distribution of stock to promoters and the con- 

 struction of the railroad from the sale of mortgage bonds, and by de- 

 faulted bills for merchandise and labor. 



2. Construction boards, corporations, committees, directors, made 

 up of promoters who handle the cash realized from the sale of bonds 

 and the credit which has been established for the property, and who 

 are practically irresponsible, as they report from themselves as con- 

 structors to themselves as proprietary directors. 



3. Express and other companies making use of the franchises of 

 the original company and its road-bed, and taking to themselves the 

 cream of the business. 



4. Rebates, drawbacks, and the various devices by which favored 

 shippers are allowed to usurp the business of the road, or the bulk of 

 it, in certain channels, and in which the profit accruing to them from 

 paying less freight is directly but the minimum advantage to them, as 

 by it they may control the production, manufacture, and marketing, 

 and real and speculative prices of an important commodity, and so, 

 by eliminating competition and controlling speculation, draw enor- 

 mous profits from the public that do not show at all in the simple han- 

 dling of the articles as freight. 



5. The property being corporate, and its ownership represented by 

 negotiable stocks and bonds, and which have gone largely into the 

 hands of the public, both by the natural and manipulated fluctuations 

 which take place in the negotiable securities, those that are " outside " 

 are at immense disadvantage compared to those that are "inside," 

 and a perennial source of profit is at hand for the "few" who have 

 reached the advantageous positions. By possessing inside knowledge 

 of a number of leading companies, by making money in the loan mar- 

 ket scarce or plentiful, the whole stock market can be " raided " for 

 the benefit of one or more operators. 



6. The wrecking, intentional or otherwise, of valuable property 

 through accumulated mortgages and debts, and its re-establishment at 

 a comparatively small cost to the new owners. 



7. The consolidation of different companies : those that are con- 

 tinuous on the same lines ; those that are parallel, and originally de- 

 signed to be competitive, and those that radiate from a common center 

 or do the business of a particular section. To make one company of 

 two or more companies, to economize in administration, to make them 

 probably more effective, to eliminate competition, has been generally 

 unlooked for, and has added greatly to the economic position, and con- 

 sequently to the value of the railroads as paying properties. While 

 the consolidation may be meritorious, this has afforded the chief oppor- 

 tunity for " stock- watering," and is a field where Napoleons of finance 

 have specially distinguished themselves and enhanced their wealth. 



